The U.S. telecom behemoth Verizon Communications Inc. VZ is currently conducting field trials for its upcoming 5G wireless network with its partners. The company is looking at mobile hotspot and fixed wireless for initial deployment of the next-generation 5G wireless networks in the U.S. in 2017.

Verizon’s CFO Fran Shammo told investment analysts yesterday at the company’s first-quarter 2016 earnings conference call. The CFO’s statement is in line with the company’s focus on building a fiber and wireless infrastructure in order to deliver mobile video efficiently.

The wireless giant, which was the first to deploy the 4G LTE (Long-Term Evolution) network nationwide, is initially testing equipment at 15GHz, 28GHz, 39GHz and 64GHz frequency bands for 5G network deployments.  The company’s partners in its 5G projects are Cisco Systems Inc. CSCO, Ericsson LM ERIC, Nokia Corp. NOK and Samsung.

Although several industry researchers have predicted that a full-fledged 5G network deployment will not start until 2020, Verizon expects some level of commercial deployment in 2017. Industry researchers expect the Asia-Pacific region to spearhead the global deployment of 5G wireless networks. However, neither South Korea nor Japan -- the two leading countries opting for 5G network -- are likely to start commercial deployment before late 2018.

Advantage of 5G

Verizon claims that its 5G network will provide a download speed of 1 Gbps (gigabit per second) which is 200 times the throughput of the currently available standard 4G LTE network. Latency period of data delivery will be in single milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless networks available these days. Therefore, 5G-enabled mobile devices are likely to last much longer than their 3G or 4G counterparts.

Additionally, superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of Internet-connected devices, popularly known as Internet of Things (IoT). According to a recent report by research firm International Data Corporation (IDC), worldwide spending on IoT is slated to grow at a 17% compound annual growth rate (CAGR) to nearly $1.3 trillion in 2019 from $698.6 billion in 2015.

The Bottom Line

The U.S. telecom industry has lately emerged as an intensely contested space where success thrives largely on technical superiority, quality of services and scalability. Thus, in order to stay ahead of competitors, existing players need to be constantly on their toes to introduce innovative products. At this juncture, we believe Verizon’s drive for 5G wireless network bodes reasonably well for its future growth. The stock currently carries a Zacks Rank #4 (Sell).

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