Verizon CEO: Network Virtualization Is 60% Complete

Verizon’s journey to transform and virtualize its various networks under a common, unified framework is 60% complete, CEO Hans Vesterg said at a UBS investor conference. The journey hasn’t been easy, he explained, because Verizon’s network assets were previously divided among wireline and wireless, and new software layers are being added to blend operations onto a single platform. Verizon’s journey to transform and virtualize its various networks under a common, unified framework is 60% complete, CEO Hans Vesterg said at a UBS investor conference. The journey hasn’t been easy, he explained, because Verizon’s network assets were previously divided among wireline and wireless, and new software layers are being added to blend operations onto a single platform. “We built a virtualized intelligent edge network, which is basically we took four different networks and we made one” with a unified transport and single network core, Vestberg said. “A lot of that has been plumbed all the way from the data center to the access point. We want to have commonality of all the equipment and how we deal with it. We are 60% through that, and that’s why we see so much efficiency in our capex.” Verizon’s largest competitor, AT&T, has also been on a network transformation journey and has often stated its goal to virtualize 75% of its network functions by 2020. Verizon’s organizational structure and network position has changed more during the last 12 months than at any other time during its 19-year history in wireless communications, Vestberg said. Verizon Edge is a “horizontal network” that will deliver a better return on investment and “we’re doing more than we’ve ever done with our capital expenditures,” he added. During the course of 2019, the operator has launched 5G mobile service in 18 cities as well as 16 stadiums and still plans to expand to 30 markets before the end of the year, according to Vestberg. Verizon decided to initially deploy 5G on millimeter-wave (mmWave) spectrum in dense urban areas because it’s 4G LTE network is robust, and relying on high-band spectrum for broad 5G coverage would be “an inferior 5G experience,” he said. “You will see us continue next year and when the market is ready we will also be ready with the coverage for the country,” Vestberg said. “We just want to see that when we launch 5G coverage for the nation it’s going to be better than our 4G.” When Apple, as is widely expected, launches a 5G capable iPhone in late 2020, competition for 5G will heat up considerably, according to Vestberg. Much of the 5G market share will be determined during the first 24 months of widespread commercial availability, but after that “it’s pretty static,” he said. Vestberg also trumpeted the approaching deployment of dynamic spectrum sharing (DSS), which will allow the carrier to operate multiple networks across different spectrum bands in an automated manner. Verizon, Ericsson, and Qualcomm successfully demonstrated the use of DSS last month and it will be commercially available to Verizon in the first half of 2020, Vestberg said. “Today if I want to run 5G on any spectrum I need to dedicate the spectrum to those phones. That’s very clunky when you want to fall back” on the previous generation 4G LTE network, he explained. Vestberg also spoke at length about the partnership it announced last week with Amazon Web Services (AWS) to marry its 5G network with the cloud provider’s Wavelength edge compute platform. The deal calls for the Wavelength service to be ported on Verizon’s data centers, thereby creating a Verizon Edge offering that can deliver compute with latencies down to 20 milliseconds, he explained. Mobile edge computing “was one of the first things I thought about in 5G,” he said, because the performance of 5G is largely defined by low latency, high throughput, and greater security at the edges of the network. “I realized that if you can establish a cloud business at the edge, you can actually get a new way of performing on the cloud,” he added. Verizon talked to the “normal suspects because we decided we are not a cloud company — we are not going to build that,” Vestberg said. “In 2020 we’re going to open more centers because the distance between the user and the application developer is important.” He described it as a “sophisticated” effort with many moving parts. “We have the network, we have the distribution, and we have the brand. [Amazon doesn’t] have these three in this 5G space,” but “of course, they have cloud, they have all the developers,” Vestberg said. “That’s what came together and we can now develop new services together.” The partnership will enable Verizon to earn “revenue we have never had before based on the infrastructure we’re already building,” while AWS and its developers “are getting new performance [and] cloud processing applications,” he explained. Vestberg hinted that further development will come via private uses of Verizon Edge for enterprises and he said the operator is “already in discussion with basically all the top companies in this country.” The foundational aspects of Verizon Edge are being built today but the operator doesn’t anticipate to earn “meaningful revenue” from mobile edge computing until 2022, he said.