Hello, and welcome to the Fall sell side analyst meeting. Great to have you all here. And first of all, it's the Veterans Day today. So anyone out there that have been serving, thank you so much for serving. It's a big day, and it's an important piece of our work being here at Verizon, working with the veterans, working at Verizon.
So anyhow, today we're going to talk a little bit about where we are in our strategy execution. I have a couple of friends with me here on stage, but I will start by kicking off and going over a little bit what we have done and where we're heading. I'm going to use a couple of slides you have seen before, but it's also important to see that how we're now executing towards our strategy. We started some 2 years ago what we call the Verizon 2.0 transformation. And one of the fundamentals of that was, of course, network as a service.
And we started with Intelligent Edge Network almost 3 years ago, which is the base for our strategy. Then we have a couple of fundamentals around that, that we have been transforming to. First of all, putting the customer first with the changes we have done in go to market, but also the way we're addressing the markets. Secondly, a lot around the innovation and, of course, taking a lot of possibilities in 5 gs on top of that network as a service. Then we have the other fundamentals that always has been in the genes of Verizon.
That was the financial discipline, our execution strength and actually see that we have a strong balance sheet and a great cost efficiency. And finally, we wanted to build this purpose driven culture as well as a company. These were the 4 elements around our networks as service that we kicked off for more than 2 years ago. It came down to 5 different transformation streams, all the way from the network transformation, our new go to market and our new reporting, our brand transformation, our process transformation that we have done internally and finally, our culture transformation. We are somewhere in the middle of all of that, but we definitely can see that this is now the foundation for us that we see we can have our ambition, which is a GDP plus with a strong cash flow and earnings.
That's our vision and our target going forward. And today, we're going to talk a little bit where we are on that. On top of this strategy, of course, we outlined our 5 gs strategy. And just want to reiterate, we want to build a network service. We want to build 1 network with multiple business cases.
All the way from the data center to the edge of the network, we have Harmony. We have the same type of technology and products. We have come quite far in that. Some work still left, but a lot of efficiencies has been brought out. But more important, has it created an opportunity for new businesses?
And some of them we see on this slide, the 3 different 5 gs use cases we have: 5 gs Mobility, the 5 gs Fixed Wireless Access and the 5 gs Mobile Edge Compute. All of them, we have been executing on for the last 2 years. And as I said fairly recently, 5 gs just got real. We are in the moment of start executing and taking benefit from it. And if we look back during this year and looking on our execution, all our execution has been based on that plan that we outlined 2 years ago with a network of service, seeing that we think about our 4 stakeholders in our execution and taking part of the growth opportunity we see as a company.
Ultimately, we came in February in our Investor Day, and we said this is what we're going to do in 2020. And we can just go over the list of things we committed to. And then we need to remember, this is a year that is unprecedented in all senses with the pandemic, with economical downturn, and we can look at the list and I look at my team, we're basically executing on everything we said. We're on track when it comes to the 2.0 transformation. If that's from a customer point of view, the constant innovation that we want to do with new products.
And then when it comes to our 5 gs deployment, we are on plan or actually on target on all of them. We have done the DSS or the dynamic spectrum sharing, the nationwide 5 gs. I said all year along, we will launch it when it's commercially the right moment. And I think we all understood when that was. That was at the launch of the 5 gs phone from iPhone, from Apple.
So that was a very important moment for us. At the same time, we launched 55 cities on ultra wideband so far this year, and we are up to 60 before year end. And that's, of course, the capacity and experience layers that we're building right now. And we're so pleased that the ecosystem is following us. And the last was, of course, that Apple in their 5 gs has ultra wideband in all of them.
Seeing the benefit of the experience and the capacity layer we have built in the ultra wideband. We also said we're going to have 10 cities on 5 gs Home by 4 year end and a new CP that is coming out that came out in October. We are on track for that as well. And finally, we said 10 mobile edge compute centers together with Amazon this year. Until just a couple of hours ago, we had 5.
Now we have 7. And we have 3 to go, but we're on track for that as well, building products and solutions that nobody else has in the world and actually leading the market. Finally, when it comes to our financials, despite the COVID impact, we have been performing very well this year. Based on our strength in our customer relationship, but also the network performance as well as our brand. And I will come back to the financials.
Ultimately, we had also said we want to be a responsible business. And this year, we have made more commitments and more actions in that area than we've ever done before. If that is with climate or if it's with supporting small and medium businesses, we have done it at the same time as we have done the execution. So if we look backwards, we have done everything we said since we rolled out Verizon 2.0. And if you look at the financials, first of all, important for us to see that our core business continue to be strong.
One of those measurements is, of course, the service revenue, the wireless service revenue. We have been constantly innovating in our customer interactions. If that is with partnership or our mix and match, that has actually paid off well. As you can see on this slide, we have been constantly growing our service revenue except in the Q2 this year, which had the impact of the COVID-nineteen. Already in Q3, we're back to growth.
And as Matt said on our 3rd quarter earnings, we expect to be about 2% in the 4th quarter. So that's really an important growth piece of our strategy, continue with our core business where we have the best 4 gs network in the nation, at the same time building the opportunity in 5 gs. Looking also at our earnings our EPS during the year. Compared to last year, after 9 months we're basically flat, we're actually up $0.01 compared to the previous year, 2019. The Q2, of course, we had a huge impact on the COVID-nineteen, but now in the Q3 back and as we did in the Q3, we updated our guidance.
So now it's from 0% to plus 2% EPS growth compared to last year. So clearly, we are executing. At the same time, we're doing everything from the network point of view, custom point of view, brand point of view. Our financials continue to be sound and strong. Finally, on the cash flow, I can only say the team has done tremendous work on the cash flow this year.
As you can see, our cash flow growth of the 9 months is quite astonishing, generating SEK 32,500,000,000 and actually seeing that we are putting our balance sheet in a very strong position. And as Matt and I have told you many times, we wanted to get back to the metrics or the financial metrics as we had pre Vodafone, and we are in those areas right now. So very good work on our treasury, but also on the cash generation from our business units. So this is creating a very good momentum for us going into 2021 with all of that. I've talked quite a lot about the growth.
We want to find the growth, and we have actually been seeing that in our service revenue. But I also outlined a couple of times both in the Q2 and the Q3 talking about the different vectors of growth. The base for doing that is, of course, our network as a service at scale that we have built right now to see that we can build businesses on top of it that can add to that GDP plus growth that we're looking for. So let me talk through a couple of those vectors and where we are. These are the 5 vectors of growth that we have in front of us, and we are in the middle of execution of all of them.
The 5 gs adoption, the network monetization, the next generation business to business applications, the customer differentiation and finally the new markets. Those are together with our core business that we're growing are the growth generators we have in front of us. And let me go through them in 1 by 1 what we're doing and what we have done so far. If we start with the 5 gs adoption, I think you have seen it. We started building our 5 gs networks several years ago, all the way from the millimeter wave to the nationwide and so continue with the ecosystem.
And one of the most important thing was, of course, on the mobility side that we now have iPhone 5 gs and with ultra wideband. That experience layer for us is a potential of growth right now together with our nationwide. We have also built a lot of partners in the Sierra all the way from the spot franchises that we're supporting and the applications that we're developing on 5 gs. All in all, this is creating a new opportunity for us. On top of that, we have the 5 gs Home coming in the 5 gs adoption that we now are launching have been launching and we're relaunching with a new CPE.
That is giving us all in all new opportunities for growth. Ronan will talk later on how we continue to work with our customer to see that they can get benefits and enjoying the 5 gs as they are moving into it. The second area of growth or vector of growth is the monetization of our network. We have long term cable MVNO agreements, which are very important for us, And we have them as really great enterprise customers, both with Xfinity and Spectrum Mobile. And those, of course, are also helping us with the growth going forward.
That, together with the 5 gs adaption, are 2 areas of vectors for growth. If we then move into the 3rd area, which of course is next generation business to business application. Here of course we're relating a lot to the 5 gs Mobile Edge Compute. And we started doing public 5 gs Mobile Edge Compute together with Amazon and now 7 sites and by year end 10 sites. And here, of course, is a market we're not even into today.
We have opportunity to grow with this and bring in revenues and we build the network once. On top of that, we recently announced that we now have also an agreement with Microsoft to do the 5 gs Mobile Edge Compute for the private sector. And Tammy and our team are constantly working with the leaders in different industries to create these new type of opportunities. These opportunities we have talked about will come in, in meaningful way in 2022. But clearly, now is when we build it.
We're world leader in this area. We're the 1st in the world doing this. This is a great opportunity for us. The 4th area is, of course, what we started with when we kicked off the unlimited. The way we are leading our customers and supporting our customers to get new benefits and new experiences.
And as you've seen the last 8, 9 quarters, the unlimited is increasing, the premium unlimited is increasing, and we give them partnership all the way from the Disney plus to the Apple Music in a way to give them new experience together with 5 gs. So far that model that Ronan and the team has built has really paid off. And I see that we have built a very resilient model with this customer differentiation. And on top of that, we are mix and match that is so far unparalleled in the market where we give our customer optionality that no one else can give. Finally, we see new segments in the markets or new markets that we can address.
We have already decided with visible Yahoo! Mobile, the LTE home internet that we are addressing new opportunities for growth. On top of that, we have announced that we are planning to acquire Trac Phone, which also gives us a very strong position in the value segment. All in all, these 5 segments on top of our core business is, of course, the base for us believing that we can do GDP plus growth over time. And we are executing on all of this this year.
