- Wall Street analyst Craig Moffett called out “Verizon’s C-band problem” in a note for investors this week
- “There are more holes than cheese in the C-band network,” Moffett said, citing Verizon’s dismal score in Opensignal’s latest 5G Availability report
- Verizon responded to Fierce’s questions about those claims, saying Opensignal’s “Availability” measure is flawed in its basic methodology
To hear well-known Wall Street analyst Craig Moffett tell it, Verizon spent a mind-boggling $52 billion on C-band spectrum which “isn’t very good” and fixing its 5G coverage problem is going to require even more money – “lots of money.”
That was one of the hottest and most publicized take-aways from Verizon’s Q2 earnings call earlier this week. While Moffett described Verizon’s overall wireless Q2 results as “fair,” the gist of his report focused on “Verizon’s C-band problem,” one that he said will take a whole lot of densification to rectify. And densification, for the record, isn’t cheap.
“Put simply, C-band isn’t very good spectrum,” he said.
His C-band concerns are not new. Moffett had voiced similar concerns well before the C-band auction ended in February 2021, saying it didn’t propagate very well, i.e., wouldn’t penetrate walls and windows. Those kinds of concerns certainly didn’t keep C-band auction prices from soaring to “seemingly unimaginable” levels, he noted.
Verizon wasn’t the only one who spent big on C-band. With clearing and relocation costs, carriers altogether spent nearly $100 billion for the 280 megahertz of C-band spectrum that was auctioned off. But Verizon led the charge, perhaps convinced the C-band would be its last best option for mid-band 5G spectrum. (So far, that seems to be the case.)
Opensignal’s 5G report
Verizon’s C-band challenges returned to the limelight when Opensignal released its most recent Network Experience report a few weeks ago.
“Remarkably, Verizon’s ‘5G Availability’ has actually fallen to a level now below 8%!,” Moffett commented. That means Verizon’s 5G customers are almost never actually connected to the 5G network; specifically, they’re in range and connected just 7.7% of the time.
That compares to Opensignal’s 5G Availability score of 67.9% for T-Mobile.
AT&T is another carrier that relies heavily on C-band spectrum, but it also bought licenses at 3.45 GHz, which is slightly lower than 3.7 GHz. AT&T’s 5G Availability score was 11.8% by Opensignal’s measurement.
“The problem is more acute for Verizon than AT&T not because AT&T’s availability is a little less bad but instead because Verizon has always based its value proposition on having the nation’s best network,” Moffett said. “That’s a tough sell when your 5G customers are only connected to 5G 7.7% of the time. T-Mobile, with better pricing as well, is pulling away.”
What gives? Is C-band spectrum, at 3.7 GHz, that much worse than T-Mobile’s 2.5 GHz spectrum? T-Mobile didn’t compete in the C-band auction largely because its trove of 5G mid-band spectrum came via its $26 billion purchase of Sprint, whose predecessors at Clearwire did a lot of the heavy lifting in getting its 2.5 GHz licenses.
Micah Sachs, VP of Syndicated Analysis and Insights at Opensignal, said spectrum is part but not all of the story.
“Just as important are operator’s traffic management choices. 5G availability measures the percentage of time Opensignal users are on 5G – not the amount of time they could be on 5G,” Sachs told Fierce via email. “In practice operators optimize their traffic mix between 5G and 4G based on traffic type, spectrum availability and signal quality.”
Verizon’s stance on C-band
Naturally, Verizon defended its purchase of C-band spectrum.
Moffett mistakenly equates Opensignal’s “Availability” measure – “a flawed measure that does not accurately reflect the customer experience” – with spectrum propagation, said Verizon network spokesperson Karen Schulz.
“The Massive MIMO technology with a massive number of antenna elements along with conducted power allows us to penetrate building materials. All carriers use similar technology,” she said, noting there’s not a whole lot of difference in path loss between 2.5 GHz compared to Verizon’s C-band frequencies.
Verizon’s network is designed to start on 4G and move data sessions to 5G only when the performance of the application or use case requires “the robust performance characteristics associated with 5G,” she said. “The applications used by Opensignal run in the background when phones are in idle mode, so Verizon’s network – by design – does not move those connections to the 5G network.”
She added that a single factor, like the “Availability” metric by Opensignal, “hardly defines the experience for Verizon customers,” which is evident in the fact that according to Opensignal, Verizon provides the Best 5G Video Experience, Best 5G Live Video Experience, Best 5G Games Experience and Best 5G Upload Speeds.
Third-party reports
According to Verizon, RootMetrics is the most scientific of third-party test vendors and it just so happens to show Verizon offers the best network experience.
Opensignal uses crowdsourcing data versus the drive tests that Ookla’s RootMetrics conducts, and both have come under fire for different reasons, noted Bill Ho, analyst at 556 Ventures.
“It’s been going back and forth” between the carriers and the third-party test firms they use and who comes out on top. “Whatever is favorable to that carrier, they’ll take and broadcast,” he said.
Coverage vs. capacity
Critics often bash Verizon for its aggressive purchase of licenses for millimeter wave, which offers super high speeds but is notorious for poor propagation. However, it bought those licenses because nothing better was available at the time, said industry analyst Roger Entner, founder of Recon Analytics.
The same reasoning applies to Verizon’s acquisition of licenses for 3.5 GHz CBRS and C-band – “there was nothing else available,” he said.
“Is the respective spectrum the best spectrum that you could imagine? No, not at all. But it’s the best that you have,” Entner said.
Specifically with C-band, it offers a lot of contiguous spectrum and it works reasonably well – even better with Massive MIMO, he said.
“The thing is, 3.7 is not your coverage layer. It’s your capacity layer. You’re only going to build out selectively to where people are,” Entner said. “You’re not going to build this out for the cows and the buffalo and the wolves.”
Verizon still has a ways to go before its C-band is fully deployed. During its earnings call this week, Verizon CEO Hans Vestberg said C-band has been deployed on almost 60% of its planned sites and nearly half of its traffic is now running on C-band, up from 36% a year ago.
Next up: Continued expansion of C-band in suburban and rural areas, so a few cows might get to see some C-band after all.