Neville Ray

Chasing Neville Ray: VZ & T building but will be behind until 2024-2025

T-Mobile US is building the best 5G network in the West. He’s reached 125 million with an average speed of 300 Mbps down, using the golden 2.5 GHz spectrum acquired from Sprint. Year end 2021 will be 200 million. 2023 or 2024 will be a guaranteed 100 down 5G for 300 million, 90% of the US. 99% will get 5G at lower speeds.

In other words, all but a very small chunk of the US will have decent 5G as fast as it can be built. Any proposal to subsidize beyond that small fraction is either pure corporate welfare of stupid waste. VZ, T, and some regionals are lobbying hard for subsidies. So is TMO, although it is committed to reach these targets without subsidy as part of the Sprint merger approval.

Any politician who agrees to unnecessary wireless spending is either corrupt, incompetent, or stupid. Being uninformed is no excuse, even if you are Joe Biden or Kamala Harris. (Whom I will continue to strongly support for other reasons.)

Verizon and AT&T each spent ~$40 billion for mid-band (3.7 GHz) spectrum. Now, both “are investing at scale.” (Dan Schlanger Crown Castle & Rod Smith American Tower, below)

Verizon has added $10 billion to capex over three years, on top of its previous ~$17 billion/year/ It is upgrading radios on existing towers essentially as fast as possible. The goal is 200 million by late 2023, about two years behind TMO.

It has ended the virtual freeze on mmWave small cells, now at less than 3% of the country. I infer a target of ~10% of the country early in 2022. The original goal of 30% in 2021-2022 is now delayed by three years. It is redlining most poor areas and communities of color.

AT&T is jumping capex from ~$16 billion in 2020 (far down) to $24 billion/year. It hasn’t given forecasts on 5G homes passed but is clearly not moving as fast as Verizon. Schlanger’s comment AT&T is building at scale is therefore welcome. T is doing very few small cells. It will almost exclusively do mid-band from towers, backed by pr about “low-band 5G” running at 4G speeds or less.

15-20% of capex is going for ~4 million lines/year of fiber home. That’s a big increase and is enough to create a severe shortage of industry capacity. Fiber hopefuls, including RDOF bidders, are facing higher prices. Some are seeing bids withdrawn and replaced at greater cost.

It takes a year or two of experience for installers to become efficient. It takes at least 2 years and more likely 3 or 4 years for a new or rapidly growing operation to find a groove. That’s the experience of Verizon President Larry Babbio, BT Openreach, and Qwest’s first FTTH effort.

Burlington’s muni fiber and UTOPIA in Utah tried to go faster. Both came in more than double the budget and literally went bankrupt. So many promising projects were disasters in the $7 billion 2010 broadband stimulus I went looking for what mad for success. Those with operational experience, facilities in place, and leadership with network or construction experience did best.

Those without – most of the hopefuls in the infrastructure plan – are more likely to fail. That doesn’t mean to exclude them, but slowly ramping funding, strong support, and close monitoring are absolutely required. Anything else is not good enough for government work.

Neville has emerged as clearly the most respected CTO in North America now that Tony Werner of Comcast is retiring. He saw in 2018 what I’m writing in 2021 and delivered. Management at Verizon and AT&T didn’t get it until two years later.

US wireless through 2024 is highly predictable: TMO is far ahead, will continue subscriber success, and will be hard to catch.

Dan Schlanger, CFO of Crown Castle, this week told investors

 all of our carrier customers starting to spend on a 5G investment at scale. And we’ve been talking about this moment for a while now, but we’re seeing it in action. And that’s a good thing for us. It’s good thing for our peers in our business. And it’s something we’ve been looking forward to for a while. When we think about kind of historical context of the activity levels now, when we gave guidance at the end of last year for 2021, we knew that this year was going to be an upswing from last year. So we had more tower growth in ’21, than we were expecting more tower from ’21 that we performed that at ’20. And that’s really coming true. And ’20 was a good year. And so when we look at ’21, our organic growth in the tower business is in the neighborhood of 6% per year, or 6% of the revenue launch

Rod Smith of American Tower confirms

We are seeing it accelerate into this year as well. To put a finer point on it, I pointed to think specifically one, is the level of applications that we’ve seen come in is the highest we’ve seen in quite some time. And certainly could be paced towards having a record year in terms of new applications from carriers for both new co-locations as well as amendment activity on the side.

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