And if you just go back and see what we have done the last 2 years, this is what we're executing for and this is what we have in front of us. Finally, I just want to summarize where we stand as an industry and how we move into 2021. First of all, when it comes to the industry and the macro environment, we have to be clear that there are economical uncertainties in the market that we don't really know where they will go. I think that what is happening in our industry that mobility and broadband becomes even more important because for me that's a 21st century's infrastructure and they're more important than ever today and the reliability on it is also increasing even more, the importance of mobility and broadband. And that's where we are in a network service with all this growth vector on top of it.
I think we're well positioned there. There is also the 5 gs sort of adoption happening right now, and the differentiation is going to be the ecosystem, how we are set up the ecosystem. My team all the way from our technology team, our supply team, our partnering team, our commercial team has been working with ecosystem for years to see that we're going to continue to be the leader in this market and, of course, having a superior performance of our technology. So all in all, if I look where we stand moving into next year, we have a great momentum in our core business. And I think we are in great shape when it comes to the 5 gs deployment and monetize the opportunities that we have outlined in our 5 gs strategy.
I think also we have the customer centricity we put in, in the Verizon 2.0 is so important for us in order to capitalize on all the investments we have done. And finally, we are sitting on a very strong balance sheet that we have built up over the years and actually been generating a lot of cash flow. So all in all, I feel good about moving into next year based on what we have outlined and where we are with execution. With all that, I'm going to hand over to Kyle to talk a little bit about the network.
Thank you, Hans. I appreciate you asking me to talk today. And it's great to be here with everybody. For those of you, I don't know, my name is Kyle Malady. My team and I were responsible for the engineering, design, maintenance of our network.
So I was with you, I guess, it was 9 months ago at Investor Day and spent a little time telling you about what we were going to do this year. I think I could characterize it as a year of execution, execution, execution for these things that you see on the screen we talked about and one you didn't and we'll get to that in a second. But 1st and foremost, what we do, our brand promise, we continue to provide the highest quality, most reliable wireless service in the nation. And this year it's never been more important for our customers with all the storms, with the social unrest, with COVID people rely on us and we've been there for them. So I'm very, very proud of the team and how we responded there.
We also promised everybody that we would launch 5 gs nationwide with DSS. We didn't give a time frame as Hans said, but I'm very pleased that we launched that in October. And we are seeing really good results with that, which I'll share with you in a few minutes. We have lofty goals to deploy our 5 gs millimeter wave and expand our footprint. We've had we have a really good story to tell there and I'll get to that in a few minutes.
Even in the face of all the COVID and the headwinds that we've had, we've been able to execute on that. Once again, very proud of the team. You'll see proof points about our maintaining our network leadership in 4 gs LTE and 5 gs, something we promised 9 months ago. And then one thing we didn't talk about was CBRS. We're very happy with the spectrum that we acquired in the auction.
It's really going to give us some more capacity in our network and more ability to grow. So we're really happy with that. We'll get into that a bit too. But at the bottom line, we're just executing to make sure we have superior performance. We've always had the best networks.
We have the best networks today, and we will position ourselves to have the best networks tomorrow. If you listen to any one of my speeches, I always talk about capacity because this is it. This is managing capacity, managing demand is extremely important. And we look at this every day in what we do. So what you see here is a chart you saw updated from beginning of the year.
And you see that been an uptick in our capacity, which we've put in for different reasons. And then you could see the growth that we're still seeing. Now what's interesting here is COVID really shifted our usage patterns. Obviously, we look in different core different ways of how you cut the usage, right? So you have your urban, you have your suburban and you have your own core holds.
Forget it. I can't say it. So but then they all have different characteristics. What we saw is people moving out of urban and more into rural and suburban. And therefore, we had to adjust our capacity a little bit.
And you saw we upped our CapEx guidance a little bit in the beginning of the year. And you'll see in a minute what we did with the money. But our team was there. We understood what was going on. We were able to react when people needed us.
And it was very important because we need to put capacity in for kids who are studying at school for people who had to work at home and for people who needed our service who didn't otherwise have broadband. So very important for us to react for our customers and we did. And how are we able to do that? Well, we put on a lot of capacity. So we added a lot more 4 gs carriers than we had first planned to and we added more CBRS.
So we're able to get ahead of the shifting capacity and shifting demands in the network. And the other point here is that it gave us the margin to launch DSS. If you remember when I talked about DSS, there's a slight inefficiency in the control plane to allow 4 gs and 5 gs to work together in the same spectrum. And we knew that. We understood exactly what it was.
So we were adding a little more capacity anyway. But now we're in really good shape. And you can see on the previous and you saw on the previous slide, we're in the best shape we've ever been in terms of capacity overall in our network. Now we put in some extra capacity so we could put in this great technology called DSS. We as engineers are so excited about this just because of the tech, but our customers really enjoy this too because it makes a very smooth and easy transition from one technology 4 gs to the future technology 5 gs.
There's a lot of hardcore tech that went into making this and I got to thank a lot of our partners for helping us this. But there was always been a question about you're going to degrade your performance if you have 4 gs and 5 gs working in the same spectrum. Well here's some we have our own test. We do our own drive testing. We've been obviously designing this and building it and optimizing it for quite a while now.
But here's some data that I was able to find from Ookla. And as you can see, 5 gs capable devices, when we turned on DSS, they're actually performing better than they were when we just had 4 gs as the only technology in the spectrum. Now do we expect this will continue? No, because the design goal is we want the experience to be at parity with our world class and best 4 gs network, right? So we don't want anybody going backwards because they're on the train for the future on 5 gs.
So we're extremely pleased with where we are right now with the ESS performance. In many cases it works better than a 4 gs would. Most of the time it's on par every once in a while you get a little bit less. But in general it's surpassing our expectations and we're still optimizing. So over the coming months, you'll see new optimizations on DSS to make it work even better.
But right now, we're thrilled with the performance. Now we take that all in and then we also look at, well, how we're doing. We can't take our eye off the ball of our superior network performance. I'm pleased to report that we continue to do very well in 3rd party measurements that measure all the competitors. We put DSS in nationwide very big deal.
We continue to put millimeter wave in and we continue to keep our eye on the ball of best network in 4 gs and that continues to pay off for our customers as they enjoy our network and they get the best performance out of any carrier in the United States. One thing I'm really proud of, we set aggressive goals for ourselves in expanding our ultra wideband footprint in this year. Last year was the start. We started ramping up. And this chart is showing you the progress we made and how many sites we are turning on per month.
You can see a significant, significant ramp here. And this is all being done while we have COVID going on and a lot of different things. It's headwinds. But the team has built a machine over the last 18 months that is allowing us to put out thousands of ultra wideband sites per month. In some cases, we're putting on several 100 ultra wideband sites per day.
And we've built a machine to continue this going on. And what you'll see is we continue to ramp this up, put this network out there, more people will be able to enjoy the ultra wideband network as we continue to scale this thing out. And as many of you know, 5 gs ultra wideband, it enables unmatched performance. We have the fastest 5 gs ultra wideband network in the world as a result of the technology, as a result of the engineering, as a result of the technology and as a result of using millimeter wave as our carrying spectrum for this. We now have it as handset in 55 cities and that's up from 31 last year.
We are definitely on track for 60 ultra wideband cities this year. What we've done and you'll see this in the next slide is we've targeted areas obviously with that have the most usage. So we are seeing a good uplift in our capacity perspective where we've put this in. We're seeing real world speeds of up to 4 gigabits a second on a mobile phone. It's incredible.
We've done in labs under perfect conditions we've done up to 5 gigabits. But that's going to grow because as we're able to put more carriers on and do more carrier ag we see ourselves getting up above well up above 5 gigabits a second. The usage that we're seeing, while still small because you need devices in there, we continue to grow our footprint, but we are up over 4x than we were last year. And the benefits that we see from scale and the cost benefits that we get, we will start seeing the improvement in the capital efficiency per bit as people start using this. Then the iPhone 12 gets traction and we start seeing more people come on to the network.
Now Hans talks a lot about network as a service. And as engineers, our role is to how do we drive efficiency in our overall network, right? And what you see right here is basically a normal curve. On the left side is the number of cells and on the bottom it's the utilization per each cell. So on the left side these are cell sites that might have low peak utilization.
So they're not very busy, okay? And on the right we have the cell sites that are high peak utilization. So we look at this curve. It's not exactly the right curve. It's actually not exactly normal.
It's a little bit binomial and so forth. But just for explanation purposes, here's how we think about the network and how we're monetizing it. On the right side in the areas of highest utilization, that's where we're starting our focus on ultra wideband, all right? It gives us it's where the people are. It's where the density is.
It's where I need capacity. It's where people can experience these great, great capabilities. And it also opens up new businesses for us in that home because I have so much capacity I can support the mobility and I can also support the services fixed wireless access using ultra wideband. So that's how we think of that side of the curve. On the other side of the curve is an opportunity for us that we haven't taken advantage of until this year.
In these areas that have low peak utilization in 4 gs, we can actually offer a fixed wireless access service for people who need it because there's latent spare capacity here. So it's a great way to fill up these areas that otherwise would just no usage would be on them. If we can sell them to if we can the we've won, we've done very well with CBRS and we're rolling that out. Then what happens is all this additional capacity we bring just kind of moves the whole curve over to the left which means more opportunity for us going forward. So once again, it comes down to capacity.
