EU investment "incentives" already failing. The latest Dell'Oro projection is that capex in Europe will be flat in 2015 despite a strong turn in EU policy in favor of the telcos. Julie Learmond-Criqui of Dell'oro emailed me  In 2015, we expect Capex in Europe will be flat." That's consistent with what the larger carriers are telling investors about their plans for the next several years. 

    I've found that the three most important factors in the level of capex are competition, new technology and direct return on investment. Policy changes rarely make much of a difference unless far more forceful than what most Western regulators would consider. The exception are policy changes that create or protect competition.  

   At the end of 2012, I met EU Commissioner Neelie Kroes for the only time. She said two things that are well on the way to proving untrue. Her changed competition policies would not kill competitors and would dramatically increase competition. Unbundling prices would stay high and the connection between cost and unbundling price would be eliminated on upgraded networks. Mergers were encouraged because she thought bigger companies are more efficient. (On average untrue, as dozens of academic studies have made clear. Ask Dilbert. Ironically the company he worked for, Pac Bell/AT&T, is an exception as Randall's Stephenson's team has proven extremely effective.)  Competition is hurting across Europe, with the top 2-4 companies pulling further away from everyone else. Investment hasn't responded.

   Kroes is a very smart and I believe honorable woman who was 73 but seemed whip sharp. But she was badly fooling herself. She claimed investment had gone up 25% which I knew was untrue because I was following the capex spending of the major firms. I asked her the source of the 25% figure. It came from a 25% increase in the loan applications to a European investment agency. I checked directly with that agency who confirmed they had no evidence of a general increase if investment.

   Two years later, the number prove that. Capex is up a little this year. Competition is driving Orange to speed up their LTE rollout and Deutsche Telekom finally to move on upgrading 2/3rds of Germany where cable has been killing them. Mathias Kurth. one of the most effective regulators I've followed, years ago told me DT would need no incentives to upgrade that 2/3rds of the country. Technology change is making wireless network upgrades nearly universal. LTE is proving something like 70% cheaper, making the momentum unstoppable. Estonia is going to 99% and I can't think of a major carrier not going to 90+%.    

     France's broadband offerings have been much better than America's for more than a decade because France protected competition like Iliad/Free while the U.S. let it die. Michael Boukobza, President of Free, in 2002 made the blunt statement "If ARCEP doesn't protect us, we're dead." Giving Free the fourth French mobile license caused prices to drop 20-40% and consumer use surged. 

      Vittorio Colao of Vodafone makes clear where the money will go as the EU pushes up prices. “The industry is not returning enough capital in Europe," (FT) Higher profits will have a modest effect on capex but most will go to shareholders. 

Here's the Dell'oro press release. The separate European figure was in a follow-up email. Dell'oro shares some of their full reports with me and I've found them very accurate.

Worldwide Telecom Carrier Capex Forecast to Decline $6 Billion in 2015

According to New Dell’Oro Group Carrier Economics Report

REDWOOD CITY, Calif. – September 30, 2014 – According to a newly published Carrier Economics report by Dell’Oro Group, the trusted source for market information about the networking and telecommunications industries, telecom operators around the world invested heavily in their fiber and LTE networks in 1H14 as the transformation from voice-centric to data-centric drivers continued.  Dell’Oro Group estimates worldwide Capex advanced at a mid-single digit rate in 1H14.  Double-digit growth in mobile network infrastructure significantly outpaced the low single-digit growth in service revenues.

“While we maintain our view that worldwide Capex will grow around 3% in 2014, we believe multiple factors will contribute to a decline in Capex during 2015,” said Stefan Pongratz, Dell’Oro Group’s Carrier Economics analyst. “Higher device penetration, decelerating mobile data growth rates, lack of new revenue streams, and increased competition in both the developing and developed markets have caused worldwide revenue growth to decelerate in the last couple of years.  Slower growth in service revenues coupled with the rapid network progress during 2014 in China, North America, Japan, and Europe will also put some pressure on worldwide Capex upside in 2015,” continued Pongratz.

Other Dell’Oro Group Carrier Economics Report highlights:

  • The amount of mobile Capex required to support incremental mobile data usage has declined more than 50% per year since the smartphone boom started.
  • Fiber and LTE coverage build-outs will continue to drive telecom equipment investments in 2H14 and 2015.  The proportion of Capex that will be allocated to new technology enablers and network topologies including NFV and small cells is expected to be negligible over the next six quarters.

