美国5G：到2020年中期每家运营商都将在全国范围内建设5G网络

1、Telecom Services, Cable & SatelliteUS 5G Strategy Update: Each Carrier Will Have Nationwide 5G Builds Well Underway by Mid-2020While 5G has been a buzz word for much of the last three years, we expect to see real momentum on network expansion over the next six months as each carrier rolls out its “n

2、ationwide” 5G network. Customer adoption should ramp and accelerate with iPhone launch in September; we see minimal 5G-specific revenue impact near-term but 5G will support higher usage and (somewhat) faster speeds that are driving customers to unlimited service and gradually higher ARPU. While the

3、geographic reach of each 5G network will be much improved current deployments (mainly mmWave with some 2.5 GHz at Sprint until last Friday), there will be substantial differences in each companys 5G capabilities and the commensurate consumer experience over that time. For now, AT&T, Verizon, and T-M

4、obile are deploying their 6 GHz 5G networks using a fairly small slice of spectrum (typically 10-20 MHz), while the availability of more mid-band spectrum (C-Band, CBRS, Dish spectrum) remains the gating factor to much higher capacity network deployments. We see technologies such as dynamic spectrum

5、 sharing and split-mode (combining a 4G and 5G signal in one handset) as well as Massive MIMO most 5G handsets faster than 4G handsets, but true “5G” improvements latency reductions will require new spectrum bands with channels and gradual changes to the wireless and network architectures time. Rega

6、rdless the true improvement in experience, we expect to see a pick-up in PR campaigns as enter 2020 with claims each carrier to have the “best 5G” in some or another.What can consumers expect to get from a 5G experience? Sprint has had MHz of 2.5 GHz spectrum dedicated to 5G in some markets for a wh

7、ile, but each of the other carriers nationwide service will start with a 5x5 or 10 x10 channel allocated to 5G, possibly aggregated with an signal. Aside small mmWave areas we expect each network to feel similar to the consumer. Early adopters that are using 5G devices on mostly empty networks shoul

8、d see substantially faster than a 4G experience, though we would expect that in the 20- 100% speed increase range rather than any of magnitude (10 x) improvement. We tested T-Mobiles 5G network it launched last and saw 200-300 Mbps 200 Mbps on 4G LTE network in one location (this was flagship store,

9、 so may not be a great sample), and 80 Mbps on each network in another location. In a Sprint test we saw 50-80 Mbps on a 5G device vs 20 Mbps on LTE in the samestore.All carriers will have nationwide 5G in 2020. We expect all US wireless operators to launch “nationwide” 5G networks by mid-2020. T-Mo

10、bile became the first to launch nationwide 5G on 6th using 20 MHz of 600 MHz spectrum and has announced plans to also launch a nationwide network in 1H20. While many investors ask us if Verizon will be stuck with just its current mmWave 5G offer, that company instead plans to nationwide 5G leveragin

11、g dynamic spectrum sharing 6 GHz spectrum in 2020 as well. Sprints 5G network deployed using 2.5 is currently live in 9 markets covering 16m POPs. AT&T, T-Mobile, and Verizon have each also launched 5G networks using mmWave across a limited geography in these areas, with the right handset, experienc

12、e should be very fast but the coverage area will remain small for years. We outline carrier-level 5G wireless strategies in detail below. Notably, the 5G consumer experience on sub-6 GHz spectrum may not be all that different over time a beefed up 4G experience, though early adopters on T-Mobile and

13、 See page 21 for analyst certification and important disclosures.North America Equity Research09 December 2019Telecom Services / Cable & SatellitePhilip Cusick, CFA AC(1-212) 622-1444 HYPERLINK mailto:philip.cusick philip.cusickBloomberg JPMA CUSICK Sebastiano C Petti(1-212) 622-8529 HYPERLINK mailt

14、o:sebastiano.c.petti sebastiano.c.pettiRichardChoe(1-212)622-6708 HYPERLINK mailto:richard.choe richard.choeReed Kern(1-212) 622-5623 HYPERLINK mailto:c.reed.kern c.reed.kernJ.P. Morgan SecuritiesLLCJ.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldb

15、eawarethatmay a of the of as a HYPERLINK / empty networks could see nice improvements.Implications for a potential handset super-cycle? We see the combination of an aging device base, imminent “nationwide” 5G network launches, and proliferation of 5G-capable devices in 2020 as setting the stage for