It comes down to managing your spectrum efficiently. It comes down to bringing new technologies that will really benefit our customers and help us move forward as a business. Now we're not done with ultra wideband. We're only at the beginning. There is a decade plus of this technology and we are just starting.
Just like when we started LTE there was many things, many technologies, many capabilities that we didn't see right away. There's a lot of things here and Ronen will talk about what we're doing with 5 gs Home and what we're doing with the CPE and the chipsets. You guys know we're working on our standalone core. We're going to be able to go way over 5 gigabits a second. We're going to have network slicing.
The one the 2 things that I'm really excited about right now that we're really knee deep in is 5 gs in building and MEC. And we believe pairing those 2 up and bringing those into the enterprise space for Tammy's group is going to be a game changer and change the way CIOs and people think about running their enterprises, whether it be a factory, whether it be a corporate campus or whether it just be regular IT capabilities. The way the technology rolls out is you start in a macro and then we getting in building solutions. We are testing in building solutions. We have many vendors working on it in different parts of the United States at the moment.
And we're really excited about what the capabilities of in building and ultra wideband bring along with MEC that Hans talked about and our partners there. A lot of great applications that people will be able to take advantage of. So we're just at the beginning and I'm super excited as a technologist and as an engineer for what we're going to be doing. Now in summary, this is all part of our overall strategy as network as a service. We start with 4 gs LTE, which we have the best broadest network.
Then we add on 5 gs DSS nationwide capability that allows our customers and allows us to transition to a new technology very, very efficiently, unlike what we've ever been able to do in the past. And then we add on the super capabilities and actually the game changing capabilities that 5 gs Ultra Wideband brings and we call this 5 gs Built Right. So we have the best in class most reliable network like I said yesterday, today, and we're making the investments and putting the technology in that will maintain leadership well into the future. So I appreciate your time. And with that, I'm going to pass it over to Ronan Dunne.
How do you build 5 gs right? Performance of 5 gs Ultra Wideband, the fastest 5 gs in the world. It's 25 times faster than today's 4 gs networks. Then increased 5 gs ultra wideband capacity and coverage with 3 times more density in major areas like Chicago, New York, Houston, Los Angeles and many others. And continue to roll out even more cities, expanding coverage more and more every day.
This is the 5 gs America
Good afternoon, everybody, and thank you, Kyle, for setting up for me. Internally, we say Kyle builds stuff and then Tammy and I sell stuff. So let me tell you a little bit about what we're doing to sell the great network we have. I want to start by just reminding you that the model the platform that we've created, which is our growth platform, and it's really built around leveraging scale And think about these scale core platforms as being available to both our consumer business and to our B2B business, really built around our network, but also the capabilities of our distribution, which is shared between our 2 business and consumer businesses and then service and billing as platforms. The key to those is they're all scale capabilities.
The more we put through them, the more efficient they get, a bit like the network itself. But to be able to activate those, to be able to actually create real opportunity out of those, what we need to do is we need to add this platform layer on top, which is our intelligence layer, which allows us to make actionable opportunities, which we can then use to very, very effectively and efficiently target different segmented opportunities in the marketplace. This is really where the brains is that allows us to be highly efficient, highly targeted and highly effective in our go to market. Our go to market itself, we have expanded recognizing the benefit of being able to put greater throughput through our scale core platform assets. So whether it be our core Verizon branded business, our Visible and Yahoo!
Mobile businesses or through our partnerships in the wholesale area with Comcast and Charter, which I'll talk to later, and with the opportunity for us to access directly into the value segment with our proposed acquisition of TracFone. And then what we've done is we've used that same intelligence layer to allow us to improve the proposition that we offer and the value of that to our customers through a combination of a modular proposition platform, which is mix and match, which is now available not just to our wireless consumer customers, but to our wireless small business customers and also to our wireline consumer customers and increasingly expanding the value that's available to our customers there and therefore both the stickiness and the experiential value that we'll deliver on the capabilities of the new technologies we're building in 5 gs. So let me bring it down to say, okay, how are we accelerating that into the execution for our plans in 2021 beyond? And key to that, of course, is going through the engagement, adoption and monetization phases for 5 gs. As Carl said, we now have our 5 gs Nationwide service, and we're really, really pleased with that, which complements the best in class 5 gs Ultra Wideband network.
Then this modular approach to proposition is allowing us to bring more value to our customers with signature experiences that are encouraging our customers to take more of what they want from Verizon, while also giving us the opportunity to expand into new product sets like the home and also in the business case into office and also to drive more value for customers by going into new segments like the value segment itself and serving other opportunities through our wholesale relationships. So these represent the vectors to accelerate our growth. And fundamentally, what they do is they allow us to leverage the core and the core relationships we have as the foundation of growth and then to complement and amplify the growth opportunities within the new segment opportunities and the new product opportunities that come with it. So let's go down into that core opportunity and how we're driving growth from the core. So the first thing to remind everyone is we have now refreshed the entire value proposition from prepay to right across the postpay business in wireless and wireline, but also through our connected devices.
So a full refresh of the value proposition built around quality, choice and experience. To do that, we have expanded our partnership arrangements with partners like Apple, Disney and more to come in that space as we ensure that more of what our customers truly value is available to them. And when I talk about platforms and scale, think all about also about our scale in our partnerships, where our purchasing scale and our distribution scale adds value both to our partners and therefore ultimately to our customers. So where does that drive through the P and L? Well, it's through new accounts.
It's through the mix of unlimited, but it's also through the premium mix, and we'll talk a little bit more about that in a minute. I talked about the efficiency, that intelligence layer that we have that sits above our platform layer. The really important thing is that we are getting better and better, and I think we are now best in class in the highly cost effective targeting of opportunities in the market. That's allowing us to take those scale platforms and drive personalized opportunities to our customers and deliver a consistent omnichannel experience, which is driving up a better NPS and a better customer outcome. It's also that same omnichannel capability and deep customer insight that's allowing us to target effectively our customers with new products and services and to reward them for their loyalty.
And the important relationship here between the credit card and Verizon up is creating this Verizon dollars currency, which actually creates more value for the broader relationship that our customers have with us. And that drives key metrics, stickiness, lower churn, but also step ups and additional lines and taking additional products. Fundamentally, we're taking share of engagement and expanding out the opportunity set with our customers. And how are we doing that? Well, we've worked really hard to make sure that we seed the market with the best quality devices that can exploit the incredible capability that we're bringing with 5 gs.
And it's no accident that all the premium product in the marketplace now, over 20 devices is what we committed to at the beginning of the year, are all supporting not just our 5 gs nationwide, but 5 gs Ultra Wideband. Couple that with the new experiences that we're showcasing with these devices, whether it be gaming, whether it be some of the stuff that we're doing, sports and entertainment, really bringing the possibilities of 5 gs to life, but also bringing us into new opportunities as we expand into the home and other areas that allow us to build out our product portfolio and grow our share of engagement and share of wallet with those customers to deliver new revenues and increased penetration. So let me just go a little bit deeper and say, okay, so how does that drive the economics of the base? Well, the first and most important thing is we're driving a significant shift to unlimited, and that's the first kicker within the ARPU story. And what you see is continued growth with our unlimited plans now more than 60% of the base.
And then the second driver within that is once we get our customers into unlimited, we have the opportunity continue to offer them incremental value as they step up the tiers and they expand the product set that's available to them. And remember, again, all on a single modular proposition platform of mix and match that now spreads across wireless and wireline. But then when you take the right hand side of the chart, what we have is the opportunity both with new customers and with the base. And what you'll see is in the Q3, we were driving 88% of the new accounts that were coming in were choosing to go on unlimited. And 58% of those unlimited were choosing to go on a premium plan.
So that's an indicator of the value of the proposition is being recognized by consumers in the marketplace, so more of them are coming to us and taking those unlimited and premium plans. And that same attractiveness is driving the base acceleration as we see the step up ratio going from up by 31% between the Q3 of 2019 and the Q3 of 20 20, which is driving an acceleration of 12% in the year over year step up revenue driver as measured by monthly recurring charges. So that's the model that is driving the real accelerated value proposition inside the base and is the core for our confidence around our growth of our service revenues. So I then go deep into the home experience. Sometimes I think when we talk about this, people think just simply fixed wireless access, tell me a bit more about that.
I want you to set the context though for this is it's an integral part of a sophisticated modular mix and match approach that our customers increasingly both understand and enjoy the benefits of. So we're building mix and match out on Fios. And what is that doing? It's actually increasing the premium take inside the Fios footprint as well, more of our customers taking a gig speed proposition. And we recognize that we had previously wireless business is improving the proposition from a content point of view, creating more choice for our customers and allowing us to take the wireless scale and add additional benefit to those Fios customers.
So that is allowing us to grow our Fios margin. And you will have seen in our Q3 results the strongest performance in Fios for about 5 years. But what's really important there is that is giving us the opportunity to bring more customers together, and that same proposition is what will support all aspects of our home offering as I go into that in a bit more detail, whether it be 4 gs LTE, 5 gs Home or Fios itself. So all of those superior performance and superior choice is also meaning that our customers are getting more benefit for taking more of their services when they take mobile and home from Verizon. And that allows us to open up more opportunities.
