Verizon Communications Inc. has chosen Samsung Electronics Co. as a major supplier in the telecom giant's push to offer high speed internet over its wireless network, as the first commercial launches of fifth-generation offerings take shape.
Verizon's 5G network will launch in the second half of this year in Sacramento, Calif., before adding the service in other U.S. markets. It will use cellular antennas to beam high-speed internet into consumers' homes. Samsung will make network equipment for Verizon--including the small boxes that will sit inside each home, receiving the signal and translating it into Wi-Fi-- the companies said Wednesday.
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Financial terms of the arrangement weren't disclosed.
Telecom giant Verizon last year began 5G trials, focused on its home broadband service and free to consumers, in 11 U.S. markets from New Jersey to California. Samsung will provide network gear for Verizon's launch in Sacramento, where customers will be offered the option of purchasing the faster service.
Companies globally are investing billions of dollars in 5G despite continued debate over its ultimate uses beyond faster download speeds.
Government agencies and telecom operators expect broad 5G availability in many markets by 2020, and with it the potential for broader adoption of self driving cars, smart cities and internet connected robots.
"5G is a reality," said Kim Young-ky, president of Samsung's networks business, in an interview.
The home internet offering is an early step in the industry's transition to 5G technology, which will be significantly faster and respond more quickly to user commands than existing 4G networks.
To Verizon, it carries the potential to disrupt an industry currently dominated by cable providers like Comcast Corp. and Charter Communications Inc. Verizon said last month it would also be supplied by Ericsson AB, another 5G network equipment maker, for commercial launches in other U.S. markets.
South Korean technology giant Samsung, a small player in the network equipment world, believes its knowledge making products and components could give it an edge with telecom customers seeking to sell connectivity to a wider range of devices.
Samsung's network business generated some 2 trillion ($1.9 billion) to 2.5 trillion won in 2017, according to research firm Counterpoint Technology Market Research. It targets annual revenue of 10 trillion won by 2022, a Samsung spokesman said.
AT&T Inc. last month said it would launch a 5G trial site in Texas, after tests in other markets. Sprint Corp. and T-Mobile US Inc. have said they are working on nationwide 5G networks, targeting late 2019 or 2020.
The average U.S. consumer uses about five gigabytes of mobile data a month, Mr. Kim said. But after 5G becomes more ubiquitous in the next few years, he believes consumers will eventually use closer to 100 gigabytes monthly on new services such as virtual or augmented reality programs--or even from driverless cars that will require greater data speeds to rapidly process traffic conditions.
About two years ago, Samsung combined about 1,000 workers from different divisions including handsets, network and its central research-and-development group, to create a "Next Generation Communications Business" team dedicated to 5G.
"With 5G, it's going to be expanding beyond your phone," Kim Woo-june, a senior vice president of Samsung's Next Generation business team, said in an interview. The industry's first mobile phones with 5G capabilities aren't likely to debut until 2019, he added.
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(END) Dow Jones Newswires
January 03, 2018 09:14 ET (14:14 GMT)