Verizon To Acquire Bluegrass Cellular

Verizon is planning to acquire over 200,000 subscribers and some assets from Bluegrass Cellular, a network operator in central Kentucky. In comparison to recent mergers and acquisitions in the cellular industry, this latest acquisition is small. Bluegrass subscribers represent less than 0.1% of subscribers in the U.S. market.

Earlier this year, I was surprised to see a company as small as Bluegrass on the short list of only eight carriers that support the latest Apple Watches. I wonder if Bluegrass only made the list because an acquisition by Verizon was in the works.

The planned acquisition will have to be approved by the FCC. Verizon expects the deal to close in late 2020 or early 2021.

Verizon’s Massive 5G Expansion

Today, Verizon announced a huge expansion of its 5G service.

More millimeter wave

According to today’s press release, Verizon added ultra-fast, millimeter wave 5G service to parts of 19 cities, 19 stadiums, and 6 airports. In total, millimeter wave service from Verizon is now available in parts of 55 cities and 43 stadiums.

Nationwide, low-band 5G

Verizon also announced that it’s now using dynamic spectrum sharing (DSS) to offer slower, low-band 5G to over 200 million customers.1

With DSS, when customers move outside Verizon’s 5G Ultra Wideband coverage area, their 5G-enabled devices will remain on 5G technology using lower bands of spectrum.

According to Verizon’s coverage map, the low-band 5G service is available in most densely populated areas, but only a minority of the U.S. by land area. Here’s a screenshot from the map today:

Verizon coverage map showing areas with 5G coverage

I’m writing this post from an area allegedly in Verizon’s 5G coverage profile. My Galaxy S20 5G phone is still showing a 4G connection.

Carrier aggregation

Today’s press release also includes a boast about Verizon’s recent achievements with bleeding-edge carrier aggregation technology:

Using carrier aggregation, a technology that combines multiple channels of spectrum to provide greater efficiency for data sessions transmitting over the wireless network, Verizon combined eight separate channels of mmWave spectrum to achieve record-setting multi-gigabit speeds in parts of some cities. Using this technology, customers will see double the download speeds they have historically experienced on 5G Ultra Wideband, with peak speeds up to 4Gbps possible in some locations.

Verizon Expands LTE Home Internet

Verizon just expanded its LTE Home Internet. The service is now available in parts of 189 markets, including parts of every state except Alaska and Vermont. You can check availability in your area on Verizon’s website.

Verizon’s LTE Home Internet could be a good option in places where conventional broadband is not available. The service has no monthly usage limits, and Verizon says speeds will typically fall between 25Mbps and 50Mbps.

Pricing

Current Verizon mobile customers can get service for as little as $40 per month.1 For those who don’t already have Verizon service, LTE Home Internet is available for as low as $60 per month.2

A special router is needed to use the service. Verizon sells the router for $240 and offers it through a $10 per month payment plan.

Most Verizon Subscribers Are On Unlimited Plans

On September 15, Hans Vestberg, Chairman & CEO of Verizon, had a public discussion with a Goldman Sachs analyst. A transcript of the conversation is available here.

One bit from the transcript stuck out to me:

Well over 50% of our customers are on unlimited. That means that the rest is on metered plan. That is also a way for us [last year] where we took the unlimited down to a basic unlimited in order to get our metered customers coming into unlimited because, ultimately, unlimited is unlimited. And then we start moving them up in the above and beyond unlimited, which will give you also the experience of 5G.

Two interesting points here:

  • Vestberg confirmed that unlimited plans dominate Verizon’s subscriber base. Since unlimited plans tend to be more expensive than metered plans, I expect the large majority of Verizon’s revenue from mobile subscriptions comes from unlimited plans.
  • Vestberg referenced the no-longer-offered Above Unlimited and Beyond Unlimited plans. I think he meant to reference Verizon’s current, premium plans (Play More Unlimited, Do More Unlimited, and Get More Unlimited).

Verizon Expands Connected Device Plans

Today, Verizon announced changes to its connected device plans. Verizon is now offering two add-on plans for mobile hotspots and tablets. Most subscribers on Verizon’s unlimited plans are eligible for the add-ons.

  • Unlimited – $20 per month
  • Unlimited Plus – $30 per month

Subscribers on the Do More Unlimited and Get More Unlimited plan can get a 50% discount on either plan.

Here’s a graphic from Verizon’s website:

While the graphic suggests there are two plans, I think its easier to make sense of the new offerings as four different plans:

  1. A $20 hotspot plan
  2. A $20 tablet plan
  3. A $30 hotspot plan
  4. A $30 tablet plan

Hotspot plans

The hotspot plans really shouldn’t be called “unlimited.” On the $20 plan, subscribers only have 15GB of regular-speed data. On the $30 plan, subscribers have 30GB of regular-speed data.

Verizon throttles customers that use all of their regular-speed data. I expect Verizon is sticking with its old policy of throttling to 600Kbps. At that speed, mobile hotspots lose most of their usefulness. I would find working on a laptop with a 600Kbps connection extremely frustrating.