You know how successful we've been in total mobile protection, but we now have more access to the opportunity to sell VisiProtect home and premium content partnerships. So that modular approach that's working so well in wireless and you see is the foundation for our ambition inside the home environment. And many of these aspects are also available from a product point of view inside the office environment as well. So when I take that and look at our home expansion, it's not just simply about our 5 gs home, but that's a great opportunity. But we're now in 48 states and over 4,000 cities for our 4 gs LTE.
And this is picking up on what Kyle explained is we're selling spare capacity. And increasingly, the efficiency of our model will mean that opportunity will expand, while at the same time on the other side of this bell curve, you see the growth out of the ultra wideband is also growing my 5 gs home opportunity. So when I pull that together, I have this very, very coherent proposition that's attractive to customers and my opportunity set is expanding as I build 4 gs Home, I build out Fios and I build my 5 gs fixed wireless access opportunities as well. As Hans mentioned, we have enhanced the 5 gs home opportunity with the deployment of the high powered CPE, and we're seeing very strong performance on that and starting to be written up externally. And that's what's giving us this very strong platform for a broadened and expanded home opportunity, which not only gives us new addressable market, but actually increases the stickiness and engagement of our wireless customers.
To give you an idea in the 5 gs Home footprint, 50 percent of the customers who are taking that product are existing wireless customers. But the other 50% are new target opportunities for us to expand our wireless business after they come and see the value of 5 gs Home. So if I pull all the pieces together, we have strong growth in the core itself. We have a modular structure that is attractive to our customers increasingly. It allows us to expand the opportunity set we offer to them in a way that's reassuring and understood to them because it's based on quality, choice and experience.
And as we open up new opportunities with 5 gs, we're able to layer those incremental growth opportunities on top. That's what gives us the confidence to develop a plan that will develop to GDP plus growth because of that strength in the core and the incremental opportunity set that's coming through. And what we're seeing is the quality of our customer experience is giving us the right to offer more products and services to customers. And as we see the build out of the 5 gs network, we increasingly have opportunities to further embed the relationship with customers and to further accelerate that growth pattern. So strong foundations that will give growth in 2021 and a modular structure that leverages those key scale platforms that will increase and expand that opportunity as we go forward.
Within all of that, we have our direct to the market opportunities, but we also have a deepened and expanded opportunity in our relationship with the MSOs, where we now have expanded and extended that relationship to give them the opportunity to enjoy the incremental technological advancement that's going on in our network and allowing us to ensure that we're the primary provider for them for the foreseeable future. So when you pull all those pieces together, that's what gives me great confidence about our ability to deliver superior growth in the coming years. With that, let me hand it back to Hans.
Thank you, Ronan, and thank you, Kyle, for those presentations. Before we go into the Q and A, a couple of things. First of all, I have a couple of the other leaders from my leadership team here as well. We have Tammy from the Verizon Business Group. We have Guro from Verizon Media Group here, and we have Matt here and some other key of my key leaders as well when it comes to Q and A.
Secondly, there are a couple of things we will not talk about. We are in a silent period regarding the C band auction and the Ardolf auction, so we cannot comment on that. So I ask you, don't ask any questions on it. It makes it easier for us. And finally, when it comes to financial guidance for 2021, we will continue with our normal process.
Matt and I will do that when we come out with a Q4. So just to be clear on that, we'll kick off the Q and A here. So by that, I hand it over to Brady to start.
Great. So we're going to go into Q and A. It's in a virtual environment. So we're going to start with Brett Feldman from Goldman Sachs. And I get to play operator today, which is fun.
Hi. Can you hear me okay?
Yes.
Hey, Brett. Great.
Thanks for taking the question. So when we look at the iPhone 12 promo that you rolled out a couple of weeks ago and as well as the promos that your competitors rolled out a couple of weeks ago. Obviously, a lot of discussion around the extent to which they are aggressive or not aggressive. But I think another way of looking at this is it's the first time since lockdowns that you and all of your competitors have really approached the market in a normal way, meaning we would typically expect this time of year that you'd be promotional than around a device launch that you'd be promotional. So the question is, with the industry approaching the market in a normal way, have consumers responded in the normal way?
In other words, are we starting to see gross adds move back to normal levels? Are we starting to see churn and upgrades move back to normal levels? Or do we still have a little bit of a way to go here?
Thank you.
Brett, I
think that's a good question for Ronan to answer. Ronan?
Thanks for the
question, Brett. So I think the answer to say is yes. It's fair to say that the shape of October was different because of the timing year over year, so we saw the switcher pool down. But just to give you a context, our Android ecosystem, about 50% of the phones we were selling were 5 gs at the end of Q3. So the arrival of Ios into the market was already leaning into a momentum and a demand and an appetite that was there.
And so we've been very pleased with the response to not just the promotions, but to the product itself as a significant portion of our base, essentially 2 thirds is iOS. And the thing I would highlight to you is within that overall environment is the model, the modular structure around the proposition that I showed you means that we have the opportunity for every one of our upgrades to be an ARPU accretive transaction as well as every acquisition or add a line. So in that context, we're very well positioned to participate in the activity in the market and for all of that to be both an accelerant of 5 gs adoption, which is really important for us as the best in class in that market, but secondly also to drive accretion as we drive step ups as well. So we've been very pleased with the response we've seen and very excited to continue to deliver a superior experience on 5 gs.
And we add there, Ron, on that the MAX and the not the Mini, I think it's Mini, they went on order just a couple of days ago.
Yes. And what I would say to you is we've been from a mix point of view, I think the MAX certainly in our experience has probably been the biggest hit. And so again, very, very pleased with the response to that. So all I would say is, I think Brady and I talk about am I pleased or am I very pleased? And I think it's fair to say I'm very pleased.
Okay, Brett. Thank you.
Yes. All right. And just a reminder, make sure you get in the queue and talk to the team and we'll get you in here. Next up is Phil Cusick from JPMorgan.
Is that for something that could happen in 2021? Do you think COVID continues to drag you? And then second for Matt, if I can. You've talked about leverage, you've gotten to your target after a few years. If you do spend more or if that goes up because you spend some money on spectrum, what's the plan for getting that back down over time?
Do you need to get back to that target leverage before you think about returning capital? Thank you.
So on the GDP plus that's the whole company. And that's the North Star that we outlined when we started our transformation for 2 years ago. And as we showed today, it was built on network as service, the core business and then, of course, the vectors of growth that we're showing today. There are some headwinds in our business. Of course, with the wireline business in certain areas is actually contracting.
So we have to counter for that. But all in all, this is an ambition and a target for the whole company growth. We will come back to the guidance for 2021, but clearly, you can see right now that many of these vectors were on the middle of the execution. They are there. They are not the more PowerPoint slide.
If you take all 5 of them, in many of them, we're middle of the execution of them. So that's why I'm pushing my team to really get into growth in these areas. And I'm pleased to see that everything we decided despite the COVID and despite the situation in the market, we're actually executing well. So as I said, I look forward to 2021. I look forward to the Q4 as well.
But I look forward to 2021 when we have all these pieces together and can really show the market that this is our growth vectors. And they will gradually come, some of them, and some of them are already there. Matt? Yes.
Thanks for the question, Phil. So certainly as we've been talking about now for it seems a long time, but we're now less than a month away from the start of the auction. Obviously, we're not going to talk about specifically what's in there. But as we said earlier in the year, once we had a start date, we'd come back and talk about the capital allocation in more detail after the auction. But certainly, as you think about our capital allocation priorities, the first one is to invest in the business.
That's the best priority for cash for us. And then once we've done that, if we go outside of our leverage target range, our plan would then be to work our way back into the leverage target range. So but certainly look forward to providing an update on capital allocation when the auction is over.
Thanks, Matt.
Thank you, Matt. Thank you, Phil.
Thanks, Phil. Okay. Next, we're going to go to Simon Flannery from Morgan Stanley.
Great. Thanks very much. Kyle, maybe you can talk a little bit about some of the early learnings from the relaunch of 5 gs Home. Obviously, you were looking for a lot more self installed. You were looking for better propagation from the nodes.
So what are you seeing in terms of that? And I think question we really want, you talked about scaling it nationally, getting to 1,000,000 combined with the LTE. But help us think again about that path to 30,000,000 households over time. And when does this I think Hans, you talked about business coming really scaling in 2022. So are we going to see this scaling in 'twenty one?
Thanks. So I'll start with it and hit the first part of your question, and I'll probably hand over to Ronen and Hans for some other stuff.
You talked.
Yes, we've been as Ronen talked about, the high power CPE, that's we're really happy with that. That adds a nice little boost to what we had before and what we were learning with TF. It's just a it's a better chip. It's more robust and it adds enough DB that we get a lot better coverage, a lot better performance. So we're happy with that.
The other good thing about it is the teams have done great work in the self install piece. So we have applications that customers can use to find the right spot in their home to place it. We have other ancillary things that we're doing to make it easier for them. So we expect much easier adoption on the self install front. In terms of the millions of people or homes or I showed a slide a couple of years ago that we're going to bring all of our spectrum to bear to cover people for fixed wireless access.
