On Wednesday, telecom giant Verizon announced that it had purchased the fiber optic network business of XO Communications for $1.8 billion. The acquisition, announced via press release, could help bolster Verizon's efforts in 5G connectivity and next-generation wireless technology.
"XO's fiber network will add ever greater capacity and reach to Verizon's networks, a combination that will lead to enhanced capabilities, better services and faster rollout of next generation communication networks," John Stratton, Verizon executive vice president and president of operations, said in a press release.
According to the release, Verizon will immediately begin integrating the acquired assets. The new addition is expected to help with cellular network density as well.
SEE: Job description: Wireless network engineer (Tech Pro Research)
Verizon also announced that it will be leasing wireless spectrum from NextLink Wireless, formerly an affiliate of XO Communications. And, if certain conditions are met, Verizon could potentially purchase NextLink as well.
"Verizon anticipates the transaction will deliver in excess of $1.5 billion in operating and expense savings in net present value," the release stated.
5G is essential to the future of Verizon's wireless plans. Even though Verizon recently expanded its FiOS fiber internet service, former Verizon CFO Fran Shammo noted at a Goldman Sachs conference in September 2016 that 5G was cheaper to deploy than FiOS. "The cost benefit is pretty substantial, or at least we believe it is," Shammo said at the time.
The main reason for this is the infrastructure. Installing hardware for 5G and fixed wireless doesn't require digging up the ground to lay cables down, like fiber installation does. Additionally, working in the 28 GHz band, which came as part of the network lease, will assist in Verizon's 5G work as well.
Expansion of 5G and fixed wireless could benefit telecommuters and businesses in rural areas by giving them easier access to faster internet speeds. It also means that startups not operating in a fixed location will be able to launch from almost anywhere.
The 3 big takeaways for TechRepublic readers
- Verizon officially purchased XO Communications' fiber network business for $1.8 billion.
- The acquisition will boost the company's efforts in 5G trials and gigabit internet, giving it a stronger foundation to provide fixed wireless options.
- Verizon is also leasing spectrum from NextLink Wireless, with the 28 GHz band offering even more advantages in 5G trials.
- CES 2017 proves that 5G is the next evolution in wireless (TechRepublic)
- Equinix scoops up 24 Verizon data centers for $3.6 billion (ZDNet)
- Verizon targets smart city growth with acquisition of Sensity Systems (TechRepublic)
- Verizon to 'unlimited' data users: 'You use over 200GB so we're cutting you off' (ZDNet)
- 5G connectivity means big changes for business and consumers. Here's a look ahead at some of them. (TechRepublic)
Conner Forrest has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.