Frozen Wireless: 14% 2020 Traffic Growth

In 2020, U.S.wireless traffic grew only 14% by far the lowest rate at least in a decade. Growth in 2019 was only 30%. Traffic growth worldwide has been falling for years. 40% and 50% growth rates are now long gone.

Technology continues to advance rapidly, especially MIMO and Massive MIMO. Verizon and AT&T estimate a 40% annual improvement in capacity. The gap between what they can deliver and what they can sell is getting much wider.

Demand for new cells also plummeted. Only 22,000 were added in 2020, less than half the number in 2019. Nearly all were small cells. Very few towers are going up. Crown Castle, with the most small cells, just cut its 2021 plans from 10,000 to 5,000. 

I've asked CTIA if they will share 2021 data. My guess is that demand is better because people get out more. But there's little data.

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Telefonica Germany/Tele Columbus huge cable sharing deal

Dr Daniel Ritz, CEO of German cableco Tele Columbus, believes in "non-discriminatory opening of our networks" and "open access." It's made a deal for Telefonica to sell capacity on its cable and fiber networks. Telefonica 

Backed by a half-billion investment by Morgan Stanley, Ritz intends to expand including FTTH. It has a natural edge-out possibility, with possible assistance from government money.

Competition has mostly failed in broadband except where network sharing is common. French prices are half the prices in the US, because network sharing (unbundling) has resulted in 4 competitors. Time Warner Cable proved two decades ago it's practical to share cable networks. I subscribed to Earthlink over Time Warner Cable, possible because of a condition in the AOL-Time Warner merger.

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"Take a number and wait." US at limits in building broadband

Fiber builders were maxed out early in 2020 and then AT&T decided to pass 12 million more homes with fiber over four years. The FCC RDOF program adds millions more. The headline comment is from one of the largest construction companies in U.S. telecom. 

I believe the skill and parts shortage means it's stupid to spend more than $2-3 billion on broadband infrastructure in 2022 and little more in 2023. Growth after that is possible but would require effective manpower training and organization building.

Industry experience is employees become most efficient after 18-24 months. Building an organization that can efficiently manage fiber construction took 3 and 4 years at Verizon and British Telecom. I spoke with Burlington Telecom, a city-owned fiber service. It had gone broke, leaving the city with a $30 million bill to cover. I spoke with them about four years after they began construction. They told me, "Now, we are ready to do the job."

Jonathan Adelstein, now head of the Wireless Infrastructure Association, oversaw billions in spending as head of the Rural Utilities Service. He writes me

To get broadband built out quickly, you need three ingredients that are in short supply right now: equipment, like yellow trucks for construction – materials, like fiber – and manpower, especially skilled labor that knows how to deploy broadband infrastructure. You need all three in place at once to get networks built.

Right now is bad timing on all three, which means this could take longer than policymaker hope and more delays than rural America needs.

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Data confirms "digital redlining" of rural black south

DC pols and uninformed reporters claim the U.S. has a major problem of broadband "unserved." Actually, the best available figure is that all but 5% were covered in 2019, At least half of the remainder are funded for fiber under RDOF. There aren't many "unserved" to reach and the White House is lying about the extent of the problem. 

But a study by Dominique Harrison of the Joint Center convinced me to look closely at select areas. She estimated that 26% of those in the Black Rural South have no decent connection choices.  

37% of rural homes in Arkansas were unserved (25/3) in 2019, per the FCC. So were 35% of Louisiana rural homes and 27% of Alabama. Non-Sothern rural areas were 91% covered.

The numbers confirm that digital redlining is a reality.

5G Base stations $13,000 in China

Most carriers don't order 200,000 5G base stations so will pay more, but that's the actual price for the joint procurement of China Telecom and China Unicom. The 200,000-300,000 cells the two jointly are upgrading are probably more than the entire rest of the world will add. The second Chinese network, jointly built by China Mobile and China Broadcast, is growing even faster. 

Huawei and ZTE will probably split 90% of the order, with Ericsson, Nokia, and perhaps CICT/Datang getting the rest. Ericsson was so worried they'd lose their share - traditionally 10% - that CEO Börje Ekholm actually threatened to move out of Sweden is the country blocked Huawei. (He didn't.)

The price of state-of-the-art commercial base stations is now so low the new Open RAN companies will find it hard to survive. Altiostar (owned by the Japanese) and Mavenir (de facto controlled by Koch) are charging much more because they don't have the volume. Some fantasists in DC think O-RAN will result in US lead in 5G. But Indian giants (Jio-Radisys & Bharti-Tata) will soon be much larger. Ericsson, Samsung, and especially Nokia are opening up.

Since the first 5G equipment hit the market in 2019, it's been clear to the industry that 5G would be similar in cost to 4G. Except for the US midband, 5G networks are being built without a rise in capex. (The analysts and reporters still saying otherwise should find another line of work.)  

Goldman Sachs: Fiber = "Material value creation"

Telcos are massively upgrading DSL to fiber, generally with minimal government support. Spain is 88% covered, France 73%. AT&T has 15 million homes passed and is adding 12 million more. British Telekom and Deutsche Telekom assert they are building as fast as possible (a politician's truth.) 52% of Europe is fibered, as you can see on the chart from the FTTH Council Europe, at left and larger below.

 Fiber is good business for telcos except in areas that are very expensive to build. Brett Feldman of Goldman Sachs has initiated coverage of Frontier, with a buy. 

Frontier Communications Parent Inc. (FYBR): Fiber expansion creates opportunity for material value creation; Initiate at Buy with a $42 price target 6 July 2021 | 

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Half of Europe fibered

Much of Europe has a 40% take rate, far more than even most industry pros realize. (Larger chart & pr below.) iDate, working for the Fibre to the Home Council Europe, finds 183 million homes passed. Subscribers are growing at 17% per year.

France and Spain are the standouts among large countries. France has covered 2/3rds of the nation. Italy, Germany, and the UK are far behind, but that;s changing.

France added 2.787.000 new FTTH/B subscriptions, whereas Russia came second adding 1.681.000 new FTTH/B
subscribers. Spain rounds out the top 3 with 1.436.000 new FTTH/B subscribers.

Russia was long the leader because many buildings have fiber to the basement. 

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Ericsson, Nokia oppose TRIPS waiver on Covid

The NY Times reported TIA, the DC association that speaks for Ericsson, Nokia, and others, opposed the TRIPS waiver that would allow poorer countries to make mRNA and other Covid vaccines. The right thing to do was clear to most of us, if only to protect people in rich countries from a rapidly mutating RNA virus. Trade rules allow governments to override patents in an emergency. If Covid isn't an emergency, I can't imagine what would be. Public Citizen explained

 More than 100 nations led by South Africa are proposing a temporary, emergency waiver of these WTO Trade-Related Aspects of Intellectual Property (TRIPS) rules, so governments and manufacturers worldwide can ramp up production of the vaccines, treatments and tests necessary to end the pandemic.  

CEO David Stehlin and the Telecommunications Industry Association signed on to a drug company letter opposing the TRIPS waiver to Biden while he was considering the US position on TRIPS. I'm sure Stehlin would never take such a position over the objection of his Board Members. 

Barbara Baffer & Maria Eriksson of Ericsson are on the board. So are Deepti Arora & Brian Hendricks of Nokia, as well as Jeff Campbell of Cisco.

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