Regional wireless operator U.S. Cellular has within the span of a week inked a pair of multi-year deals to purchase equipment and software for its 5G network plans. The nation’s fifth-largest wireless operator tapped Ericsson and Nokia to supply standards-based 3GPP 5G New Radio (NR) equipment for a 5G network it plans to make available to customers sometime in the second half of this year.
U.S. Cellular is much smaller in terms of coverage area and customers but it’s keeping up with larger operators like AT&T, Verizon, T-Mobile US and Sprint, which have all announced plans to launch 5G commercial services during the next year. Ericsson and Nokia are also major 5G suppliers for the nation’s four largest operators.
The Chicago-based operator, which has roughly 5 million customers, didn’t disclose financial terms of the agreements, but in a recent Securities and Exchange Commission filing it noted that “deployment of 5G technology will require substantial investments in spectrum and U.S. Cellular’s networks to remain competitive.”
Boosting Network Capex
During a recent earnings call, the company noted that it plans to initially deploy 5G service using the 600 MHz spectrum band. U.S. Cellular’s capital expenditures tied to its network improvements will jump between 21 percent and 40 percent this year, coming in at between $625 million and $725 million. Company CFO Steven Campbell called it a “substantial increase in the pace of activity for our engineering organization,” according to a transcript.
While that level of investment pales in comparison to the roughly $23 billion AT&T plans to spend and nearly $18 billion Verizon has pegged for network improvements this year, U.S. Cellular’s push into 5G is notable because it underlines a market-wide update in network capabilities.
Rapid Deployment Plans
It’s unclear if Ericsson or Nokia will capture the majority of U.S. Cellular’s spend on 5G, but the agreement with Nokia is for five years and the Ericsson deal is being described as a “multi-year contract.” The deals also call for the vendors to provide radios, software, and services that will be required to build out the 5G network across the carrier’s footprint.
However, U.S. Cellular CTO Mike Irizarry’s prepared comments on the deals could indicate the direction U.S. Cellular is going, particularly in the early stages of deployment this year.
“We value our long-standing relationship with Ericsson and are impressed with their 5G-ready portfolio. We also know Ericsson is committed to meeting our deployment timeline in order to bring 5G to our customers in the second half of 2019,” Irizarry said about the Ericsson deal.
His prepared remarks on the Nokia deal were less effusive and time specific. “With Nokia’s end-to-end solutions we will have the ability to launch 5G-based services that will provide massive connectivity and enhanced IoT to our customers.”