 

<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">EU investment "incentives" already failing. The latest Dell'Oro projection is that capex in Europe will be flat in 2015 despite a strong turn in EU policy in favor of the telcos. Julie Learmond-Criqui of Dell'oro emailed me&nbsp;&nbsp;In 2015, we expect Capex in Europe will be flat." That's consistent with what the larger carriers are telling investors about their plans for the next several years.&nbsp;</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp; I've found that the three most important factors in the level of capex are competition, new technology and direct return on investment. Policy changes rarely make much of a difference unless far more forceful than what most Western regulators would consider. The exception are policy changes that create or protect competition. &nbsp;</span></p>
<hr id="system-readmore" />
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;At the end of 2012, I met EU Commissioner Neelie Kroes for the only time. She said two things that are well on the way to proving untrue. Her changed competition policies would not kill competitors and would dramatically increase competition. Unbundling prices would stay high and the connection between cost and unbundling price would be eliminated on upgraded networks. Mergers were encouraged because she thought bigger companies are more efficient. (On average untrue, as dozens of academic studies have made clear. Ask Dilbert. Ironically the company he worked for, Pac Bell/AT&amp;T, is an exception as Randall's Stephenson's team has proven extremely effective.) &nbsp;Competition is hurting across Europe, with the top 2-4 companies pulling further away from everyone else. Investment hasn't responded.</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;Kroes is a very smart and I believe honorable woman who was 73 but seemed whip sharp. But she was badly fooling herself. She claimed investment had gone up 25% which I knew was untrue because I was following the capex spending of the major firms. I asked her the source of the 25% figure. It came from a 25% increase in the loan applications to a European investment agency. I checked directly with that agency who confirmed they had no evidence of a general increase if investment.</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;Two years later, the number prove that. Capex is up a little this year. Competition is driving Orange to speed up their LTE rollout and Deutsche Telekom finally to move on upgrading 2/3rds of Germany where cable has been killing them. Mathias Kurth. one of the most effective regulators I've followed, years ago told me DT would need no incentives to upgrade that 2/3rds of the country. Technology change is making wireless network upgrades nearly universal. LTE is proving something like 70% cheaper, making the momentum unstoppable. Estonia is going to 99% and I can't think of a major carrier not going to 90+%. &nbsp; &nbsp;</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp; &nbsp;France's broadband offerings have been much better than America's for more than a decade because France protected competition like Iliad/Free while the U.S. let it die.&nbsp;Michael Boukobza, President of Free, in 2002 made the blunt statement "If ARCEP doesn't protect us, we're dead." Giving Free the fourth French mobile license caused prices to drop 20-40% and consumer use surged.&nbsp;</span></p>
<p>&nbsp; &nbsp; &nbsp;&nbsp;Vittorio Colao of Vodafone makes clear where the money will go as the EU pushes up prices. “The industry is not returning enough capital in Europe," (FT) Higher profits will have a modest effect on capex but most will go to shareholders.&nbsp;</p>
<p>Here's the Dell'oro press release. The separate European figure was in a follow-up email. Dell'oro shares some of their full reports with me and I've found them very accurate.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>Worldwide Telecom Carrier Capex Forecast to Decline $6 Billion in 2015</strong></p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>According to New Dell’Oro Group Carrier Economics Report</strong></p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>REDWOOD CITY, Calif. – September 30, 2014</strong>&nbsp;– According to a newly published Carrier Economics report by Dell’Oro Group, the trusted source for market information about the networking and telecommunications industries, telecom operators around the world invested heavily in their fiber and LTE networks in&nbsp;<span class="aBn" data-term="goog_1522628277" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">1H14</span></span>&nbsp;as the transformation from voice-centric to data-centric drivers continued. &nbsp;Dell’Oro Group estimates worldwide Capex advanced at a mid-single digit rate in&nbsp;<span class="aBn" data-term="goog_1522628278" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">1H14</span></span>.&nbsp; Double-digit growth in mobile network infrastructure significantly outpaced the low single-digit growth in service revenues.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">“While we maintain our view that worldwide Capex will grow around 3% in 2014, we believe multiple factors will contribute to a decline in Capex during 2015,” said Stefan Pongratz, Dell’Oro Group’s Carrier Economics analyst. “Higher device penetration, decelerating mobile data growth rates, lack of new revenue streams, and increased competition in both the developing and developed markets have caused worldwide revenue growth to decelerate in the last couple of years. &nbsp;Slower growth in service revenues coupled with the rapid network progress during 2014 in China, North America, Japan, and Europe will also put some pressure on worldwide Capex upside in 2015,” continued Pongratz.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">Other Dell’Oro Group Carrier Economics Report highlights:</p>
<ul style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">
<li style="margin-left: 15px;">The amount of mobile Capex required to support incremental mobile data usage has declined more than 50% per year since the smartphone boom started.</li>
<li style="margin-left: 15px;">Fiber and LTE coverage build-outs will continue to drive telecom equipment investments in&nbsp;<span class="aBn" data-term="goog_1522628279" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">2H14</span></span>&nbsp;and 2015. &nbsp;The proportion of Capex that will be allocated to new technology enablers and network topologies including NFV and small cells is expected to be negligible over the next six quarters.</li>
</ul>
