Danger, Will Robinson! The Best on Wall Street Often Get It wrong

Charter fell 12% on April 27th, despite a buy rating from one of the very best on Wall Street. He had a sell on Sprint, which went up 8%. If the best in the business can be so wrong, should you be picking stocks? The average of all hedge funds many years does worse than the S & P. You literally would have done better with a flight of darts.

I'm leaving out the name because the guy really is good. Sooner or later it happens to everyone. This just happened to be particularly dramatic.

Knowledge is worth a great deal on Wall Street, I discovered, when I started DSL Prime in 1999. Several on the street made me their pet geek because I was in broadband, suddenly very hot. I got all the reports, could exchange ideas with almost everyone, and went to events where the waiters had better suits than I owned.

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Trillion Dollars ($1,000,000,000,000) Says China Must Never Be Dependant On Foreign Core Technologies

“It is the compelling obligation for big companies to compete in core technology,” insists Jack Ma of Alibaba, market cap $451B, at the first Digital China Summit in Fuzhou. $457B Tencent chairman Pony Ma said "it is urgent for Chinese enterprises to make breakthroughs in the ownership of core technology." Baidu, probably world #2 in Artificial Intelligence, takes the market cap to $1T.

Xi Jinping sent a message to Fuzhou, calling for "Breakthroughs in core technologies." Chinese companies directly support policy and will come through here. Xi also called for, "promoting the upgrade of infrastructure." China Telecom responded by promising 2M 5G cells.

China has the talent and the funding.

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CEO: AT&T's Existential Crisis. I Disagree.

AT&T makes ~$20B/year, has $49B in cash, and claims $444B in assets. Few believe CEO Randall Stephenson's sworn statement it faces an "existential crisis." (NY Times) I know it's a genuine fear because I've heard similar from others at the top of AT&T. One friend wrote me, "I certainly hope the TW deal goes through. ...  Our world is changing and companies have to change as well."

AT&T, despite what the Times thinks, is not going to go out of existence. But profits certainly could fall from $20B to much less, clobbering the stock price

In 2016, Randall himself said that without enormous changes, "In three years we’ll be managing decline." AT&T is working on ~70,000 job cuts, the largest cutback anywhere in the world since Elisha Gray and Alexander Graham Bell invented the telephone.

I'm certain AT&T will be around in a decade and still an enormous company, despite Randall's doubt. But Randall, John Stankey, & John Donovan are running very, very scared. This is not just D.C. bluster put on to impress the judge.

Telecom is a (slightly) declining business. Randall thinks Google and Facebook will take T's profits unless he remakes the company in their image.

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Xavi's Breakthrough 10 Gig For $53 in Switzerland. Believe It!

Xavier Niel's Salt is offering 10 gigabits to 1.3M Swiss homes for 50 Swiss francs, less than Verizon wants for 50 megabits. Salt includes an Apple 4K TV in lieu of a set-top, 300 TV channels, and unlimited. He will probably bring similar to other companies he owns: Free in France & Italy, Eir, and Singapore. 

His 30 euro triple play in France changed everything in Europe and made Xavi a multi-billionaire. Now, many of those lines are gigabit fiber.  He makes more money per customer on the 10 gig for 50 Swiss francs

The numbers suggest any large company with competition should be going for 10 gig rather than 1 gig GPON. 

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Active Internet Connections: About 1,500,000,000; Users About Twice As Many

~65% in the Global South. Point-Topic, the most reliable source, found 913M fixed lines at the end of Q3 2017. By now (April 2, 2018,) fixed lines are over 940M. I don't know any way to be as precise for wireless-only. For Q3 2017, I find about 1B regular data users without a home wired connection. I'm estimating ~500M wireless only "connections" to compare with the landline figures (Follow links or charts at end.) Update 1/10to reflect a higher estimate for Indonesia.

25% have English as a primary language, per the chart below. 75% do not. Chinese is 19%; Spanish is 8%; almost 25% speak languages outside the top 10. Google translation is almost but not quite good enough to bridge that. 

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10 Gig: $100 in Japan, Smart City Adelaide

10 gig to the home costs between $4/month (efficient high volume) and $10/month more than 1 gig GPON, I estimate. Respected analyst Julie Kunstler accuses America of dozing while the Sony & KDDI are now selling 10 gig service for less than $100/month. (Fierce) If anyone wants to buy 10 gig at $100, KDDI would net a little more than if they were selling a gig for $75.The equipment and bandwidth for 10 gig are now cheap enough that it's affordable anywhere there is fiber and a good use for the speed.

I very rarely wish I had more than the 100 meg down I have although a better upstream would be very welcome. (Jennie does video.) 10 gig is about enough to serve every apartment in Jennie's 20 story building. It's enough for 30 4K camera raw outputs or about 600 4K video streams.

Adelaide has a more practical plan: The city is building 10 gig to 1,000 buildings in the central business district and major commercial strips. They expect to finish in two years. I'd bet 95+% of Adelaide businesses would rarely draw more than 1 gig, although that could change in the future. However, the cost to build to 10 gig is low enough that it pays off even at a low take rate. 

It's a smart move for Adelaide and I'd recommend it to other cities with commercial buildings without fiber. It pays off directly if the high speeds draw even a handful of businesses. Unlike Smart City manifestos, the high speeds for businesses are more than pr.

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Colorado's Jeff Storey Up, Louisiana's Glen Post Out

Big city data guy takes over from rural telco guy. Louisiana Senators John Kennedy and Bill Cassidy didn't even try to protect jobs by blocking the Century - Level 3 merger. Century, Louisiana's largest company and America's third largest telco, will now be managed by Jeff Storey from Colorado. Predictably, executive jobs will migrate to Denver. Storey never moved from Colorado.

Just a few months ago, Century wrote, "Glen F. Post III will remain CEO until Jan. 1, 2019; then expected to become executive chairman." Century stock has lost one-third of its value over the last nine months, so Storey probably had little trouble convincing the board to make the move early. They also blocked Post from the promised chairmanship.

In a parting shot, the official photos have Storey looking sleek and Post badly in need of a shave.

Century has a goal of 40 megabits to most by 2020. That's probably "up to 40 megabits" and actually less. Their fiber and G.fast plans, modest already, have been cut. They simply aren't competitive with cable, which by 2020 will have a gigabit to 90%.

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U.S. Q4: Cable + 717K, Telco -193K; U.S. 2017 Cable +2,720K Telco -626K

2,095K adds to 95,056K. Over 100,000,000 including smaller companies. No surprises here. DSL - especially lines not upgraded - continues to be clobbered. Most U.S. cable is 100 megabits or more. Almost half the cable homes are offered a gigabit. In my Manhattan building, Verizon doesn't offer more than 3 megabits.

AT&T is apparently the anomaly here, adding 114K while the other telcos fell. However, without the 3M fiber homes and the joint marketing with DirecTV, they too would be negative. 

Century, Frontier, and Windstream lost between 5% & 10% of their broadband lines. They've starved the network in order to keep the dividend high and eventually it caught up to them. Leaders at all three have been promising investors they would turn around the 600,000 lines lost in 2017. Given the inferior networks, I believe they are lying to themselves.

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