Realme 5G down to $145 ** 80M 5G subscribers in Q2, 100M August prove 5G is real.** 5G Worldwide: Saudi first, USA last** 5G Phones $199-260
China is > 70% of 5G as subs pass 80M ** Primary: Cost per bit of wireless is falling at a ferocious rate
5X Advance for Africa with Massive MIMO ** Spectrum Marvell: 5 nm 20-40% better ** $400 TCL REVLL 5G at T-Mobile: Here comes 5G in the USA
$Hundreds of millions in extra chip costs prove Open-RAN not quite ready
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 inas the transformation from voice-centric to data-centric drivers continued. Dell’Oro Group estimates worldwide Capex advanced at a mid-single digit rate in . 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 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.