You heard Ronen talk about Fios fantastic product best in class. Now we're talking about 5 gs fixed wireless access and now we're adding 4 gs fixed access to the product too. But specifically on 5 gs fixed wireless right now our plans are we are focusing on the dense areas and that we focus on those dense areas and the great capabilities that people will be able to enjoy and we just are expanding as quick as we can so we could just bring more and more people on. So it's work in progress. We keep rolling and we keep adding people to the possibilities as we go.
With that, I'll hand it over to Ronen for the rest of that.
Simon, I'd just add a couple of things. What we're seeing with the new high powered CPE that 70% of the people who try our self install are completely successful with any assistance from a third party of any kind. And that's because not only is the CPE better, but the tools are better. Just to give you a data point, we're now seeing more like 700 gigs utilization. And although we say kind of 300 meg plus, we're seeing average throughput speeds of 1 gig, and that's a factor of the improvements with the Carrier Ag as well.
And we're also seeing that install times we're seeing as low as 40 minutes install time for the 5 gs fixed wireless access. And also I have to say with the 4 gs LTE product, we're seeing really interesting usage at about half what we're seeing in gigabits from the 5 gs ultra wideband, but we're actually seeing 4 gs LTE install times of 5 minutes. So really good customer experience.
Thank you, Ronan. And Simon, just to add on that. I mean, we I think we are really pleased with the technology and the vision we had from the beginning with self install, a total unique and transformative solution. And one thing that we haven't talked so much about, but over time also another opportunity is, of course, the fixed wireless access for our businesses and small and medium businesses because this is a product that it's not only for 5 gs Home, it could also be for and wherever we are building millimeter wave, of course, we're going to expand this out. The reason why we have 10 cities as a ambition right now, we need a cohort that is big enough to start marketing.
But ultimately, everywhere and every city we have millimeter wave is a 5 gs home or a 5 gs fixed wireless access city. And I'm really happy how we have been so dedicated on self install, making this transformative. And of course, the new CPE is just meaning that we can add much more subscribers to the same base station because that was the sort of the limitation with the previous generation. So all in all, it's great. But as Kyle said, on the 5 gs Home or 5 gs Fixed Wireless Access, we start in the most dense areas because of capacity and the super experience we're giving.
So then we just build it out. I'm excited over it, and I think we're doing absolutely the right thing. We're just doing this different again. We're doing transformative. Next.
Thank you, Simon.
Thanks, Simon. Okay. Next, we're going to go to Colby Synesael from Cowen. Colby, I hope I got that name right.
Close enough. Two questions, if I might. The first one for Kyle. In the chart that you showed regarding 5 gs and the improvement you see in network speeds since you launched, I guess a few weeks ago, it didn't seem like that big of a change relative to what you're seeing with the 4 gs network. Curious what needs to happen for that to be a faster, a bigger improvement and also what's the timing around when we might see that.
I think when I look back at some of the standards for 5 gs, the expectation was for north of 100 megabit per second speeds versus I guess today what I would consider more traditional average broadband speeds for 4 gs and maybe 40 or 50 megs. And then secondly, as it relates to MEC in 5 gs home, the company has talked about over time, how we start to see the revenue start to materialize in 2021 and then become more meaningful in 2022. And Hans, on the Q3 call, you said something similar. When should we expect to start seeing that revenue reported and you giving us some of those metrics so that we could kind of independently see that for ourselves? Thank you.
So I'll start with the DSO. Yes. So that slide I showed there, Colby. So remember, that's aggregated data. That's through Ookla.
And while it's a little higher than typical 4 gs, and I think the reason for that is there's not a ton of devices out there yet. So what's happening is people are using it. And when the fundamental technology of sharing the bits in the control plane in the spectrum, There's more 4 gs people on there than the 5 gs person. So therefore, they're getting a little bit better service. But in terms of it working it's doing what we want.
We want to have people to basically have a very good experience just like they're used to and not degrade. So it will get better over time but it's largely depending on the bandwidth you have. So you said 100 megabits a second. You go around our footprint right now you see that quite often in LTE. What we didn't want to have happen is you get a 5 gs phone and all of a sudden you're getting 60.
That would be terrible. So we want to have the baseline is it's the same and sometimes it's going to be better. And then over time we'll bring new technologies to it. It will get better and better and better. But it's not going to be as good as ultra wideband.
I have 1500 megahertz plus of spectrum there. It's not going to be as good. So that's why that's the game changer. We focus on that but we're focused on the performance of 5 gs. And we're just in the early days of this so it'll get better and better and better.
We do have some improvements that we see.
Yes. And I can only say our engineering team is conservative all the time. And that's when I look at it right now, I mean, we are on par or better with our DSS than we are on our 4 gs network. That was never our conversation from the beginning, but that is how our team can actually do better than any other carrier in the world with the performance. And as you might have seen, all this nationwide comparison right now, I mean, the early ones you have seen, I mean, we are best on that one as well already.
And we are just in the start of it. So I have a lot of confidence in the team when it comes to our nationwide that we launched just a couple of weeks ago, and you saw we already have improved. So I think they're doing great work. When it comes to the 5 gs Mobile Edge Compute and 5 gs Home, so what we have said meaningful sort of revenues coming in for 5 gs Home or Wireless Access in 2021 and 2022 for Mobile Edge Compute. They will of course be embedded in our units.
And over time, as Ronan explained, some of it like 5 gs adoptions and all of that, they will just straight come into his way of working as a core business over time. We will of course start when we feel it's the right time to give some statistics around it, but maybe I can ask Tammy to make a couple of comments where we are on 5 gsVomal Edge compute because you don't turn that on from 0 to 1. It's a big work we're doing with a lot of enterprises. So Tammy?
Yes. Thank you very much. And listen, when we think about Mobile Edge Compute and the timeline to when we begin to scale revenues, we've talked very consistently about that being 2022. But what we are doing is building, scaling the ecosystem of how do we take 5 gs not as a sprint, but a marathon. And I think you see us begin to lay down those ground markers for how we've done that.
A year ago, we announced our partnership with AWS for what we would do with Mobile Edge Compute. We didn't just announce the partnership. We actually showcased several applications with them that were up and operational. What I love about that is that's the public mix that we've opened up to a 1000000 developers around the world to begin to develop on edge compute capability with latency that's sub-ten milliseconds. So very, very exciting as we think about what's possible.
You then fast forward to this year where we launched 5 commercial sites and then 2 more today, Dallas and Miami. So real time update, those launched this afternoon. So we're now at 7 site locations and on track to deliver the 10 site locations by end of year. In addition, as you heard Hans talk about, we announced our partnership for private MEC with Microsoft and our ability to really scale out as enterprises reimagine in a post COVID environment their world how they think about private networks, how they think about private edge compute. We're beginning to really have a very robust funnel of what our customers expect to deliver in terms of transformation and they view edge compute capability being a key part of what they do and how they do it.
And so we're on track from a technical standpoint. Our funnels are full, and we are consistent about revenues in 2022.
Thank you, Tammy. Matt, some comments there maybe from the question on Colby.
Yes. Just maybe Colby following up on the reporting piece. So as you heard Tammy say, we expect when the MEC revenues will start showing up. And then as we start seeing the impact show up on fixed wireless access next year, we'll start to have some we'll show the numbers there when they're material and starting to come through. So as that starts to come through in 2021, the B2B side in 2022, we'll have more to share with everyone at that time.
Thank you, Matt.
Thanks, Colby.
Thank you.
All right. So next, we're going to go to Dave Barden, Bank of America.
Hey, guys. Thanks for taking the question. I guess my first one would be for Kyle. You showed a slide with black and red bars demonstrating expansion of the 5 gs Ultra Wideband with no Y access. I think that given you guys are advertising this as the key differentiator between Verizon and everyone else, it would be hugely helpful for people to understand what those bars really mean in terms of addressable market, addressable population coverage.
What does 5 gs Ultra Wideband really deliver for Verizon today? And I guess the second question is, and maybe this goes back to the prior question is, you guys have a target for revenue contribution from the 5 gs network that you think will be visible in the financial statements by 2022. Is that going to be purely enterprise? Will it be partially consumer? And if it is consumer, how will that look?
Thank you.
Well, I guess I'll start, David. I think your first thing there isn't a question. I think it's a comment, so or a request. So we'll have to probably come back to that. But I mean that is discrete data that I showed you there.
I mean that is our ramp in terms of number of nodes that we are building and we're putting on the air and integrating into the network month after month. I think my idea there was just tell to show you that even time of pandemic here, we're building a factory that's going to pump these things out and is really going to accelerate putting these things out there. As you can imagine, right now in COVID it's not exactly easy to get a permit to do anything. So the team's overcoming that and we continue to accelerate our growth and that's going to continue. In terms of providing other data, I'm going to look to my buddy Brady over here and ask him to take that on advice and see what we think.
Yes, yes. We'll take it under advisement and come back at the appropriate time, Dave. But I appreciate you asking for sure.
Yes. And David, I think the most important for and what we'll come back, we build this where people usually live, play and work. That's where we build the capacity. This is super experienced with ultra wideband. As said, we are on track to do 5 times more small cells on 5 gs ultra wideband this year compared to last year, and we continue that journey and even in this time.
So we think we are in meaningful sort of capacity areas where actually this is used. So I think that's important. The second question was where we will see this show up. I think Ronan actually explained that this will show up as he's working with this unlimited premium and so on. So whatever 5 gs subscribers coming in, it will show up in his service revenue going in.