16、a potential device super-cycle. While 5G smartphones begun to come to market already the price points those are high; more reasonably priced and iconic devices from Apple and Samsung are expected in 2020 supporting both low-band and mmWave bands. This dynamic could finally reverse the trend of lower

17、 churn and upgrade rates that we seen in recent as consumers hold their old smartphones due to limited feature enhancements. J.P. Morgan analyst Samik Chatterjee expects Apple (AAPL) to launch four 5G-capable devices in 2020 with two sub-6 and two mmWave. It will be interesting to see which US carri

18、er benefits increased subscriber flows in 2020+ as 5G networks proliferate; we believe that T-Mobile and AT&T, with the most incremental network capacity in 4G and 5G, could benefit an acceleration in customer turn-over vs Verizon, which has the largest customer base and no new spectrum toDont hold

19、your breath for the 5G Capex boom. We constantly get questions about when the 5G cycle will begin, and the answer is: we are in it. is deploying 5G as part its FirstNet effort, and as part its 600 rollout. Much Verizons network is already 5G-upgradable and will a signal DSS is available year, though

20、 we do to see Verizon ramp wireless when it gets access to new mid-band spectrum possibly C-Band though that looks further out than it did a month ago in 2021 or 2022. We expect mmWave deployment to continue at Verizon at a similar pace in 2020, and fairly slow at T-Mobile and AT&T primarily driven

21、by enterprise needs or very high demand areas like stadiums. The network architectures will change over time in order to reduce latency and create the conditions for Mobile Edge Computing, that is a long effort and unlikely to create a spike in spending. For towers we expect fairly steady activity i

22、n 2020 from AT&T through declining in 2021, Verizon to remain slow until new spectrum bands are available in 2021-22, Sprint/T-Mobile to rebound to some extent from the recent slowdown once their deal is decided, but overall fairly consistent with 2019 onaverage.Verizons Ultra-Wideband service to dr

23、ive differentiation; coverage layer will likely start with 850 MHz. We see Verizon expanding its 5G Mobility network in 2020 leveraging existing spectrum bands with dynamic spectrum sharing Verizon plans to reach 30 markets with mmWave year-end 2019 21 today and we see the companys fiber build as a

24、potential roadmap for mobility market deployments. current mmWave deployment, dubbed Ultra- Wideband, provides a robust experience as the company allocates 400 MHz of mmWave spectrum, but across a limited geography even within the announced cities. However, in to keep pace with U.S. wireless Verizon

25、 will up with a “nationwide” (200m POP) network sometime in 2020 before the iPhone launch in September. DSS will the easiest/fastest path to nationwide coverage, and while the planned band has not been announced we believe Verizon may be focused initially the 850 MHz (Cellular) band, which is gradua

26、lly freeing up as the company shuts down its legacy 3G network. Few smartphone handsets support DSS but availability should grow through 2020 as Qualcomms (covered by JPM Analyst Samik Chatterjee) X55 chip is rolled out by OEMs. Separately, Verizons 5G fixed wireless broadband service recently expan

27、ded to Chicago (5th market) its first 5G market using NR standard equipment while we may see additional 5G expansion in 1H20 this is likely to ramp in 2H20 high-power Gen 2 NR chipset/equipment comes to market; regardless we dont expect substantial scale in 5G Home until 2022 at earliest. With regar

28、d to enterprise 5G services, Verizon has partnered with AWS for multi-access2edge computing to bring compute and storage to wireless access points (initially over 100) and eventually thousands ofCRANs.AT&T focusing on 850 MHz nationwide rollout. AT&T has rolled 5G+ mmWave service on a limited basis,

29、 but its main 5G in 2020 will be the nationwide rollout of low band 5G using its 850 MHz spectrum. AT&Ts network already has a massive amount of LTE capacity from the spectrum put into service with its FirstNet build out. As part the build, the One tower initiative also upgraded equipment (base stat

30、ions and antennas) at sites, which are now software upgradable to 5G. AT&T expects to cover 200m pops with in 1H20 using that 850 MHz spectrum (10-20 MHz initially) and with DSS as well as re-farming will eventually be able to add incremental coverage and capacity across spectrum bands. We do not ex