<p>&nbsp;</p><p><span style="font-size: 12pt; line-height: 130%; color: #000000;">EU investment "incentives" already failing. The latest Dell'Oro projection is that capex in Europe will be flat in 2015 despite a strong turn in EU policy in favor of the telcos. Julie Learmond-Criqui of Dell'oro emailed me&nbsp;&nbsp;In 2015, we expect Capex in Europe will be flat." That's consistent with what the larger carriers are telling investors about their plans for the next several years.&nbsp;</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp; I've found that the three most important factors in the level of capex are competition, new technology and direct return on investment. Policy changes rarely make much of a difference unless far more forceful than what most Western regulators would consider. The exception are policy changes that create or protect competition. &nbsp;</span></p>
<hr id="system-readmore" />
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;At the end of 2012, I met EU Commissioner Neelie Kroes for the only time. She said two things that are well on the way to proving untrue. Her changed competition policies would not kill competitors and would dramatically increase competition. Unbundling prices would stay high and the connection between cost and unbundling price would be eliminated on upgraded networks. Mergers were encouraged because she thought bigger companies are more efficient. (On average untrue, as dozens of academic studies have made clear. Ask Dilbert. Ironically the company he worked for, Pac Bell/AT&amp;T, is an exception as Randall's Stephenson's team has proven extremely effective.) &nbsp;Competition is hurting across Europe, with the top 2-4 companies pulling further away from everyone else. Investment hasn't responded.</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;Kroes is a very smart and I believe honorable woman who was 73 but seemed whip sharp. But she was badly fooling herself. She claimed investment had gone up 25% which I knew was untrue because I was following the capex spending of the major firms. I asked her the source of the 25% figure. It came from a 25% increase in the loan applications to a European investment agency. I checked directly with that agency who confirmed they had no evidence of a general increase if investment.</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp;Two years later, the number prove that. Capex is up a little this year. Competition is driving Orange to speed up their LTE rollout and Deutsche Telekom finally to move on upgrading 2/3rds of Germany where cable has been killing them. Mathias Kurth. one of the most effective regulators I've followed, years ago told me DT would need no incentives to upgrade that 2/3rds of the country. Technology change is making wireless network upgrades nearly universal. LTE is proving something like 70% cheaper, making the momentum unstoppable. Estonia is going to 99% and I can't think of a major carrier not going to 90+%. &nbsp; &nbsp;</span></p>
<p><span style="font-size: 12pt; line-height: 130%; color: #000000;">&nbsp; &nbsp; &nbsp;France's broadband offerings have been much better than America's for more than a decade because France protected competition like Iliad/Free while the U.S. let it die.&nbsp;Michael Boukobza, President of Free, in 2002 made the blunt statement "If ARCEP doesn't protect us, we're dead." Giving Free the fourth French mobile license caused prices to drop 20-40% and consumer use surged.&nbsp;</span></p>
<p>&nbsp; &nbsp; &nbsp;&nbsp;Vittorio Colao of Vodafone makes clear where the money will go as the EU pushes up prices. “The industry is not returning enough capital in Europe," (FT) Higher profits will have a modest effect on capex but most will go to shareholders.&nbsp;</p>
<p>Here's the Dell'oro press release. The separate European figure was in a follow-up email. Dell'oro shares some of their full reports with me and I've found them very accurate.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>Worldwide Telecom Carrier Capex Forecast to Decline $6 Billion in 2015</strong></p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>According to New Dell’Oro Group Carrier Economics Report</strong></p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;"><strong>REDWOOD CITY, Calif. – September 30, 2014</strong>&nbsp;– According to a newly published Carrier Economics report by Dell’Oro Group, the trusted source for market information about the networking and telecommunications industries, telecom operators around the world invested heavily in their fiber and LTE networks in&nbsp;<span class="aBn" data-term="goog_1522628277" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">1H14</span></span>&nbsp;as the transformation from voice-centric to data-centric drivers continued. &nbsp;Dell’Oro Group estimates worldwide Capex advanced at a mid-single digit rate in&nbsp;<span class="aBn" data-term="goog_1522628278" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">1H14</span></span>.&nbsp; Double-digit growth in mobile network infrastructure significantly outpaced the low single-digit growth in service revenues.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">“While we maintain our view that worldwide Capex will grow around 3% in 2014, we believe multiple factors will contribute to a decline in Capex during 2015,” said Stefan Pongratz, Dell’Oro Group’s Carrier Economics analyst. “Higher device penetration, decelerating mobile data growth rates, lack of new revenue streams, and increased competition in both the developing and developed markets have caused worldwide revenue growth to decelerate in the last couple of years. &nbsp;Slower growth in service revenues coupled with the rapid network progress during 2014 in China, North America, Japan, and Europe will also put some pressure on worldwide Capex upside in 2015,” continued Pongratz.</p>
<p style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">Other Dell’Oro Group Carrier Economics Report highlights:</p>
<ul style="color: #222222; font-family: arial, sans-serif; font-size: 12.8000001907349px; line-height: normal;">
<li style="margin-left: 15px;">The amount of mobile Capex required to support incremental mobile data usage has declined more than 50% per year since the smartphone boom started.</li>
<li style="margin-left: 15px;">Fiber and LTE coverage build-outs will continue to drive telecom equipment investments in&nbsp;<span class="aBn" data-term="goog_1522628279" tabindex="0" style="border-bottom-width: 1px; border-bottom-style: dashed; border-bottom-color: #cccccc; position: relative; top: -2px; z-index: 0;"><span class="aQJ" style="position: relative; top: 2px; z-index: -1;">2H14</span></span>&nbsp;and 2015. &nbsp;The proportion of Capex that will be allocated to new technology enablers and network topologies including NFV and small cells is expected to be negligible over the next six quarters.</li>
</ul>
<p>&nbsp;</p>

