If you ask a dozen experts who has the best 5G network in the United States right now, you might not be able to find a discernible winner between AT&T (T 1.67%), T-Mobile US (TMUS 1.69%), and Verizon (VZ 1.75%).
Two recent reports on the state of 5G in the U.S. crowned two different winners. RootMetrics said AT&T has the best 5G network based on superior download speeds and reliability. Ookla said T-Mobile's speeds are best right now and its customers can connect to its 5G network more often.
But current rankings provide little value to investors. 5G is still in the early stages. Investors should be looking to which carrier has the strongest potential to create an advantage with its 5G network.
5G is more like 4G+ right now
If a customer is connected to a 5G network, it's reasonable for them to expect noticeably faster speeds than on their carrier's LTE network. For the most part, that's not the case right now.
Among the three major carriers in RootMetrics' study in the early months of 2021, just one broke a median download speed of 100 Mbps -- T-Mobile. What's more, the carrier was only able to produce those speeds in one of the 45 markets RootMetrics tested (Syracuse, New York).
It's not uncommon for carriers to offer similar speeds on their 4G and 5G networks right now. That's because the bulk of 5G availability is on the same spectrum wavelengths as the carriers' 4G networks.
In fact, AT&T and Verizon are using the exact same spectrum to provide 5G coverage by using dynamic spectrum sharing. That strategy can have a noticeable negative impact on 4G LTE customers. Verizon, for example, saw its median 4G LTE speed drop in RootMetrics' latest update.
While the current 5G strategy used by all three carriers improves coverage, it doesn't provide much advantage over good 4G LTE coverage.
Things may change quickly
In the RootMetrics report, the analysts said, "The current leaderboard could shift quickly if T-Mobile can continue to show improved speeds along with its already broad availability, or if Verizon can pair its rapid 5G expansion with faster speeds going forward."
Indeed, the "leaderboard" metrics the benchmarking company uses favor T-Mobile. That's because the telecom already has a plan in place to improve speeds nationwide by deploying its mid-band spectrum, most of which it acquired in the merger with Sprint.
Those mid-band frequencies deliver faster speeds but require more cell sites in order to provide the proper coverage. While it's more labor and time-intensive, the resulting network ought to provide faster and more reliable coverage, especially when combined with the existing low-band 5G network in place.
T-Mobile said it expects to increase the number of people covered by its mid-band spectrum network from 125 million at the start of March to 200 million by the end of 2021.
Meanwhile, Verizon bought up a ton of C-band spectrum in the 3.7 GHz range earlier this year. But the company won't be able to use that spectrum until the end of the year after clearing it. Still, Verizon's putting equipment in place now so that the telecom only has to flip a switch, so to speak, when it's ready. That could vastly improve Verizon's coverage and speeds, but it won't happen until the first quarter of next year.
AT&T isn't moving as quickly as Verizon. It also bought a lot of spectrum at this year's auction, but it hasn't been as aggressive in building out the network before it can use those licenses. As a result, it could easily fall well behind T-Mobile and Verizon in 5G performance.
As 2021 goes on, investors should expect more experts to show T-Mobile is winning the 5G race. Not only that, but 5G will actually start to mean something as speed improvements over LTE become meaningful.
Investors looking to bet on a company to create value with its 5G network build-out would do well to avoid AT&T. T-Mobile should jump out to a clear lead this year -- perhaps it already has -- but Verizon is increasingly aggressive in its build-out and device promotions to get customers locked into the network, which could make it competitive in 2022.