31、pect AT&T to be as aggressive with its 5G+ (mmWave) build out as rather the company appears to be focused on the incremental benefits of 5G service (somewhat faster speed, capacity, lower latency) consumers and reserving that 5G+ (mmWave) service for enterprise or industrial applicationsT-Mobiles na

32、tionwide 5G network is live. On December 6th, T-Mobile became the first U.S. wireless carrier to a nationwide 5G network. This follows T-Mobiles 5G mmWave network deployment in mid-2019, which is in markets. has a 20 MHz (10 x10) band for 5G, which is a tremendous amount new capacity on a empty netw

33、ork, so customers should see very good speeds and our tests in New York last weekend showed speeds 80 to 300 Mbps. T-Mobile has said that this nationwide low-band (600 MHz) 5G network will provide a foundation layer for its New T-Mobile network should its merger with Sprint close, augmented by 2.5 G

34、Hz spectrum from the latter as well as additional mmWave deployments using T-Mobiles existing holdings. Regardless deal completion, we would expect T-Mobile to continue ramping its 600 MHz/low- band 5G network rollout, but may look to re-farm some of its mid-band spectrum further down the road. Shou

35、ld the deal close T-Mobile has buildout commitments related to its FCC approval including 5G coverage and minimum speed requirements over 3 and 6 yearperiods.Sprint currently covers 16m POPs with 5G on 2.5 GHz; additional coverage may in 2020. Sprint has a 5G network using 60 MHz of 2.5 across nine

36、markets covering approximately 16m POPs as of 3Q19. company is using a 60 MHz 5G signal using split-mode on Massive MIMO as it deploys the 2.5 GHz band to macro sites. Sprint has not announced additional 5G cities, but we expect the companys 5G network expansion to persist in 2020 across existing as

37、 well as new markets. We see a long 2.5 buildout for an extended period of time and at some point expect to see 5G in Sprints 1900 or 800 MHz bands to increase coverage. Sprint has a limited ability to re-farm existing spectrum bands near-term given its limited spectrum holdings outside of the 2.5 G

38、Hz band, and because LTE performance degradation when using DSS, Sprint may not look to deploy DSS before improving the quality of its 4G network. Sprint/T-Mobile have talked about using Sprints 2.5 GHz holdings as part of its “New” T-Mobile 5G “layer cake” with the latters current 600 MHz low-band

39、network thefoundation.3VerizonIn October 2018 Verizon became the first US wireless carrier to launch 5G in theU.S. using its proprietary TF standard over mmWave spectrum. The company first deployed 5G Home fixed wireless residential broadband in four markets using its Ultra-Wideband 5G service (mmWa

40、ve), and in April 2019 launched 5G for mobility service in Chicago and Minneapolis. The companys 5G Mobility network is live in 18 markets today with very limited coverage and expects to be in 30+ cities by the end of 2019 (28 markets announced). The companys fixed wireless or 5G Home service is liv

41、e in parts of 5 markets with Chicago being the first 5G NR Home market.Verizons 5G Mobility is live in 18 markets with very limited mmWave coverage Verizon plans to reach over 30 markets by year-end 2019 from 18 today with 28 markets announced to date. The company is actively deploying fiber in 60 m

42、arkets outside of its legacy telco footprint and we see the fiber build as the potentialroadmap for future mobility market deployments. We see a long runway of fiber build ahead as the company expands its fixed footprint nationwide, insources much of its wireless backhaul, and eventually offers fibe

43、r services to consumer, enterprise and SMB customers.We see Verizons 5G coverage in two distinct builds. First, the Ultra-Wideband focus will be a robust service utilizing mmWave spectrum to provide up to 1 Gbps or more service in dense urban and suburban areas. That service should be truly differen

44、tiated vs other mobile networks in terms of speed, latency and capacity, but extremely limited in coverage it will expand over time as Verizons fiber network expands around the country, and will be available both in and out of Verizons historical wireline footprint. Second, Verizon will expand its o

45、verall 5G service using low and mid-band spectrum so that it overlays the 4G LTE network nationwide coverage. We see low-band 5G service for Verizon as well as other carriers as less differentiated than service than Ultra-Wideband 5G. We Verizons initial 5G speeds using 6 GHz to see 10-20% average s

46、peed improvements, less than AT&T or T-Mobile may see because it does not have a lot of new spectrum to allocate to the service. Customers in areas covered by Verizons mmWave signal though should see dramatically better speeds as an incremental MHz or even 800 MHz spectrum is available.Current 5G Ul

