US 5G Coverage Still Two Years Away
Over the past six months, we have been tracking US carrier comments related to 5G deployment along with the number of 5G cities launched and coverage within those cities. Based on the most recent updates, we continue to believe that widespread US adoption of 5G, defined as 75% of the US population having consistent access to 5G, is still two years away (2022). This is about a year behind the general time table advertised by the US carriers.
While 5G will take longer to roll-out, we believe its impact will, over time (5 years), exceed expectations by enabling real-time cloud processing on mobile, game streaming, and other compute-intensive mobile use cases like autonomous driving, vehicle-to-vehicle communication, augmented reality, and countless IoT and smart home applications, to name a few.
What’s New in the Past 6 Months
Verizon, AT&T, and T-Mobile have added 5G cities in the past six months with pocket coverage. Pocket coverage implies that 5G is only available in select areas like next to a stadium, shopping mall, or business district. The wild card in determining the pace of the 5G rollout is whether the carriers continue to turn on 5G antennas when they are added rather than installing antennas but holding off of activation until larger coverage areas can be turned on. Our expectations that broad 5G coverage will be available in 2022 assumes the current incremental rollout approach.
- Verizon (~160m subs). Six months ago, Verizon had the most 5G coverage with 8 cities and met its 2019 goal to exit the year with 30 cities. Verizon expects to grow to that number to 37 by the end of 2020. In August of 2019, CEO Hans Vestberg commented the company expects 50% of the population to have access to 5G by the end of 2020. Given 5G coverage in those cities is extremely limited today, we believe reaching 50% coverage by end of 2020 is aggressive.
- AT&T (~160m subs). Six months ago, AT&T indicated two-thirds of the US population would have coverage by the end of 2020. Since then the company has added that it expects 5G nationwide in the first half of 2020. We note that “nationwide” does not set an expectation related to coverage. We expect AT&T to exit 2020 with 50 cities, up from 19 today, with pockets of 5G.
- T-Mobile (86m subs). Six months ago, T-Mobile had not commented on its expectations for 5G timing. At the time, the company was the 4th US carrier to “launch” 5G in the US with 6 initial cities. The company is of course in the midst of clearing regulatory hurdles to move forward with the Sprint merger, which was announced in April of 2018. T-Mobile’s path to 5G is heavily influenced by the timing of closing the Sprint merger. The company has recently set the most realistic 5G timing expectation of the 4 US carriers, targeting 97% coverage in 3 years.
- Sprint (54m subs) – Six months ago Sprint expected to have almost “complete coverage” of 5G across “select” US cities by the end of 2020. The company now says its road to 5G is dependent on T-Mobile. We believe the merger will eventually close and expect Sprint to follow T-Mobile’s 5G rollout schedule of 97% coverage in 3 years.