Verizon on 5G speed
Verizon (VZ) doesn’t consider 5G as a substitute of LTE (or long-term evolution). According to Fran Shammo, Verizon’s (VZ) CFO and EVP, “As far as what’s the use case, the use case right now is fixed wireless broadband. And 5G is designed for 1 gigabit of speed.”
He added, “Now I know others will claim a lot more, it’s the same with LTE, when you have an empty network you can get a lot of speed out of something that has nobody on it. But it’s being designed for 1 gigabit of data. And that’s what’s being proven in Japan and Korea, who are much further ahead than the US in deployment. So when you think about the use case it’s fixed wireless broadband.” He spoke about this at the recent Bank of America Merrill Lynch Global Telecom & Media Conference.
Internet speeds of 5G and other networks
As per an article by recode, the expected theoretical peak download speed of 5G is 10 Gbps (or gigabits per second). As per that article, the latency for the technology is expected at ~1 millisecond. Additionally, in the case of 4G, the theoretical peak download speed and latency are ~1 Gbps and ~50 milliseconds, respectively.
Now let’s look just at the 4G and 3G speeds in the US. As we can observe in the above chart, and as per Cisco’s (CSCO) US VNI (Visual Networking Index), the average speeds of 4G connections and 3G connections were ~19.4 Mbps (megabits per second) and ~2.9 Mbps, respectively, in 2015. As per the forecasts by Cisco, in the US, the average speeds of 3G connections and 4G connections are expected to be ~5 Mbps and ~36.4 Mbps, respectively, in 2020. The top four US mobile players are Verizon, AT&T (T), T-Mobile (TMUS), and Sprint (S).
For diversified exposure to telecom companies in the US, you can consider investing in the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.7% in some of the US telecom players at the end of May 2016.