Newsletter

Often interesting

Events

Mobile World Congress, Barcelona, Feb 27-March 2 100,000 mob Barcelona. Fares from New York are triple the usual price and hotels even higher - if you can find one less than a hour from the city. Everybody who is anybody goes so everybody who is anybody goes. Beyond the pomp and hot air are a slew of top technical people. Seek them out and make sure yo make appointments in advance with the people you want to see. Hint: You can still get rooms at the hostels in town. Next year, book way in advance to get one of the hotel rooms GSMA have negotiated with the city.

Digital Hollywood Media Summit, New York March 7-8. Victor Harwood always had an enormous number of top people in an almost overcrowded schedule. Senior folks from advertising, all media, marketing and more. VR and AR are heavily represented, from the talent to the salesmen. The price is about half what most shows charge and there are discounts for those with limited resources, including students.  A great way to learn what the most advanced in these fields are doing.

Brooklyn 5G Summit April 19-21st The most sophisticated people in wireless will be there, from the CTOs of NTT and Nokia to the most respected academics on the planet. Incredible S/N. If you can't come to Brooklyn, you must watch the stream. It takes two or three years for most people to catch up to what's learned here.

G.fast Summit, Paris May 9-11 Trevor Linney of BT is deploying 10M lines. John Cioffi promises something astonishing. Everyone in the industry will be there except Broadcom, being their usual antisocial self. On the 9th, Hubert Mariotte of the standards committee has a deep technical tutorial and I have a session for everyone else.

TNO Ultrabroadband Den Haag June 12-15 Always a strong group.

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