Samsung signed a major network deal with Verizon, worth $6.65 billion, as the South Korean electronics giant deepens its presence in the U.S. and boosts network credibility.
A public disclosure on Samsung’s website shows the supply contract for radio equipment and services, signed Friday, runs through the end of 2025. Samsung was already one of Verizon’s early 5G suppliers, alongside leading equipment vendors Ericsson and Nokia.
Samsung didn’t get back to questions from Fierce before this story published.
Samsung builds credibility as Nokia loses out
While possibly best known as a top smartphone maker, the deal with Verizon gives Samsung’s network business a new injection of credibility.
Samsung already has contracts with U.S. operators including AT&T and U.S. Cellular, as well as deals with operators in Canada, Japan, and at home in South Korea, among others. It’s been largely absent from major operators in Europe, which mainly relied on the big three of Ericsson, Nokia and Huawei.
“It’s healthy,” said industry analyst Joe Madden, founder and president Mobile Experts, of Samsung’s addition to the approved secure vendor pool dominated by Ericsson and Nokia. “Samsung has now become a credible third option.”
He said that’s also true for the Western part of the world in countries that have decided to ban the use of Huawei or ZTE, where operators now have another choice in Samsung.
And working with Verizon in this new capacity “absolutely gives Samsung credibility as they go into other customers,” Madden acknowledged. “Verizon has the most efficient network in the world in terms of spectral efficiency, the capacity they get for every dollar they spend; it’s very well respected.”
As for Nokia, rumors surfaced over the summer that Verizon might replace the vendor in favor of Samsung. At the time both Nokia and Verizon maintained that the Finnish supplier was a key partner.
With the multi-billion contract going to Samsung, Madden believes it’s a sign of the trends for Nokia, and marks a loss of market share for the Finnish vendor.
“This is a sign post saying you just lost a major $6 billion contract. That’s money that Nokia would have captured a few years ago and now that’s going to Samsung.”
Signals success for Verizon’s interoperability efforts
Madden pointed out that news of the contract is not necessarily a surprise, but follows on a continued trend of Verizon running trials first with vendors Samsung and Ericsson, followed by Nokia.
The FCC’s CBRS spectrum auction closed recently, where Verizon committed $1.89 billion to purchase Priority Access Licenses (PALs) in the shared CBRS 3.5 GHz band. Meaning Verizon has a lot of new spectrum across markets and a contract was bound to be awarded, Madden added.
Notably, he said the deal with Samsung speaks to the success of Verizon’s interoperability work among its network suppliers.
In general, Verizon’s network historically has been half Ericsson and half Nokia gear. However, adding new infrastructure to the network isn’t as simple as picking one supplier or another, Madden noted, since equipment has to interact with the existing gear in place. So if Verizon wants to use Samsung’s mmWave or CBRS radio overlayed on Nokia’s 3G or 4G gear – the elements need to work together.
Over the last three years Verizon’s been developing interoperability between its three suppliers, Madden said.
“It’s been mixing and matching between the three and forcing the kind of compatibility that the open RAN ecosystem is trying for,” he said, adding that the carrier essentially created that functionality within Verizon’s own ecosystem.
To Madden, the Samsung deal means “that Verizon now believes they’ve done enough testing on the interoperability that they have everything working, so that they can put a Samsung CBRS right on top of a Nokia LTE system” for example.
In late July, Samsung announced general availability of its CBRS Massive MIMO radios. It’s already deployed tens of thousands of mid-band Massive MIMO radios in South Korea, which Samsung’s Head of Customer Technology Solutions Sanjay Kodali over the summer suggested gives the vendor proven experience for commercial deployments looking ahead in the C-band for U.S. operators.
With the C-band auction coming up in December, Madden thinks Samsung will be in a good position there too. Verizon’s expected to bid competitively and he expects the spectrum also will also be an overlay of 5G on top of the existing network, with the same interoperability issues as newly available CBRS spectrum.