Verizon Frontier Deal and 3D/Backhaul Innovations – 5G Factor – EP71

Hello and welcome everyone to the 5G Factor. I'm Ron Westfall, research director here at the Futurum Group, and today I am focusing on the major 5G ecosystem developments that have caught my eye. And this includes Verizon's $20 billion acquisition of Frontier.

That's right, $20 billion. Also, Telefonica, Ericsson and Matco, I believe are advancing holographic call capabilities, which is pretty neat. And also the FCC has made an interesting ruling on the eban, which I think, uh, gives an opportunity for Nokia to showcase some capabilities within their portfolio.

So, hey, let's jump right in because we have a lot of material today. First of all, Verizon in Frontier did announce that they have entered into a definitive agreement for Verizon to acquire Frontier in an all cash transaction valued at $20 billion. That's official now.

Now, this, uh, strategic acquisition of Frontier, I believe who, you know, markets itself as the largest pure play fiber in a net provider in the US will have impact on the 5G market itself as well. But also, and this is where a lot of the attention has been, uh, devoted so far, expand Verizon's fiber footprint across the US and that can accelerate the company's delivery of mobility and broadband services to both current and new customers. Also, it can augment Verizon's intelligent Edge network for digital innovations related to ai, our new best spread over the past year and a half, as well as other important key technologies.

And I'll touch on it such as IOT. Now here's some, uh, basic backs of the deal, uh, that will help table set, uh, my deep dive. 2 million fiber subscribers added to the Verizon network.

And this will extend Verizon's reach to 25 million premises across 31 states and Washington dc. Now, the good news, uh, for Verizon and as well as Frontier, is that there's very o uh, little overlap between the two footprints across all these jurisdictions. So that should help ease the overall integration process.

Also, pre-deal, Verizon had about 18 million fiber locations growing at about 500,000 per year. 4 million per year, plus it has more locations passed through its giga power joint venture. So this really upped the ante for Verizon that they really needed to show that they have more gain in terms of fiber deployments and being able to counter at t more effectively.

Now. All yes, uh, the deal is projected to generate all at least $500 million in annual run rate cost synergies. Plus, and this is I think, uh, important to note that there is a little history here, and some of it I think is, uh, a bit paradoxical.

5 billion back in 2015, almost a decade ago. 5 billion of fiber assets to Frontier in 2015 to concentrate on its wireless business. Subsequently, frontier went bankrupt in 2020 and wiped $10 billion off its books.

Yet now Verizon is buying Frontier for $20 billion to get more fiber assets and to Parar, uh, paraphrase John Malkovich in the line of fire. The irony here is so thick on Verizon's back to the future move that one could choke on it. However, from my view, first of all, it's a tribute to Frontier's leadership under president and CEO Nick Jeffrey in turning Frontier ship around.

That resulted in this Verizon $20 billion acquisition. Now leading up to the deal, frontier launched 70 gig fiber internet services to consumers across its entire fiber footprint. 6 year over year.

So that's impressive really by any measure. Plus it delivered, uh, accelerating the revenue growth and continued strong EBITDA growth, uh, across its balance sheet. As such, I believe Frontier in partnership with, uh, Nokia is the first company in North America to successfully trial broadband speeds of a hundred gig, 50 gig 25 gig, and 10 gig pawn technologies simultaneously all on its existing network.

So you could see why Verizon was very keen on capturing, uh, frontiers, uh, capabilities and assets. Now, the important question is how, what does this have to do with the 5G ecosystem? I believe it has direct bearing, and I have a few reasons why.

Well, first of all, it'll quite simply enhance Verizon's 5G infrastructure. The integration of Frontier's fiber networks is ready to bolster Verizon's overall 5G network by providing a more robust and extensive network. And this is quite simply crucial for supporting the high demands of 5G technology.

They basically go hand in hand. Fiber is really the dominant backhaul technology release, the preferred, uh, backhaul technology for many 5G deployments. But again, there's going to be variety in hows back haul, but clearly that's been, uh, the trend, uh, over the last few years.

Second, it can improve network performance with a larger fiber footprint. Verizon can offer better network performance including faster speeds, lower latency, which are critical for 5G applications such as 5G fixed wireless access or FWA as well as industry vertical services including IOT devices. Now, in addition, it's good for increased competition, and this is I think something that the regulators will, uh, approve without too much, uh, concern.

And that that the acquisition positions Verizon more competitively against other major telecom providers, such as at and t already addressed it, but also T-Mobile, which is also investing more into its fiber assets. And it all has a t fiber offering right now, for example, as well as the cable operators who are also deploying fiber to compliment and augment both their HFC services as well as their expanding mobile services. So this is really about convergence.

It's really about the major operators in the US being able to compete against each other more effectively and being able to offer an array of choices. Many customers will look to bundle some of these capabilities depending on their situation, but also it will enable Verizon to reach more customers who would prefer a fiber service, say at the home or at the business over say FWA service, but vice versa, it will enable them to offer it FWA service when, uh, fiber is not available or it's not cost effective enough on a price point. 5 billion beat funds to help bridge the digital divide and meet society wide broadband connectivity goals.

