One of the best ways to understand telecom

I’ve been covering the industry since 1999, always trying to get closer to the truth. I’ve learned from hundreds of the best. If you’re trying to understand telecom, I’m always happy to exchange ideas. If you’re in the industry and need answers, ask me. Our consulting rates are fair and if I can’t help you I’ll say so. Dave Burstein daveb@dslprime.com

Our analysis

It’s all free, at least until the book is ready.

5G: The Facts and the Future is probably the best current review publicly available. 60 pages, loaded with data and projections. No hype. Worldwide coverage, updated weekly. tl;dr unless you’re really interested in wireless.

June 2020 H1 5G subscribers 86M (84M-92M)
China is > 70% of 5G as subs pass 80M
US Q2 5G 5-6 million. Year-end 12-17 million
Moffett’s Remarkable Insight: Low marginal cost means nothing if you can’t sell it
Primary: Cost per bit of wireless is falling at a ferocious rate
5X Advance for Africa with Massive MIMO, Spectrum

Consulting

When you need analysis, research, or project management, consider us. A different point of view on your plans. A perspective that’s informed by very wide experience. Call me. Dave Burstein daveb@dslprime.com 347-603-6442

We have little overhead so our fees are usually somewhat lower.

Teleinformed — Expert on call

The best, fastest way for you and your team to learn the latest. An informed expert on call when you need answers or an outside opinion. A news service customized by hand for what you need.

All based on what you tell me are your key interests. IoT in 5G? Edge in the Data Center? Germany competition? Spectrum sharing? Price of phones? Is Open-RAN ready? or …
I spend untold hours researching every week, with help from Google translate. Guaranteed to find useful information easily missed.

  • A monthly customized news presentation, probably via Zoom, with plenty of time for your questions.
  • Up to six calls looking for specific information, such as the history of a new customer or a country’s regulatory policy. Including a reasonable amount of research.
  • Brainstorms on your new ideas, combined with reality checks. Any reasonable amount of time.
  • Regular emails when I discover news important to you. E.g. The customer of a client has a new initiative that would be natural for sales follow-up.

Targeted package, $300/month, paid quarterly. Satisfaction guaranteed or money refunded.

Analyzing Telecom

Hottges
5G is not raising Canadian capex

Canadian telcos claim 5G at 1.7 Gbps. Actually, in the spectrum they have, 300 Mbps would be extraordinary in a real test. In the lab, they can combine four 4G bands (1.2-1.4 Gbps) with a single 5G band to reach that figure. 4G is still faster than low-band 5G until many problems are solved.

The first substantial 5G testing results are unbelievably bad. (Open Signal.) The scam of “low-band 5G,” spreading in Germany, is slower than decent 4G. Indoor results, including mid-band, are dismal.:

  • Verizon mmWave 5G customers connected 0.4% of the time despite $billions spent on the network.
  • Korea has >90% outdoor coverage but only 15% 5G connection rate
  • T-Mobile 5G 49 Mbps, AT&T 61 Mbps. Canada 4G 69-75 Mbps
  • My analysis, that 5G capacity would be great, may be totally unsound.
  • Latency at Verizon is 30 ms; no 5G deployment has very low latency. 1-10 ms is a fantasy outside the labs.
  • 10-20 ms latency will be possible in the few places outside China building Edge networks.

17.6 million 5G phones in June in China is on track for 150 million year-end. Fine phones from US$230-260 and $13 service plans driving demand, although few practical uses have developed.

Craig Moffett warns about “the fallacy of marginal cost advantage. … It’s not true with telecom.” Remarkable technical advances have resulted in more capacity almost everywhere than the telcos can sell. Result: the low costs of Verizon’s mmWave or Rakuten’s new network are useless unless buyers can be found. Verizon’s Hans Vestberg is learning that the hard way.

5G slower than 4G in the US Finally, Data: US 5G slower than Canada’s 4G. Believe it and Germany.

A huge question for Edge inside telco networks is whether the web giants will take over. It’s now clear most Edge is a hybrid cloud and hybrid clouds need huge teams of engineers to manage. Many telcos are deciding to hand over to the web giants and take a (modest) percentage. Even the telcos building their own, like Verizon and DT, will find profits hard to come by, Pal Zarandy notes. “Buyers like Google, Amazon, Microsoft, Facebook with massive bargaining power would bargain away MNOs’ margins. Near zero marginal cost network economics => near zero margin to be made on wholesale access.” He’s talking about other services than Edge but the point holds. Will the telcos be able to cash in on their terminating monopoly? To be seen.

