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Verizon 5G rollout could change broadband competition

Verizon launches Oct. 1 a 5G internet service in four U.S. cities. The Verizon 5G rollout could give the company an edge against cable companies in the high-speed internet market.

Verizon has chosen to temporarily forego standards and launch a proprietary 5G internet service to homes in four U.S. cities. The rush to market could start generating a return from the billions of dollars spent on developing the fifth-generation wireless technology.

Verizon introduced its 5G Home service this week and said it would be available Oct. 1 in select neighborhoods in Houston, Indianapolis, Los Angeles and Sacramento, Calif. The service provider promised a baseline speed of about 300 Mbps, which is significantly higher than Verizon's current fiber optic service, Fios.

Customers covered in the Verizon 5G rollout could experience speeds close to 1 Gbps if they are in a favorable location relative to Verizon's 5G small cell site that broadcasts the wireless signal to the home.

Verizon plans to charge wireless subscribers $50 a month for the 5G service and nonwireless subscribers $70 a month. Verizon won't charge for the first three months of service or for the 5G router and its installation in the home.

The promotional deal makes the 5G offering similar in pricing to the internet service Verizon currently provides through its Fios product, which delivers speeds of only about 100 Mbps or less, said Tom Nolle, principal analyst at technology consulting firm CIMI Corp., based in Township, N.J., in a research note.

"I think Verizon will be moving to normalize their pricing across FiOS and 5G, which could give Verizon users the best internet bargain out there today," Nolle wrote.

Verizon 5G rollout using nonstandard gear

The home and cell site gear used in the Verizon 5G rollout are temporary. The company plans to replace the proprietary 5G equipment with devices built around universal standards set by the 3rd Generation Partnership Project (3GPP). Verizon will replace the equipment as suppliers deliver standard gear.

Verizon is willing to forego standards initially to be quick to market with 5G internet services and to start generating revenue as soon as possible, said Rajesh Ghai, an analyst at IDC.

"This is a brand-new service for Verizon -- incremental revenue," he said. "They're not going to eat into anything they're already selling. They don't have to get their existing customer base to adopt it."

Because 5G is a fixed-wireless technology, Verizon can compete against cable companies and rival AT&T without having to bring a cable connection to homes or apartment buildings.

"If you have broadband deliverable to homes over the air, then it becomes a lot faster for a customer to provision the service," Ghai said. "You get the box from Verizon, and it's ready to go."

Indeed, Verizon has made ordering the service easy by launching a website for would-be subscribers.

Verizon 5G rollout includes TV over IP

Verizon's handling of TV over IP (TVoIP) through the 5G service is also significant. Subscribers get Google's YouTube TV at no charge for the first three months and then have the option of continuing the service for $40 a month.

The offer shows Verizon is experimenting with TVoIP without having to buy a content provider. "If they like what happens, they could shift FiOS to TVoIP too, and drop a lot of cost along the way," Nolle said. Also, Verizon could collect user data and website activity on the 5G service and use the information in other applications, such as ad selection.

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