Verizon has positioned a new 5G offering as an industry disrupter, but investors have 'low expectations'
- In a Morgan Stanley survey of over 50 telecom investors, analysts said investors had "low expectations" for 5G home broadband.
- The note said 45% of survey respondents predicted the Verizon 5G Home would have less than 100,000 subscribers by the end of 2019.
- That stands in stark contrast to the way Verizon has positioned the offering as a cable disrupter.
Investors aren't betting on big results from Verizon's so-called cable-disrupting 5G offering.
In a Morgan Stanley survey of over 50 telecom investors, analysts said investors had "low expectations" for the 5G home broadband offering that launched at the end of 2018.
The note said that 45% of survey respondents predicted the Verizon 5G Home would have less than 100,000 subscribers by the end of 2019. Another 27% said there would be between 100,000 and 200,000.
Verizon began offering its 5G Home service to customers in four initial markets - Houston, Indianapolis, Los Angeles, and Sacramento - in October, choosing cities where Verizon is not the incumbent carrier, meaning there is room for growth in the market.
The service is separate from 5G mobile service, which is yet to launch from any of the wireless providers. It's instead a home broadband solution. While cable companies provide fixed-line broadband to homes, or internet delivered through cables that connect to a modem, 5G fixed-wireless broadband uses radio signals and the installation of an antenna outside of the home to deliver internet.
Offering fixed-wireless broadband may be a way for telcos to fight back against cable companies, which are increasingly stealing broadband customers away. Bolstered by a strong economy and a growing necessity for a fast, persistent, in-home internet connection, analysts see continued growth opportunities for cable.
Verizon itself has positioned its 5G Home offering as a cable disrupter, stating that "Verizon 5G Home is ideal for consumers looking to 'cut the cord' or upgrade from their current cable service," in a release in September.
The company has so far provided scant details on the number of subscribers it's added since its launch. Verizon declined further specifics about the service when contacted by Business Insider.
But according to Cowen analysts, at an analyst event in November, Verizon management said about half of the customers who signed up for 5G Home were not previously Verizon customers, which was surprising since there was a notable discount for Verizon customers.
Verizon did not share underlying details about what type of companies they were stealing share from, whether that was cable companies or telcos that offer service in the area, according to the analysts at Cowen.
Based on this note from Morgan Stanley, the telecom investing community does not expect to see significant disruption from 5G Home.