So yes, it's about it expanding footprint. It's about being more competitive, it's about improving, you know, revenues and uh, also, uh, all important, you know, revenue, uh, per customer and so forth. But also it can make a difference in terms of meeting these very important society y goals.

And that is, you know, broadband connectivity for all. And so that I think is going to be important for us to keep following. And I, I can bet, uh, by say October, I'll be revisiting this acquisition and the impact that it's having across the entire broadband market, including by G.

Now, I'd like to turn to an application that has been around for a while and I, this is echoing quite simply, ai. Now, AI has been around for many decades, but as we've seen over the last year and a half, AI has become a transformative technology that's driving almost, uh, all the key decision making in terms of investments and priorities, of course across service providers, certainly cloud providers, but also enterprises and so forth. And what I'm like to shot a spotlight on is calligraphy.

Now, this has been around for decades. I think we all know that. In fact, I fondly remember visiting the Museum of Calligraphy in New York City back many years ago.

I don't think it's around anymore, but yes, it was there and it's something that, uh, captured the imagination for many years, uh, back at least in the 20th century. And what is new and different here is that we're seeing the integration of holographic calls directly into dialer apps that would allow users to access and use advanced communication technology without the need for additional applications. In other words, keep it simple.

Now what we're seeing is that Telefonica, Ericsson and Mat Suko in collaboration have successfully, uh, successfully completed one of the most complex demonstrations of IMS data, uh, channel technology to date now this proof of concept showcase the potential of IMS data channel to evolve 5G and six G voice services with innovative applications. And naturally this is including holographic communication. Now, IMS data channel is a standard space technology that enhances existing IMS voice networks, which have also been around for many years, and as such, could enable network operators and mobile service providers to deliver improved services ultimately to millions of users.

Now this technology is using built-in capabilities of the telephony networks, such as quality service, reliability, mobility, and security, while introducing these new capabilities for interactive and immersive communication. Now since 2021, telephonic has been, uh, executing various PS with partners, including as noted Ericsson and Matt Suko. Now the goal has been, uh, to demonstrate the potential of integrating this technology into commercial services, especially 5G smartphones.

So meaning this has impact potentially for existing technology. And I'll, uh, get into more detail here. Now, I think, uh, what we're seeing here is that the recent POC focused on developing and testing holographic communication as part of the six G XR European project, which also aims to bring holographic communication closer to reality.

Quite simply, the company successfully demonstrated holographic calls using IMS data channel that's compliant, uh, and with devices such as the Samsung Galaxy S Series, which I use today. So this is pretty exciting on a personal level, but what I think is important here is showing where a color face and torso can be captured and transmitted to real time hologram to the receiver. So in this pock, each contributor played a critical role and to break it out, Telefonica, which coordinated the pocket activities and is ultimately responsible for providing the service.

And, uh, as noted Ericsson, which is actually providing the IMS infrastructure and services to make this holographic communication, uh, reality, uh, hopefully in the horizon here soon, as well as mat zuka, which is actually providing the holographic technology and applications for viewer and presenter. Now, I believe the P achieves, uh, a couple of key milestones. First of all, it demonstrated the transmission of a one-way hologram from the presenter to the viewer with two weight audio between them, which is obviously important.

We just don't want the visual, we want the audio as well. And this is again, using existing IMS infrastructure. Now the holographic service was integrated into native smartphone dialers, and this eliminates a need again for additional applications.

I think this would be well, um, uh, received quite literally by any user out there. Now also, I think what is important is, uh, that macOS holographic service process and reconstructed the hologram data in the cloud. And this, as a result ensure high quality performance.

I think we understand the benefits of having cloud communication capabilities. It's quite simply can prove, uh, lower latency and other high quality service out outcomes, uh, by using it. Now, that's not to say that the, uh, the p did not face challenges.

First of all, current 3G PP specifications lacks standards for IMS data channel interface with third party servers, which can quite simply impede broader implementation. And hopefully this will be resolved. Yeah, this is something we've seen before.

It's just again, uh, the, uh, ecosystem getting together it to develop more cooperation for I think a, a game changing breakthrough. Now, uh, bandwidth of payload limitations for higher resolution holograms were identified, emphasized the need for improvements in data segmentation and reassembly for better performance. So again, we're seeing this all going on with ongoing, say, private 5G implementations and, you know, improving overall, you know, 5G quality.

But I think the progress with 5G standalone deployments combined with, uh, you know, the emerging 5G advanced standard will help, uh, address these issues. Also, addressing perfect synchronization between audio again and holographic video is still a challenge. However, I think it's important to see that we are making progress here in an important pock, uh, that has, you know, key ecosystem players backing it up.