Tablet plans

The tablet plans have limited allotments of “premium data” (15GB on the $20 plan and 30GB on the $30 plan). While subscribers have premium data available, they’ll have high-priority connections during periods of network congestion. After premium data allotments run out, subscribers may experience especially slow speeds if Verizon’s network becomes congested. Fortunately, congestion is rare in most areas.

5G

The Unlimited Plus plan includes unlimited 5G Ultra Wideband data on both tablets and hotspots.1 While that sounds great, it’s rarely meaningful in practice since Verizon’s 5G coverage is extremely limited. I’m guessing the unlimited 5G data will be dropped from the plan when Verizon’s 5G coverage expands and the 5G network becomes more congested.

Verizon Plans To Acquire Tracfone

This morning, Verizon announced plans to acquire Tracfone. The planned deal will involve an acquisition of the Tracfone brand and a bunch of subsidiary brands like Total Wireless, Straight Talk, and SafeLink.

At the moment, these brands have about 21 million subscribers. The deal is slated to be worth six or seven billion dollars (or about $300 per subscriber):1

The consideration for the transaction will include $3.125 billion in cash and $3.125 billion in Verizon common stock, subject to customary adjustments, at closing. The agreement also includes up to an additional $650 million in future cash consideration related to the achievement of certain performance measures and other commercial arrangements.

Along with the subscribers and brand names, Verizon is acquiring Tracfone’s roughly 850 employees and Tracfone’s retail presence in over 90,000 locations.2 Verizon expects the deal to close in the second half of 2020.

Reflections & open questions

Tracfone and Verizon will need to pass through some regulatory hoops before the deal is official. If the acquisition goes through, it will cause a massive shift in the industry. Tracfone’s user base makes up about 5% of the U.S. wireless market and a major share of the prepaid market.3

At this time, I’m guessing Verizon will continue to operate several Tracfone brands rather than consolidate Tracfone subscribers under the Verizon brand name.4 Years ago, a Verizon executive discussing Verizon’s lackluster number of prepaid subscribers stated the following:5

“Our retail prepaid is above market. We’re really not competitive in that environment for a whole host of reasons and it’s because we have to make sure that we don’t migrate our high-quality postpaid base over to a prepaid product…Quite honestly, we use the Tracfone brand as our prepaid product.

About 13 million of Tracfone’s subscribers already have service running over Verizon’s network.6 I don’t know what will happen to the 8 million subscribers on other networks. I’m guessing Verizon will try to transition most of them to the Verizon network, but Verizon may sell the subscribers to other carriers.

When the merger between Sprint and T-Mobile closed, I wrote:

I continue to think the merger is going to be bad for consumers over the long term.
I’m guessing the merger between Sprint and T-Mobile contributed to the viability of Verizon’s Tracfone acquisition. As with the merger, I’m not optimistic about the effects this new acquisition will have on consumers in the long term.

Verizon Updating Unlimited Plans

Yesterday, Verizon announced a set of updates to its postpaid unlimited plans. The new plans are slotted to release on August 20th. All plans will keep their current names and monthly prices. Existing Verizon customers will have the option to switch to the new plan structures or stick with the old structures.

Changes

All of Verizon’s next generation of postpaid unlimited plans will allow 720p video streaming. While details are vague so far, it looks like customers will have to enable 720p streaming in their plan settings. I expect streaming will default to 480p by default.

Verizon has also changed its approach to Premium Data. Going forward, all plans other than the Start Unlimited plan will offer 50GB per month of Premium Data.

Plan by plan changes

Start Unlimited

Positive:

  • Video streaming up to 720p (must opt in, previously 480p)

Negative:

  • Disney+ now included for 6 months (previously 12 months)

Play More Unlimited

Positive:

  • +25GB Premium Data (now 50GB)
  • Disney+ included indefinitely
  • Hulu and ESPN+ access added

Negative:

  • 720p video streaming now requires opting in
  • Apple Music now only included for 6 months (was indefinite)

Do More Unlimited

Positive:

  • Video streaming up to 720p (must opt in, previously 480p)
  • Smartwatches and HumX now eligible for 50% connected device discount
  • +100 GB Verizon Cloud storage (now 600GB total)

Negative:

  • Disney+ now included for 6 months (previously 12 months)

Get More Unlimited

Positive:

  • Hulu and ESPN+ access added
  • Smartwatches and HumX now eligible for 50% connected device discount
  • +100 GB Verizon Cloud storage (now 600GB total)

Negative:

  • -25GB Premium Data (now 50GB, previously 75GB)
  • 720p video streaming now requires opting in

Verizon’s 5G Mobile Hotspot & Tethering Policies

Verizon’s higher-end unlimited plans come with monthly allotments of full-speed 4G hotspot data.

