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Verizon (VZ) to Implement Virtualized RAN Network in 2017

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Per a report by FierceWireless, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) will implement virtualized RAN (vRAN) technologies in 2017. vRAN refers to a RAN (Radio Access Network) implementation where some or all baseband functions are separated from the remote radio unit and run as VNFs (Virtualized Network Functions) on commodity hardware. This approach results in multiple operational benefits including a significant reduction in costs, performance gains and scalability. Additionally, vRAN enables mobile operators to make their networks for upcoming 5G standard upgrades.

Ericsson AB (ERIC - Free Report) will be Verizon’s vendor to supply equipment for testing and deploying vRAN network. Research firm SNS Telecom has estimated that vRAN deployments will account for a market worth $2.6 billion by 2020. vRAN is essentially a step up from centralized RAN or coordinated RAN (cRAN), Verizon and Sprint Corp. (S - Free Report) are investing heavily in C-RAN architecture networking gear as part of its Next Generation Network densification plan. Further, Chinese telecom giant China Mobile Ltd. (CHL - Free Report) is investing extensively for cRAN networks.

Verizon is emphasizing on its upcoming 5G fixed wireless network to counter rising competition in the domestic wireless market. The company claims that its 5G network will provide a download speed of 1 Gbps (gigabit per second) resulting in 200 times the throughput of the currently available standard 4G LTE network. The latency period of data delivery will be in single milliseconds. Moreover, 5G technology is designed to be more power efficient than any other standard wireless networks available at the moment. Therefore, 5G-enabled mobile devices are likely to last much longer than their 3G or 4G counterparts.

Price Performance of Verizon

In the last one year, the stock price of Verizon has witnessed a growth of 17.43%, underperforming the Zacks categorized U.S National Wireless industry’s growth rate of 23.98% in the same time period. Nevertheless, Verizon has a very powerful diversified business model. In the wireless front, it will start initial deployment of the upcoming 5G network in 2017 while on the wireline front, the company is aggressively expanding its fiber-based footprint. In the digital media front, Verizon has become a major contender for the lucrative online advertisement business. We believe these are primary reasons behind the stock currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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