Now, looking ahead, I believe the companies are committed to enhancing that user experience and the quality of the holographic services. I think that's a no brainer, but also they plan to focus on improving the user interface with features such as RGB, background integration, 3D controls and better hologram manipulation. Also, they aim to improve the overall quality of the holograms, explore the implementation of two way call, quite simply make it all the more interactive.

Now the, the teams here are working towards defining the necessary standards of interfaces to support the widespread adoption of IMS data channel technology. And so quite simply ensure it can be effectively used in the future applications. And so there's some back, uh, I mean good news here and that is that IMS is already an existing technology.

IMS data channel just needs to be better aligned with 3G PP. And as a result, we can actually see, I think, uh, that major breakthrough. And so again, with calligraphy, we've been familiar with it since say Star Wars, and I think it would definitely warm the hearts of consumers to actually have a real world holographic service that they could just simply use on their 5G uh, smartphone.

But I think what's also important here is that it'll be useful for businesses at enterprises. I think, you know, holographic capabilities will be very important for things such as field, uh, field tech, uh, performance, uh, also, uh, quite simply being able to improve designs, uh, IE using it for virtual reality, uh, type capability as well as, you know, uh, lighting with metaverse type capabilities. And so that's important for r and d and other important business applications.

So this is really across the board. It's not just gonna be kind of the, oh, the, uh, whizzbang cool gizmo for consumers, which I believe will be the case, but it will also be something that businesses will receive. And our Fred AI, I believe can play a role here and how to make holographic, uh, technology all the better in terms of its quality syncing with audio and so forth.

Now, uh, turning to the next topic, which is a little more, I would say in the present, and that is recently the FCC released a release and mortar, uh, that is an ardo that introduced a relaxation that requirements for antenna is operating in the giga 80 gigahertz millimeter wave band or eban, which are used for microwave backhaul transmission. Now. So why is this important to, you know, the 5G ecosystem?

Well, first of all, this change has been discussed for some time and the Fixed Wireless Communications Coalition or FWCC has proved, I think, uh, instrumental in driving the FCC rule change to allow the use of smaller antennas. Now, with the release of this RO, it's possible to use lower gain 38 decibel relative to isotropic or DBI microwave antennas instead of the existing 43 DBI antennas. Now, the Eban wireless backhaul is typically used, uh, to connect cell sites in urban and downtown areas where sites require high capacity and short path, uh, lengths.

Also low gain radios are a very good fit for short wireless links and, uh, such typical use cases include backhaul for small cell deployments, hotspots, and pop-up events, uh, which I think is gaining, uh, more traction as a use case. For example, you know, music festivals we're also construction sites. And one I'm, uh, fond about is, uh, food trucks, uh, being able to use, you know, 5G capabilities to make the food truck service all the more better now to serve these eand use cases, Nokia unveiled the wave, its ultra broadband transceiver urban product, which is a high capacity 10 gig radio with an integrated antenna that's gonna be important.

Uh, and what I'm about to discuss now, it's designed to be, of course fully compliant with the new FCC regulations and that as such can deliver fiber like performance and is commercially available today. So this is, you know, today. And so that's impact I think will be felt, uh, over the next couple of quarters and uh, also into 2025 plus.

Now as a competitive advantage, it's so compact, this Nokia offering that it can practically fit in the palm of the hand, which as such can accelerate deployments and time to value. Now the Nokia offering is almost twice as small and lighter as competitive offerings as far as I can tell. Especially since these competitive offerings, we still require external antennas that could, uh, quite simply drive that solution weight up almost, uh, to a threefold level.

So I think this is something that Nok will be able to take advantage of certainly in the near term in terms of, you know, more deployment of, uh, the new offering. Now because the competing products are bigger and heavier, these solutions, uh, as the result require more installation infrastructure that includes enforced walls, additional supporting structures, as well as quite simply driving up site costs also can be more difficult, uh, to get the required permissions to deploy these relatively bulkier and heavier solutions at sites where visual impact is a key consideration. And the complexity of these solutions also increases the number of warehouse assets and spare parts required.

I think everybody's getting the idea here quite simply. It's less expensive. And uh, also I think this is important that, uh, what I'm finding is that Nokia advance its credibility and the microwave markets transport segment and also fulfilling customer energy efficiency objectives.

As we know, sustainability is a very important objective for all service providers, certainly the mobile service providers, but across the entire 5G ecosystem. And so by delivering a clearly differentiated project, uh, product that it immediately takes advantage of the FCC decision, I think, uh, that Nokia will quite simply gain more mind share and as such gain more market share as well. And that this I think, is good news for the 5G ecosystem.

And so with that, that's a wrap for today's, uh, 5G Factor and again, to our beauty, uh, viewing audience and listening audience. As always, thank you for spending time on the 5G Factor. And don't forget to bookmark, you know, the 5G Factor.

We'll be coming out with more episodes over the next few weeks, uh, all about, you know, exciting cutting edge developments and so forth. And with that, I'll look forward to seeing you all again and have a great 5G day. Everyone.