Keith Bradsher in the NY Times dramatically makes clear the effectiveness of industrial policy support in his article on the growth of Chinese medical supply manufacturers. Indian telecom production is booming under protectionism. Ericsson & Nokia benefit from over a $billion in EU R&D in 5G.
The US chip industry has come together to demand $30 billion. Senator Mark Warner wants $billion for 5G in the U.S. From cruises to autos to pharma, business leaders decry government support except for their own companies.
US policy for 40 years has been to stimulate the economy with tax cuts, although only a small fraction of the money goes to expanding investment. The money would be far more effectively used for investment in strategic industries. That works whether the government is capitalist or communist – so long as it’s not captured by industry or totally corrupt.

“The Moving Finger writes; and, having writ, moves on.”  If you’d like America’s top China trade rep to speak for you instead, Jeffrey Gerrish has abandoned Trump and returned to Skadden Arps. Million dollar retainers expected.

“What jumped out to me was how users’ current thoughts are mostly around smartphones, IoT/sensor data collection, display boards, CCTV and so on. Whereas MNOs are focused on automation, robots, AR/VR and the ‘sexier’ applications.” Dean Bubley writes, adding that all the likely apps work fine on 4G. Telefonica CTO Enrique Blanco also wonders whether 5G is actually needed for IoT. (Hint: not.)

Some people still think 5G is expensive to build. AT&T & Orange are cutting capex while building 5G. Deutsche Telecom is keeping it flat. 5G does not cost more than 4G.

Tim Hottges, CEO of DT, is the Great Welsher. TMO wants out of merger agreements to serve 93% of Californians with carefully tested 300 Mbps by 2024 and to cut 1,000 jobs.

Telcos’ greatest problem: demand growth is slowing while technology is increasing at a ferocious rate. Hans Vestberg of Verizon claims, and I can confirm, that cost per bit is going down at 40%/year. Traffic growth is now typically 25%-35%. Every investor implicitly acknowledges this: the number of subscribers is crucial to the stock price response after quarterly earnings.
That’s the reason why millimeter wave, the real 5G, finds so little demand. When the enormous capacity of mid-band spectrum became clear, carriers realized they would have more capacity than they could sell without mmWave.
The primary factor in telco profitability is how close the carriers come to cartel-like pricing. CEOs talk about “rational pricing,” a true description that should be a signal to antitrust enforcers. When carriers have unused capacity in most locations, the natural act is to break from the (unspoken) cartel.

For a good understanding of AI today, read Architects of Intelligence: The truth about AI from the people building it by Martin Ford. To understand China, the U.S. and what’s going on, Kai-Fu Lee’s AI Superpowers: China, Silicon Valley, and the New World Order is deeply informed but easy to read. AI/Machine Learning has limits. It is great for translation, video surveillance, and speech recognition. It’s been disappointing, so far, in tasks like network optimization. (That could change)

Multi-cloud and hybrid cloud are crucial trends in data centers, Equinix is demonstrating, per Nick Del Deo of Moffett.

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China is > 70% of 5G as subs pass 80M

At the end of June 2020, China had ~65 million 5G phones, Korea 7.5 million, the U.S. 5-6 million, and the rest of the world perhaps 4 million. In June 2019, Minister Miao Wei told the giant Chinese telcos “accelerate” and the results are…

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US Q2 5G 5-6 million. Year-end 12-17 million

According to Ken Hyers at Strategy Analytics, 3.4 million 5G phones shipped in Q1 in the U.S. and 2.7 million in Q2. Stores were closed and promotion limited. Some of the 6.1 million shipped were in transit or store inventory, hence the total of…

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June 2020 H1 5G subscribers 86M (84M-92M)

China had ~65 million 5G phones, Korea 7.5 million, the U.S. 5-6 million, and the rest of the world perhaps 4 million. Only China and Korea provide official figures. Update August 11 China 5G phones 14M, down 3M from June. M Science has a…

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5X Advance for Africa with Massive MIMO, Spectrum

In 2014, Stanford Professor Paulraj told me MU MIMO would be the most effective way to deliver the capacity Africa needed. In 2016, the first Massive MIMO systems were deployed by Softbank Japan and China Mobile. The results were excellent. Softbank reported “up to…

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Consulting

When you need analysis, research, or project management, consider us. A different point of view on your plans. A perspective that’s informed by very wide experience. Call me. Dave Burstein daveb@dslprime.com 347-603-6442 We have little overhead so our fees are usually somewhat lower….

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