That's the model that Ronan and his team has worked in. And Tammy as well as of course it can be 5 gs subscribers coming into her that will also be in the service revenue. Then of course the 5 gs Mobile Edge Compute will be later on as we said. So you will see them showing up in our P and L over the year and especially when it comes to Rona that's part of his I call it the ladder of taking customers on the whole journey of getting more experience and more benefits moving up to unlimited and premium unlimited. Do you agree, Rolf?
Yes. So and maybe I didn't make it as clear as I should have done on the slide, but one of the things that the is one of the premium components for people to go to the higher tiers in Unlimited is, of course, things like Apple Music, Disney and other things, but it's access to 5 gs Ultra Wideband in those higher tiers, where 5 gs nationwide is available across all of the tiers. And what we're seeing is that increasingly more and more of our customers as we build out, if you think about it, if we're building where the traffic is, then actually what happens is that's because more of our customers use those areas. And therefore, surprise, surprise, more of those customers get the benefit of where we're building the 5 gs ultra wideband. And it's true to say that they won't be seeing it in 100% of the footprint they use on a daily basis, but that was never the plan.
But any customer who's using any of the areas that are high traffic areas gets the benefit of the 5 gs ultra wideband being built. That coupled with areas like transport hubs and termini and other things means that the experience of 5 gs Ultra Wideband is that I walk across the concourse in an airport or in a bus station or a train station and I download 10 gigs of data so that I can consume 4 ks streaming as I go on my journey. So there's lots of the use cases that are consistent with enhancing everyday experiences of a wide number of customers as opposed to because what we said is the capacity and experiential layer, not the coverage layer. And so I think our customers increasingly understand that and that's what enhances the ability of us to deliver a high quality experience to our customers wherever they are.
And important to add to that, how we have worked with ecosystem all the way from the infrastructures vendors, how we build the network with the handset and the chipset manufacturer to be where we are today. And this is just the beginning. But this plan started several years ago on a clear strategy that we had in order to create a superior experience on 5 gs, we want to do transformative. But on top of that, we have our 5 gs nationwide as well right now. So I think we're really taking the best out of our engineers to create opportunities both for TAMI and for Ronan, but also mentioning that our Verizon Media Group is very much involved in all of this.
If you think about some of the applications we have developed with NFL, for example, the 5 screens that we have from the stadiums, that is developed in our Verizon Media Group. So everybody company has rallied around these growth sectors or vectors, I should say, that we're executing right now. So it's again, I just go back to we were very clear on our strategy, where we wanted to play and how we want to execute and how we want to have the best network, the best distribution and the best brand. And that's what we're continuing right now. So I feel that we're in a good situation, and I like our assets.
I like our assets really much.
Okay. Thanks, Dave. Okay. Next, we're going to go to John Hodulik from UBS.
Okay, great. Thanks, guys. Maybe a couple of follow ups. First, maybe it's for Ronen or Matt. The 88% now taking unlimited obviously is a big number of given that you guys were at 50% for so long in terms of penetration.
What's the average ARPU lift as you go from metered to unlimited and then maybe to that high end unlimited? That's number 1. And then number 2 on the prepaid, for a number of years, you guys participated in the prepaid market, basically through wholesale. Obviously, big change in strategy with TracFone, why the change? And that company has been growing service revenue sort of 1% to 2% for the last few years.
Any chance you guys can bring all the Verizon resources to bear and accelerate that number? Thanks.
So
I will start and then I will ask. And first of all, I want to give a big shout out to the team that build the model that we have done with Unlimited over the years and how they have been working with new additional partners, values and all the way. And this is nothing you do in 2 minutes. If you might remember, I was the CTO and IT Head of IT for a while. It's a lot of changes in the Nobody else in the market can do this because it's so complicated from an IT Nobody else in the market can do this because it's so complicated from an IT point of view and seeing that everything hangs together and our customer gets the experience.
So before Ronan talks about how much we're lifting and so on, I just need to remember that this is something unique we have built. And then on the track front, I think that what I won't say, what we saw is that we have had prepaid. We haven't been that successful on it. They have been. And of course, we want to see that we are part of the value segment.
So this is a value segment because certain customers want to be in that segment. And we want to keep that and we want to support it. We have some synergies in the back end, but clearly, we're going to keep that market and we're going to keep those customers because that's an important market. And we're going to keep that market. We're going to keep that market.
We're going to keep that market and we're going to keep those customers because that's an important market. And we want to be the number 1 in our premium market. We want to be the number 1 in the value market. So that was the whole idea about it and it's straight up in the line of the network as a service strategy that we outlined. Now you can speak, Ron.
Okay.
So John, thanks for the question. And let me break it into a couple of component parts. Quite rightly, the focus is on unlimited. But I just want to remind people that we're also enhancing proposition in our meter, in our prepay and in our Fios home proposition, all of which are intended to increase contribution. Second thing I said to you is the way we're building the machine is my actual cost of acquisition is more efficient as well as my average value of the customer that are acquiring higher.
And my customer attention is kind of flat against an improved churn. So all of those are drivers of value dynamics. Within the step ups, think about high single digit dollars ARPU uplift for the people who move up. Then the second part of your question was given that we've wholesale traditionally into the prepay market, why are we moving prepay? And I wouldn't overly personalize it, but I came from a market where we had a very successful prepay business.
As we built out our capabilities and technologies and as I've worked with Kyle particularly and understood the capacity and capabilities of the network, value segment. We could enhance the product set in that space. And therefore, we could improve the opportunities there for the customers who are served in that value segment. I also think that I now have the capabilities based on the approach that I told you about, the platform approach and then the analytics and capability above it to better serve the needs of those segments in a way that we can give real value and enhance benefits from Verizon's ownership of TracFone. So that's why we're confident that that's a good opportunity for the customers.
Because the one thing that I would say overarchingly here is, if there was one metric that's the most consistent is, it's the improvement in NPS that's been going on for the last 7 or 8 quarters. And that demonstrates that more of our customers value more of the things that we're doing. That opportunity to bring that into the value segment as well, I think is a compelling proposition for consumers. And I'm excited about doing that. And I think it can be accretive ultimately because of the quality of what we bring to those customers and the efficiency with which we bring it.
Okay. Matt?
Thanks, John. The only other thing I'd add to what Ronen said is remember that construct we have where you bring the customer in and then you have the ability to step them up to higher tiers. With the new price plans that we've just put in place in SMB, we now have the ability to do that on the B2B side as well within the smallmediumbusiness segment too. So that ability to step people up is something that the consumer team has been doing now obviously for a few years. And we now have the ability to do it as we go forward on the SMB side as well.
So continued opportunity for us to drive service revenue growth.
And I think that's an important maybe Tammy you want to mention a little bit more about that because we are thinking in the same way. Again, we're using the scalability of our platforms in order to address the market and as Matt said both for SMB and enterprises.
Yes. Listen, I think you said it well. It's been years to build out that infrastructure. And what I love about the way that we're structured is we can take that and repeat and use that same scale from a network and an IT capability for both consumer as well as the offering we have for small business. You might have seen us launch that about a week 10 days ago and it really gives us the ability to take that mix and match capability and tailor to small businesses.
And if there's ever been a time small businesses want choice and flexibility, It's right now in a post COVID environment, where we can package incremental value like digital capability, like security and then like video and collaboration tools. We have the owner's economics of now owning the BlueJeans platform that we acquired in May, and that really gives us more tools to build against customer requirements, be it consumer or that same platform to scale for the growth opportunities in small business.
Thank you, Tommy. Thank you, John.
Thanks, John. Okay, we're going to go to the next We're going to go to Mike Rollins from Citi.
Two topics, if I could. The first was following up on something that I think it was Ronen who mentioned about the cable companies. And I think the comment was that you've expanded and extended the relationship. So I'm curious to learn more about what that entails And in that context, does that now allow the cable companies to create their own capacity and coexist with the Verizon capacity? And does this take away the risk that the cable companies might use another vendor for their mobile capacity about the about the ongoing growth of the postpaid market in terms of where it's coming from and your feeling about how long that can continue to sustain itself?
Thanks.
I will start, but Ronan will comment. I think that I think I said that we feel good about our relationship with the cable companies that are doing MVNO and us. And we treat them as any enterprise customer that we would have in Tami's organization. We give and take, but it's a little bit interesting for me. There was a lot of discussion from the analysts for 6 months ago that this somebody will take it away from us.
I haven't heard the question for a long time, so something has probably happened. But again, I feel really good about where we are with these guys, and we will continue to serve them in a good way, but always with the financial prudence we have. So that's what I can say, and probably Ronan can say something more. But that's what I how I feel about it.
Sure, Mike. Thanks for the question. If I break it into 2 parts, as regards their network strategy and the public fact that they've acquired Spectrum, the specifics of that you would have to ask the cable companies. But all I would say to you is that a single band of Spectrum doesn't create a network in the context of the service you deliver to customers. And yes, we have expanded and extended our relationship in order to make sure that the customers at Charter and Comcast would have access to the enhanced engineering capabilities that we've been delivering.
And as a result of that, as I indicated, I think we've created the conditions to ensure that we're their primary provider of connectivity for the foreseeable future. But as regards their specific strategy about their core or anything else, those are questions that you would have to direct to them because in that regard, they would be a competitor.
Postpaid market, have you learned something? Yes.