47、tra-Wideband smartphones include the Samsung Galaxy Note 10+ 5G, Samsung Galaxy S10 5G, Moto z4, LG V50 ThinQ 5G very high-end phones with prices from $850 to $1,300 ($850 is sum of Moto z4 + mod). When Verizon first launched 5G Mobility, the company implemented a $10/month service charge which it s

48、ubsequently reversed. However, Verizon has revamped its unlimited data plan pricing/packaging since that time with Verizon 5G on its mid and high-tier plans, creating an incentive for customers who want 5G to move to the higher-spending plans.4Figure 1: Verizon 5G Mobility/Home MarketsMarket5G Mobil

49、ity5G HomeTechnologyAtlantaJuly 2019NRBoiseSeptember 2019NRBoston Charlotte Chicago Cincinnati Cleveland Columbus DallasDes MoinesDenverNovember2019 Announced April 2019 Announced Announced Announced October 2019 AnnouncedJune2019October 2019NR NR/NRNR NRDetroitHoustonJuly 2019November 2019October 2

50、018NRNR/TFIndianapolis Kansas City Los Angeles Little Rock MemphisMinneapolisJuly 2019 AnnouncedAnnounced AnnouncedApril2019October2018October2018TFNew YorkSeptember 2019NROmahaOctober 2019NRPanama CitySeptember 2019NRPhoenixAugust 2019NRProvidenceJuly 2019NRSacramento San DiegoAnnouncedOctober 2018

51、TFSalt Lake CityAnnouncedSioux FallsNovember 2019NRSt. PaulJuly 2019NRWashington D.C.July 2019NRSource: Company websites.850 MHz could be an initial source of wider 5G spectrum bandAside from Verizons headline mmWave 5G coverage, the company will have to offer a nationwide 5G signal before the iPhon

52、e launches in September or risk getting lambasted in AT&T and T-Mobile advertising. Rather than having to rebuild a lot of its network to get there, Verizon has said that much of its network is 5G upgradable and ready for a software load when DSS is ready the company will effectively have a 5G signa

53、l overnight once it loads 5G software. Verizon has not said what frequency this will start with, we believe that the 850 cellular frequency is a very good candidate as the companys 3G (EVDO) network in that band is in the process of being taken down with only small deployments remaining for IoT serv

54、ice contracts, and the wide propagation at 850 MHz will allow for nationwide coverage with a start of relatively few cell sites. That AT&T is also focused on this band will allow for handset efficiencies in the first fewyears.Using DSS, Verizon will be able to initially allocate small blocks of that

55、 band to 5G only needed, and as the 3G network is taken down over the next several quarters, the 850 MHz spectrum will be re-farmed for 5G and provide anice5coverage layer. Of its 25 MHz of nationwide Cellular spectrum, we believe Verizon should be able to reclaim the majority of this spectrum for 5

56、G and would not be surprised to see Verizon rollout a 10 MHz (5x5) or 20 MHz (10 x10) signal for 5G in that band over the next 1-2 years.Currently Verizon is conducting lab trials of DSS and is expected to offer the technology following some equipment and software upgrades. Next year device availabi

57、lity should grow as most major OEMs are expected to deploy Qualcomms X55 chipset including Apples iPhone refresh late in 2020.Figure 2: Verizons 5G Coverage PlanSource: Company reports.Despite DSS, Verizon has clear spectrum needs and unclear supplyVerizon has an average of 117 MHz of 100 MHz within

58、 that band. Verizon may also be interested in CBRS, but this could be contingent on the outcome of the C-Band process. The company could also look to buy spectrum from Sprint or even Dish were it available for sale.5G Home is less of a priority than Mobility, but expansion to continue In October 201

59、8, Verizon launched 5G Home fixed wireless access (FWA) residential broadband service across Sacramento, Los Angeles, Houston,andIndianapolis using its 5G TF proprietary equipment. In October 2019 Verizon expanded its 5G Home service to Chicago, the first 5G Home market with NR standard equipment, w

60、hich will be used going forward, and Verizon will eventually6retrofit its legacy 4 markets with TF equipment with 5G NR gear. We believe that FWA is less of a priority than Mobility for Verizons 5G network given the companys need to defend its mobility market share, but over time expect FWA to grow