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Verizon Seeks First Mover Advantage With Samsung 5G Phones

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In order to gain a first mover advantage in the 5G race, Verizon Communications Inc. (VZ - Free Report) has announced plans to launch commercial 5G smartphones in the market in first-half 2019 in collaboration with electronics firm Samsung. This offers a clear-cut edge to Verizon as one of its closest competitors — Apple Inc. (AAPL - Free Report) — reportedly aims to introduce 5G phones in 2020.

5G is billed as the technology of the future with faster download speed and seamless transfer of data. This revolutionary technology brings to the table three new aspects for the overall improvement of the sector, namely, greater speed (to move more data), lower latency (to be more responsive) and the ability to connect a lot more devices at once (for sensors and smart devices).

Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things (IoT) services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals. Moreover, 5G technology is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel wide proliferation of IoT.

According to data from research firm, IHS Markit, 5G is expected to enable $12.3 trillion of global economic output by 2035. In order to cash in on this huge revenue-generating potential, Verizon has decided to offer 5G-enabled smartphones by Samsung to customers who intend to join the bandwagon once the 5G mobility service is rolled out in early 2019.  

The Samsung 5G smartphones will leverage the flagship Qualcomm Snapdragon Mobile Platform with the Snapdragon X50 5G NR modem developed by QUALCOMM Incorporated (QCOM - Free Report) and antenna modules with integrated RF transceiver, RF front-end and antenna elements. These will help smartphones to immediately benefit from the speed and capacity of Verizon’s 5G Ultra Wideband network.  

Verizon had launched the world’s first commercial 5G broadband Internet service in select markets on Oct 1, 2018. Dubbed Verizon 5G Home, the service was initially made available in select regions in Houston, Indianapolis, Los Angeles and Sacramento. Verizon 5G Home service is built on the world’s first and only 5G Ultra Wideband Network, offering typical network speeds around 300 Mbps and peak speeds of nearly 1 Gbps with no data caps. It combines end-to-end fiber network with a large deployment of small cells for improved connectivity and millimeter wave bandwidth to realize the full 5G potential for capacity, throughput and latency.

Over the past three years, Verizon has systematically invested in 5G technology to gain a foothold in the industry. With the latest manoeuvres, the company expects to capitalize on the impending 5G boom and beat competitive pressure. It remains to be seen how AT&T Inc. (T - Free Report) reacts to this strategic move of Verizon.

Verizon has recorded an average return of 14.2% in the past year compared with growth of 1.1% by the industry while AT&T has declined 13.2%.

On its part, AT&T aims to launch mobile 5G service in certain areas of five cities — Houston, Jacksonville, Louisville, New Orleans and San Antonio as part of its 5G deployment in a dozen cities in 2018. These add to its previously announced seven cities of Atlanta, Charlotte, Dallas, Indianapolis, Oklahoma City, Raleigh and Waco. AT&T is further planning to bring mobile 5G service in parts of Las Vegas, Los Angeles, Nashville, Orlando, San Diego, San Francisco and San Jose in early 2019 to take the tally to 19 cities and will expand thereafter. Notably, AT&T’s 5G deployment will entail utilization of millimeter wave spectrum to deploy 5G in pockets of dense. In parts of urban, suburban and rural areas, the company aims to deploy 5G on its mid and low-band spectrum holdings.

Both Verizon and AT&T currently carry 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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