So what have I learned about the postpaid pay market. So it may sound obvious, but I would just remind people, one of the drivers of this growth in post pay is the fact that essentially everybody who passes the age of X is taking a smartphone somewhere in their teens. But everybody who leaves the market at the other end, if I put it that way, probably didn't have a smartphone. So within a population that's not really moving, you actually have a significant entry to the marketplace. That plus immigration is a factor.
The other thing that also drives in our multiline accounts is connected devices, whether that be more and more tablets. And one of the things I mentioned was we refreshed the whole portfolio as well as we refreshed the connected devices element. The other thing that we see and it can be cyclical based on the overall economic cycle is pre to post migration, which is also a factor. And all other things being equal, although we've seen growth in our prepaid base recently as we've reported, that's not something we particularly participate in maybe relative to others. But so there's probably slightly more growth actually in the prepay segment at the moment, probably growing up 1 or 2 percentage points per annum more in the recent quarters than maybe the postpaid market.
So I think we have the opportunity to be exposed to all of that. And the last thing I would just say about the MSOs is that we're very conscious that we're a partner of choice when it comes to wholesale, but we're also very comfortable to compete the hell out of every segment in the marketplace every single day of the week. And that's why when I've refreshed all of my propositions and the fact that I'm increasingly improving my mobile and home value proposition to customers, I'm positioning myself to compete in every segment of the marketplace direct.
Thank you, Ron. Tammy, maybe you can say something about the postpaid market in the business segment?
Yes. I think one of the important things that we've seen in continued to take market share leadership. But when you look at, Mike, where new growth to take market share leadership. But when you look at, Mike, where new growth comes from, when you think about the COVID environment, what we're seeing is new models begin to emerge. I'll give you two examples that I think are really important as we think about expanded growth both for B2B as well as B2B2C as we think about healthcare and we think about education both really radically changing as we think about what will that look like in the future.
So when we think about how do we serve postpaid customers in that environment, opportunity to continue to drive growth not only for traditional customers but for new and emerging growth segments like those 2. That really reinforces for us that we're well positioned in a segment model to meet the changing needs of customers, be it B2B or B2B2C.
Thank you, Tammy.
Okay. So we're ready for the next question. We're going to go Craig Moffett from Moffett Nathanson. Craig?
Hi. So I want to stay with the what seems like it's the question of the day here, which is the coverage of ultra wideband for a second. Maybe you could put it into just sort of time on the network terms if you can't quantify the y axis for us. I've seen reports that say today it's 1% of the time, but if I look out 5 years, what's your expectation for a typical user as to how much of the time that they're on the network, they're actually going to be in range of a small cell using millimeter wave, such that they get the real ultra wideband experience. And if I could just expand that, when I think about in building in particular, what's the business model for getting in building coverage and covering the cost of all those cells?
Okay. So I'll start with the 2 different questions. I'll start with the first one. Our as I showed in that one slide, we're targeting areas that are capacity constrained, if you will, right now and other areas that we could really show off the tech I. E.
Stadiums and arenas unfortunately COVID threw us a bit of a curveball with those type places but people will come back to those. So but those are areas that we could really show off the technology and that we started putting on. What's going to I don't want to say it's an eightytwenty rule But if you look at people's typical usage, you're generally in the same area a lot of the time. So if you if we put the capacity in areas that people are most of the time, we're going to get a lot of usage on millimeter wave as we start penetrating the base with these devices that are capable. So in the near term, we're probably looking for about 5% of our overall usage to be on millimeter wave, but that's going to ramp significantly as we continue to ramp our deployment and we continue to see devices in the network to do this.
So it's my expectations and I'll try to say the word cohort again because I couldn't be more. But if you look at the urban cohort then at some point in the not too distant future we're going to start seeing upwards of 50% of my usage on millimeter wave in that area. So this is going to be a significant game changer for us. It really gives us the capacity that we want. Remember we started talking about this stuff, it's capacity.
And that's what we're putting out first. It allows new business opportunities and it allow us to do things that we couldn't done before because of the upside in the bandwidth. In terms of the in building stuff, I don't know if I'll take that one too. I mean it's no different people put in Wi Fi in their campuses and in their buildings etcetera and so on. The capabilities that we bring that that ultra wide brand brings along with a Mac can change the way CIOs think about how they run their operation.
We Tammy and her team have been doing some great things and you might want to come up and talk but we have some of these campuses that we put 5 gs on mainly down in Newport News and they build ships. It changes the way that they actually build their ships. So these are the kind of things groundbreaking things that we're looking to show go out there and showcase and people will figure out how they use it for their own efficiencies. But I'll let Tammy comment.
Okay. We'll trade spots on the stage here. Listen, I think when we think about UWB being not only capacity but capability, we have very specific examples today where we've done in building is a game changer for manufacturing. As we think about healthcare, as we think about supply chain, these are deployments that we actually have deployed and have solutions up and working. So when you think about the capability, it is really the capability for CIOs who think about solutions that they can deploy on their campus as we think about how quickly you can scale that.
It's the reason why I think we talk about both the private network and mobile edge compute together because you think about the power of bringing those together and we are seeing CIOs really redefine how they think about solutions that comes back to the capability that we can deploy with UWB.
Yes. Thank you. Ronan, finally.
So Craig, just one thing when you're thinking about the metrics and how it grows, taking the Kyle point is just think you talked about kind of in the current short term maybe 5%. Just think of the fact that 2 thirds of my base is on iOS. So exactly 0% of those up until the other day had access to ultra wideband. Think of the fact that I mentioned that about 45% of what we sold in maybe September, October time in Android. So you're probably low single digits of 5 gs ultra wideband devices in.
We're already seeing that sort of percentage that Kyle talked about. So we see the adoption curve. My personal view is the adoption curve of 5 gs devices, all of the lead ones of which support ultra wideband will be at least as fast as the 4 gs adoption curve and maybe a little faster. So when you put those 2 together, you see how as the network scales and as the capacity demand scales, you'll actually have the base of 5 gs capable devices to support it.
Yes. And one other thing on indoor, which is, of course, one of the flip sides. When you have the ultra wideband in urban areas, of course, you unleash the 4 gs capacity to be in indoor penetration much better from the outside as well. So you get a lot of benefit for our customers, but with experience layer and a capacity layer that we're building. So that's what we see.
Okay? Thank you, Craig.
Thanks, Craig. We're going to go to the next question from Frank Louthan with Raymond James. Frank?
Great.
Thank you. Can you talk
to us a little bit about your expectations for return on invested capital out of the 5 gs investments? And with that, have you had any conversations with the incoming administration about how they're viewing the FCC and the potential to bring back Title II and what that might the implications that might have for your expectations for returns? Thanks.
So when it comes to our capital expenditures, I mean, maybe, Matt, you want to say something. I'm not sure Craig, you can say something about the administration, so prepare yourself.
Yes. So on the ROIC, frankly, we look at our investment in 5 gs the same as any other capital that we put to work in terms of it has to generate a return for our investors. And so we certainly look at that one. And what Hans mentioned earlier is exciting about it. It's the first time we've had a wireless technology where we get multiple revenue streams off of the same investment.
So that really opens up some different opportunities for us. But I am very confident that our 5 gs investment will continue the strong ROIC story you've seen from us in the wireless space over many years now.
And also adding to that, we have transformed our CapEx planning and how we spend quite dramatically over the last 3 years. I mean, we don't speak so much about fiber here, but of course, we are building a lot of fiber in order to have our own fiber and owner economics for all our 4 gs and 5 gs network at the same time. So we are doing a lot of things to future proof our network. So we're going to have the owner's economics and actually being able to have the best return on investment on our network as well. Craig,
do
you want to say something?
Sure. Happy to, Hans. Hi, Frank. Great to see you. So a couple of points there on the administration.
First, obviously, we're in early days of the administration. Officials haven't been named. We obviously know a lot of the folks who are likely to end up in the administration. But one of the big themes that obviously has been driving the street recently is that this election has resulted in a more centrist likely policy agenda, would be the first point I'd make. Secondly, as you know well, Title II is less the question.
The question is what do you do with Title II? And I think COVID has provided an interesting policy experiment between the U. S. And Europe. We have seen a situation in the U.
S. And here's the one answer that you'll hear today that's not about just Verizon. But the industry as a whole and networks as a whole in the U. S. Have performed brilliantly during COVID with all these changing usage patterns and increased usage patterns.
In contrast, what you've seen in Europe is strains on the network and that hasn't been lost on policymakers in the U. S. I think that the policymaking environment we've had in the U. S. That actually incents investment in the networks has actually paid huge dividends.
So I'm confident that the incoming administration is going to look at this and say, whatever we want to do around Title II, what we don't want to do is disincent the network investment that has actually really paid dividends for the U. S, all the U. S. Networks throughout COVID. So I think whatever happens, we'll continue to work with policymakers, but we feel very good that we're going to be able to compete and win in the policy environment, what ever that may be in the next administration.
Thank you, Greg. Thank you, Frank.
Thanks, Frank. Going to go to the next question, Peter Cepino from AllianceBernstein. Peter?
Hey, Brady, thanks. Two questions, if I could. First, I wanted to just ask if the 30,000,000 home TAM for FWA is an F to a residential FWA TAM or is it a 5 gs home TAM? And then the other question I want to ask follows up on David Barton's question. Our experience walking around New York City with a 5 gs phone is that the coverage appreciating very well that it's a capacity layer is really measured in strides blocks lost a signal quickly moving around with New York City's density and fiber depth priority for Verizon, we hoped for better.