  • Play More Unlimited – 15GB
  • Do More Unlimited – 15GB
  • Get More Unlimited – 30GB

Subscribers that burn through all of their full-speed 4G data can continue to use more hotspot data with a 4G connection throttled to a sluggish 600Kbps speed.

Verizon doesn’t prominently advertise it, but the company has separate policies for 5G hotspot data. Here’s a bit from a section of Verizon’s website that gives additional details about one of the carrier’s unlimited plans:1

Unlimited 5G Ultra Wideband Mobile Hotspot

An unlimited 5G Ultra Wideband mobile hotspot means your smartphone becomes an ultra-fast and reliable Wi-Fi connection for your other devices. Service available in select locations and requires a 5G capable device.

Yesterday, I was exploring my Verizon online account for the Play More Unlimited plan and found this:

Screenshot of Verizon account interface showing a 5G hotspot allotment

Verizon is currently allowing 50GB of full-speed 5G hotspot use each month on the Play More plan. After 50GB of use, speeds are throttled to 3Mbps. While 3Mbps isn’t a great speed for hotspot use, it’s still fast enough that most people could browse the internet and do work on a laptop without overwhelming frustration.

I’m guessing the Do More and Get More plans have the same 50GB allotment, but I’m not sure. It’s odd that Verizon’s 5G hotspot allotment on the Play More plan is so much larger than the regular (4G) allotment.

I wonder if the large allotment is a promotional thing. Will we see the allotment shrink as more subscribers get 5G-compatible phones?

Opensignal’s Report on U.S. 5G Performance – No Big Surprises

Earlier this week, Opensignal released a report on the performance of 5G networks in the United States. Opensignal’s report puts some numbers and data behind two things that were already clear:

  • T-Mobile is destroying the competition in terms of 5G coverage, but T-Mobile’s 5G isn’t very fast
  • Verizon’s 5G is outrageously fast, but the coverage profile is terrible.

Opensignal primarily collects its performance data by crowdsourcing data from tests that run in the background on regular people’s phones. It looks like the company restricted the data underlying this report to include tests run from 5G-compatible phones.

Speeds

Verizon destroyed the competition with an average 5G download speed of 495Mbps. The other major networks in the U.S. had 5G download speeds averaging around 50Mbps. Verizon’s dominance in download speeds is due to the company’s focus on rolling out millimeter wave 5G.

Coverage

Unlike Verizon, T-Mobile has focused on deploying sub-6 5G. This type of 5G is great for covering large areas, but less impressive for delivering high speeds. Unsurprisingly, T-Mobile dominated in terms of 5G availability. According to Opensignal’s data, T-Mobile subscribers were able to access 5G 22.5% of the time. Verizon did about fifty times worse with an availability score of 0.4%.

While 0.4% is low, it’s still a better availability score than I would have predicted for Verizon. I wonder if Opensignal’s crowdsourcing approach might lend Verizon’s availability scores a leg up. If living near a Verizon 5G deployment makes a Verizon customer more likely to purchase a 5G phone, selection bias can creep in and cause Opensignal to overestimate Verizon’s actual 5G availability.

Silly press releases

Following Opensignal’s release of its report, T-Mobile published a press release. The company bragged about the network’s excellent 5G coverage without mentioning that the network got demolished in the download speed results.

Verizon published its own press release bragging about ludicrous download speeds. Verizon’s awful 5G availability score was not mentioned.

Download Speed Experience – 5G Users

Opensignal’s report included a metric called Download Speed Experience – 5G Users. The results for this metric were calculated by looking at users with 5G-compatible phones and tracking their average download speed even at times where they did not have 5G connections. In some sense, this single metric does some accounting for both 5G speeds and 5G availability.

Verizon and AT&T tied for the top spot:
Results graph showing AT&T and Verizon tied for the top spot

The metric is interesting, but I don’t think it quite captures how users will feel about the quality of their download speed experiences. The marginal value of a 10Mbps boost in download speeds that moves a subscriber from 5Mbps to 15Mbps is much greater than the marginal value of a 10Mbps boost that moves a subscriber from 500Mbps to 510Mbps. Collapsing a distribution of download speeds into a single, average download speed masks this reality.

Verizon’s Revamped Shared Data Plans

Verizon used to offer several different plans with shared pools of data. The carrier has now simplified its offerings with only two shared data plans. Both plans include unlimited minutes and texts. The cheaper plan offers 5GB of shared data. The more expensive plan offers 10GB of shared data.

For customers who enroll in paperless billing and Auto Pay, The 5GB plan costs $30 per month plus $25 for each line. The 10GB plan costs $40 per month plus $25 for each line.

Customers that don’t enroll in Auto Pay and paperless billing will be charged $10 more every month on each line.

Examples

  • Two lines on the 5GB plan would cost $80 per month with Auto Pay and paperless billing. That would include the $30 base charge for the plan and two $25 line-access fees.
  • Three lines on the $10 GB plan would cost $105 per month with Auto Pay and paperless billing (a $40 base charge plus $75 in line-access fees).