Verizon's 5G network projected to cost $18 billion

Since unlimited data plans were introduced back into the fold by the big two - Verizon and AT&T - overall data consumption increased twofold, putting immense pressure on the networks, especially on Big Red's, as the most popular US carrier. Recently, Verizon reacted by adjusting its unlimited plans into tiers, with the cheaper one offering "just" 480p video streaming on phones, and HD on tablets. According to Verizon's CEO Lowell McAdam in a recent interview: "You can give a different quality of video. Most people on a cellphone can't tell the difference between 480 and 1080p. You give customers that sort of option."

Fair enough, though the likely reason behind giving the freedom to choose between high-res and regular streaming, depending on the price, is the hope that customers will chose the more affordable option, and reduce the strain on Verizon's network that would otherwise require more and more investments to keep up with the demand, slowing speeds for everybody in congested areas and peak times.

Verizon also laid out the investment into the upcoming 5G (r)evolution - upgrading its network to usher in augmented reality, connected cars and the like, will cost it the whopping $18 billion in capital expenditures over the longer run. Moreover, the carrier is gunning for $10 billion in cost reductions over the next few years, partly from cuts and process improvements, and partly from avoiding unnecessary expenditures (like iPhone promotions).

source: CNBC


1 Comment

1. bambamboogy02

Posts: 842; Member since: Jun 23, 2012

Makes sense. When prices get lowered, your cash coming in (Revenue) is lower. So where can you get money for investments? Save. Now this does have a negative impact in the eyes of the end user (Me/You), of limiting streaming quality, but it's better than raising prices. When they do their projections and such in the beginning of their fiscal year, they probably didn't take into account lowering prices, and the impact on revenue it will have for investments till after they already budgeted everything out. Now to keep up with the price competition, they lowered prices, took a hit on revenue, but still need to invest in their network. My thought process says, it's better to reduce the stream limit to reduce costs than to raise prices. (This is coming from someone who owns 2 lines with Grand-Fathered unlimited data plans who also gets throttled with the same things. And now I can't even do a device payment plan anymore on this plan. Even though the original $20 price hike for the data plans was for enabling device payments plans. )

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