Telcos’ Biggest Problem is Massive Overcapacity With Few Buyers

AT&T and Verizon have said publicly their cost per bit is going down 40% per year. (Confirmed and fact-checked.) Traffic growth is down, often below 30% and falling.

Result: Misery.

The diagram at left is from Verizon CTO Kyle Milady. It shows capacity margin roughly doubling from 2016 to 2020. (That’s the distance between the red and black lines. Larger below.) This is before mid-band, which is a huge step-function in capacity.

The unused capacity is the reason T-Mobile is aggressively selling FWA. Once a mid-band Massive MIMO network is built, virtually all cells have unused capacity. The marginal cost of delivering that surplus approaches zero.

Carriers around the world have said FWA is a big part of their plans.

AT&T shocked everyone by dramatically underbidding T-Mobile for the Boost contract. . Verizon delivers all the network for the fast-growing cable wireless. The low bandwidth cost is why Verizon CEO Hans Vestberg just told Wall Street the contract is very profitable.

Both AT&T and Verizon have told me publicly their cost per bit is going down 40% per year. (Confirmed and fact-checked.) When Stanford Professor Arogyaswami Paulraj won the Marconi Prize in 2014, the “Nobel of Communications,” he described a path to a 50 times increase.

Mid-band spectrum wildly increases what carriers can handle. ~2x is a reasonable approximation. Massive MIMO does even more. It raises what a telco can deliver on average 3-5 times*. Between 2021 and 2025, on T-Mobile and Verizon will go up 5-12 times. Traffic growth has slowed to ~30% per year and is falling.

The typical siteCarrier aggregation doubled and tripled capacity the last few years.

T-Mobile US has covered 65% of the US with 100 Mbps mid-band, 80% by yearend,

*The result in a given cell site varies enormously based on terrain, network choices, and what is there already. Traffic growth also varies a great deal.

great economics in the mid bands as it shares the 4G grids, the existing 4G grids, and reduces significantly the need for new sites and it allows a shared use case with mobile broadband.

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