And so we're just wondering if we could expect New York or Chicago to really be a laboratory or a glimpse of the future.
So the first question on the €30,000,000 homes, that was homes. Then of course, we've seen other opportunities as well. And remember, this was 20 17 we talked about it. Of course, a lot of things has happened. We have not changed the target.
We have the same target to of addressable TAM. We will see different ways of doing it, but we have not changed that one. We still have the same targets. And this team, they stick to the targets, and we execute on them as we have shown you in the previous slides or when I spoke. So we have these targets there and we're going to continue with it.
Then we find new opportunities and new ways of doing it and we will do that for sure. Do you want to talk about New York?
Yes. Well, in terms of the build up, that's why we're scaling this machine as quickly as we can. We want to put 1,000 and 1,000 per month so we can scale this thing as quickly as possible so people can use it. So it's early days. I mean it's early days of the deployment.
Like I said there's been some headwinds this year but we're on track to doing it and we're just going to keep building this thing out. So it's going to get better and better and better. We're not resting on our laurels and saying we're done. It's going to get better as we go.
Yes. And we're adding capacity in all these places. Thank you,
Peter. We're going to go we got room for 2 more. Next up is Walt Piecyk from Light Shed Partners. Walt?
Thanks. I also want to go back to one of the Kyle slides, the capacity margin slide. I'm just trying to understand like what how does that math work? Because it's hard to think about that on a nationwide basis. There's not like nationwide busy usage.
It's if I'm at 50th and third, what's the capacity there and what's the usage? So how exactly are you trying to represent that? And like in some cases, the capacity actually, it looks like it went down at some point in 2020. And while Kyle is addressing that, could you also talk about DSS? We had an event, I guess, or a call with a CTO who's also using DSS.
And he said that there's an issue with the phone in terms of carrier aggregating multiple bands and using DSS. I'm just curious, is that an issue anywhere in any of your phones? Are you able to aggregate multiple bands with DSS?
Yes. Let me start with the let me start with the last one. The answer is yes, absolutely, we are. Okay.
So you're already doing it. So the CTO obviously needs to talk to their vendor. The CTO needs to talk to his own vendor and find out why it doesn't work for him and it works for you guys. Is that
I'm not sure who the guy is or what his issue is. What I can tell you is that the DSS is working like we want. Like I said, there's certain modifications we can still do to make it even work better. But where we're seeing things that can do better is with the schedulers. Each one of the vendors have different kind of schedule logics.
And how they deal with the PDCP aggregation, they're doing it differently. So we're learning what the probably the best way to do it is and we're Are
you carrier activating or not on DSS?
Well, DSS is your control well, it's a control plane, right? So what you're doing
is But if you're only using one of the bands, that's why your speeds are not doing well with DSS. You have to carrier aggregate multiple bands to get a reasonable
speed there. We are carrier aggregating for the bearer. What I'm saying is DSS is used for control plane. And what we do is that's how we're able to balance 4 gs usage and 5 gs usage and even the playing field for everybody. I'm carrier aggregating.
I don't understand. I don't know what your CTO maybe I'll help them out. Let me know. But The first question was about slide that has no Y access. Yes that one's easy.
So what we do is each we look at each cell site we call it floating busy hour. So we look at each single cell site and at the busiest time of the day how is it doing relative to its capacity and utilization. So you got to look at each cell site in each area and that's how we measure that and that's how we end up with the overall aggregate, and that's what we show. But we've been consistent with that.
So some guy in North Dakota could have a lot more capacity than I do. So how does that chart tell me how this is performing for the vast majority of your customers?
What it tells you is overall for the network. What it tells you for overall for the network, the capacity headwind we have. We've had this measurement since the beginning of time in wireless. Each area certainly has different characteristics based on usage how many people are there what the level of usage is all those kind of things and that's why it's interesting for us as we now are going to have a mobility and a home play they're different use cases. So us keeping on top of this capacity and understand what's going on at a micro level and that's what we do that's why I'm organized the way I am.
We think globally, we act locally and my engineers are taking care of stuff at a micro level. What I'm showing you is just the aggregate overall of where we stand.
Okay. I didn't get to my last question on that, which was when you were just answering, I think it was Peter's question. You said you wanted to get to 1,000 of sites added per month. Don't you need to get to like tens of thousands of sites per month if you want millimeter wave to give you the UMB coverage that you need?
I think the path that we're on, the machine that we've built to pump these out and do 1,000 a month is going to allow us to hit our game plan.
Yes. 1,000 a month small cells with the wave millimeter wave works is enough. Okay.
Thank you. Thanks, Walt. All right. We've got time for one last one tonight. We're going to go to Mike McCormack with Guggenheim.
Hey, guys. Thanks. Can you hear me?
Yes. Yes. Hey, Mike.
Great. So Hans, it's either for you, Ronen or Matt, but trying to unpack the GDP plus growth, I guess, we've been digging in on a lot of angles here. But when you think about the trade off between ARPA growth, revenue opportunities, that versus long term subscriber growth, how do you weigh what's going into that GDP plus number? Is it going to be much more weighted towards the revenue or fifty-fifty on subs and revenue? And then I've got a couple for Kyle.
I guess number 1, the 5 gs home data point was interesting because that the usage that he's talking about on a daily basis equates to about the same usage that Cable is seeing on a monthly basis. I'm just trying to see whether or not that's a scalable business at that same level of capacity utilization. And then just lastly for Kyle, network slicing, one of your new competitors made a comment that they think they've got the secret sauce and that incumbents don't. Just trying to get a sense for what he thinks about that.
Yes. On the growth and the GDP plus I think what we have built, we have built sort of our business plans around these growth vectors, and all of them are adding up. And of course, it's a combination of subs. But of course, in the core offerings both in Tamils and Ronan's world, we also see expansion of the Tam given that we have more offerings when we go, for example, in the threshold of the unlimited, etcetera. So it's both of them, but I think that what I'm trying to say is that the 5 gs adoption has multiple opportunities both from more subscribers but also on value added services, as Ronan spoke.
Maybe you want to add something, Ronan? So Mike, the
only thing I would add on that, which I think is an important thing, is the structure that I outlined in my presentation means key drivers for me are my cost of acquisition and cost of retention and my ability to increase what the customer spends with me every month. So respectfully, you should be provided I manage those, you should be ambivalent as to where that dollar of incremental service revenue comes from as long as I've got the operational leverage to drop it to the bottom line. So what I'm trying to make sure is I'm efficient in all of those so that my investment can be smartly deployed. So rather than chasing one particular vector of growth at the expense of others, which might distort the market, I have a machine that's much more optimized to go where the maximum return per incremental dollar is. And that's what I think is much more sophisticated in my business today than it was a few years ago.
Yes, absolutely.
And that's exactly why when Hans answered about 5 gs versus 4 gs monetization of it, customers don't buy different products like that. They buy the experience that's enabled by our network superiority. So I'm trying to make sure that I present those choices out to them in exactly that same way.
And then
Kai.
Thanks for the question on slicing. So we are right in the middle of putting our SA core in. That's what's going to give us the capability to do that, our 5 gs SA Core. We're starting to roll that out this quarter. And in 2021, we'll have it fully kind of fully operational.
Now we're working on the use cases of it and how do we the harder problems we're dealing with right now are how do you get end to end slice, right? So it's kind of easy to slice the RAN. I think we all know how that's going to go. Setting it up right is going to be difficult but we'll do that. But then how do I carry that through all the way end to end?
So we're thinking about that. A customer wants a slice. They want a full end to end scenario. So we're working on those hard problems too with the landline side. So early days with it, but we're excited about it.
We think it's going to be a good feature that especially enterprises will want to use and others, but you'll start seeing that in 2021.
Great. What about the 5 gs Home, Kyle?
The 5 gs Home, about the usage?
About the usage, that was Ronin.
That was Ronin. Ronin gave us a call. Ronin, why
don't you answer?
So
they about 5 gs usage. So we've seen 5 gs home usage actually grow, increase throughput speeds. Now we're seeing on average a gig. And what we're seeing is about 700 gigs a month, which is actually slightly higher than we're seeing in the Fios footprint. Does that answer your question, Mike?
Yes. The question was more, I guess, around sustainability as that scales up because it becomes
Oh, yes. Well, Carlos so much spectral capacity, you and I will be long since retired before I have any contention in the network whatsoever. You should see it as close as a wireless network can be to a direct substitute to end to end fiber because there's just literally so much capacity there. No expectation of contention. And don't forget when they're using it in the home environment, the time of day, the other things which Kyle was mentioning when he talked about how he manages capacity, I'm using it in a lot of cases differently and at different times.
So the combination of those two things is, I'm selling the same capacity at different times of the day for mobility and for home, and I have so much spectrum that, as I say, will all be long since retired before I run out.
Okay. Mike, Thack, thank you. And thank you, Ronan, Kyle, Tammy, Matt, all the leadership you got some more insight where we are on our execution. As I said, I feel good about where we are and what we outlined 2 years ago and where we are right now and looking forward to move into next year. Of course, we're going to close this quarter as well.
But coming into 2021, we have many of the pieces that we wanted in order to execute and take benefit on the investments we have done. So once again, thank you, everyone, and goodbye, and good night.