5G: Why Traditional Cable Could Beat Verizon, AT&T

The next generation of wireless technology, 5G, has been highly anticipated to support the demands of an Internet of Things (IoT) ecosystem and shake up the wireless communications industry. 

While many are expecting the wide-scale adoption of 5G to bolster wireless carriers' hold on the market and threaten traditional broadband providers, a recent story published by The Wall Street Journal suggests that the opposite could be true. (See also: 5 Things to Know About 5G Wireless Technology.)

The importance of 5G was recently demonstrated by President Donald Trump's unprecedented decision to block the merger of Qualcomm Inc. (QCOM) and Broadcom Ltd. (AVGO), indicating that it would undermine U.S. strength in 5G and pose a risk to national security.

Blurred Lines Between Wired and Wireless

It should be noted that the enthusiasm over 5G, expected to have a bandwidth between 100 and 1,000 times greater than the current 4G network, might be all hype. Like its previous generation wireless technology, the shift to 5G will require a large amount of time and investment, and could be just as patchy and slow as 4G. 

The WSJ suggests that one of the most significant things to occur after the introduction of 5G will be a less-clear distinction between wired and wireless networks. "Wireline" service providers such as Comcast Corp. (CMCSA), and Charter Communications Inc. (CHTR), which are seen as losing out to wireless providers such as AT&T Inc. (T), Verizon Communications Inc. (VZ) and T-Mobile US Inc. (TMUS) will adopt similar technologies, transforming the means by which the internet reaches people.

While 4G LTE wireless technology is enabled by large cell towers that can be miles apart, 5G wireless, which improves network speed yet operates over a shorter distance, may be better suited for an ultradense web of radios, nearly the same size as a Wi-Fi access point, wrote the WSJ's Christopher Mims in a story published Sunday. Given that all of these must be physically connected to power and the internet, and reside where the network operator already has right of way, 5G will work much like a cable or fiber-optic internet service.

A Long, Slow Rollout

This gives traditional cable carriers, already focused on homes and offices, a head start against telecom giants such as AT&T and Verizon, who will need to continue building out their fiber-optic networks, a feat that requires a take deal of time and resources. AT&T plans to expand its fiber near 22 million homes and businesses by July 2019, while Verizon already has about 6 million customers for its fiber-optic home internet service. 

Cable companies, which already have dense wireless networks, will see an opportunity to move into mobile, wrote Mims. Comcast already has near 400,000 subscribers for a such a service, while Charter plans to roll out a mobile service by mid-2018. 

Ultimately however, cable companies' stronghold at homes and in the workplace should offer them an advantage over wireless companies, from which consumers should expect a long, slow rollout of a full-coverage 5G network, according to New Street Research managing partner Jonathan Chaplin, as quoted by the WSJ. (See also: T-Mobile ‘Unstoppable,’ Will Rally 20%: Guggenheim.)