ICC News : Currently, T-Mobile, AT&T, and Verizon have all achieved or exceeded their initial coverage goals for their 5G networks. It is unclear at this stage whether they will set new public goals or expand their existing ones.
Verizon’s Network Chief, Joe Russo, recently stated that the company is poised to surpass its 2024 target of covering 250 million people with high-speed mid-band 5G in the coming quarters. Following this achievement, the company will shift its focus to meet customer demands.
However, Russo did not provide any explicit construction targets beyond the 250 million coverage range. This suggests that the days of tracking mid-band 5G network expansion through servicing new markets or covering additional customers are essentially coming to an end. Instead, network operators may pivot towards networks involving new technologies or features rather than solely focusing on original coverage.
For instance, T-Mobile recently boasted about the successful deployment of six-carrier aggregation connections supporting speeds of up to 3.6 Gbit/s. The company announced at the end of last year that its mid-band 5G network now covers 300 million people.
T-Mobile CEO Mike Sievert stated that the company’s 5G deployment is “far from finished,” but he added that the company’s outlook for the coming years involves improving capital efficiency. Sievert did not provide any further construction targets, indicating he might consider the mission essentially complete.
Jennifer Fritzche, Managing Director at investment bank Greenhill & Company, recently wrote, “5G: Where did you go? With carriers cutting capital expenditures and focusing on free cash flow, mentions of 5G on last year’s earnings conference calls for almost every carrier sharply declined.”
Although urban areas have largely been covered by 5G in the past two years, carriers may continue expanding mid-band 5G networks into more rural areas. In fact, according to executives at American Tower, a tower infrastructure company, only 50% of their towers have been upgraded to 5G. However, the pace of upgrading the remaining sites may be much slower.
Mid-Band 5G Cools Down
The landscape of 5G in 2024 looks markedly different from that of 2022. Two years ago, T-Mobile, Verizon, and AT&T all possessed substantial and valuable mid-band spectrum, eager to deploy these frequencies.
This spectrum had the potential to significantly boost speeds. In fact, the download speeds for most users covered by these networks doubled, with some experiencing increases of five to ten times.
Moreover, mid-band spectrum played a crucial role in supporting Fixed Wireless Access (FWA) services for all major wireless network operators in the United States. FWA promises to replace wired internet connections in homes and offices with 5G connectivity.
Saving Cash
However, carriers are not currently boasting about their mid-band network constructions. Instead, they are emphasizing plans to reduce network expenditures to increase revenue.
AT&T CEO John Stankey stated at a recent investor event, “We’ve been saying that (in 2024) our capital intensity is going to come down from the peak levels of the past few years.” In 2024, the carrier plans to spend between $21 billion and $22 billion on capital expenditures, lower than the $24 billion spent in 2023.
Other carriers have also signaled similar cost-cutting measures.
T-Mobile CEO Sievert explained, “In the last five years, we’ve spent a lot of money, invested a lot of capital building the world’s best 5G facility, and now it’s time to harvest it and be able to enjoy the benefits of it.”
In a recent report to investors, financial analysts at Evercore indicated they anticipate a decrease in capital expenditures in the United States as the 5G investment cycle gradually shortens. They added, “In a fundamentally uncertain world, there shouldn’t be another capital spending cycle in the next few years.”
Next Steps
With the decrease in capital expenditures and a slowdown in 5G construction, what will be the focus for AT&T, T-Mobile, and Verizon in the next phase?
AT&T has recently initiated a plan to replace Nokia’s Radio Access Network (RAN) equipment with Ericsson’s devices nationwide in the United States. This move will enable AT&T to start integrating Open RAN interfaces into its network. Whether this effort will lead AT&T to introduce new technologies into its network remains to be seen. This is certainly the perspective of Dish Network, which views Open RAN as part of its competitive advantage.
Meanwhile, Verizon has hinted at the eventual rollout of standalone 5G (5G SA) after years of delay. The company states that this technology can support “advanced technologies and services, providing customers with the reliability and performance they now expect and what they will need in the future.”
As for T-Mobile, the company indicates it will continue to leverage technologies such as carrier aggregation to accelerate 5G connections on its network. Like its competitors, T-Mobile also expresses its commitment to expanding 5G into frequency bands beyond mid-band.
