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
Consumers at carriers with fewer than 7M customers wind up paying a high price. At Goldman Sachs, CFO John Stephens suggested major synergies for the DirecTV deal due to “There's about a $17 difference on average between the price the U-verse platform pays for content on an apples-to-apples basis than the DirecTV platform pays. And on 6 million customers, you can get your head around about $100 million a month of expense.” That's an important datapoint to understand the U.S. TV market. Hollywood takes most of the gross income. Seeking Alpha transcript, more below.
- Confirms that even a carrier as large as CenturyQwest has little or no chance of breaking even on video, as $17/month eats most of the gross margin. The little companies are even more vulnerable despite their cooperative.
- If triple play/video is required for carrier success, competition will be even less likely to develop. It also raises the effective subsidy a small rural carrier requires.
- AT&T, like Comcast, is spending $50B mostly to achieve a blocking position against Hollywood. They intend to be so big no one in Hollywood will want to risk a dispute and cut off. That give them enormous leverage they fully intend to use. (see below.) In one sense, a video market “blocking position” raises the same issue as infringing neutrality. The gatekeeper has the ability to extract “monopoly rents” and raise the cost to everyone else. The key question is whether most of the burden will fall on consumers (an argument for neutrality) or on Hollywood giants (which generates less public concern.)
- (For policy) The numbers here highlight the crucial question: Cui bono, who benefits. It’s the same question raised by broadband subsidies: Do they get passed on to consumers (lower prices, better availability, investment in better networks.) or flow through to company profits/dividends? It’s equivalent to the economic problem of “the incidence of a tax.” My approach is empirical. Some subsidies accrue mostly to company owners. “Universal service support” to the the large U.S. carriers seems to mostly flow through to shareholders. (The evidence is several reports to Wall Street of increased cash flow from the latest increase.) That’s why I am very skeptical of most broadband subsidies, including the current plan in Germany. The government is about to give $2B to carriers to increase speeds. If spent to deploy to the last 1-3%, it would be justified. In depth analysis for the U.S. Broadband Plan showed prohibitively high costs for about 1/2 of 1% of homes. The next few % of homes would yield marginal profits on investment, if any. Deutsche Telekom wants subsidies for 20% of the country, most of which can be profitably served. They say otherwise but the U.S. analysis was carefully done. British Telecom is bringing high speeds to 95% without subsidy.
- (for policy) These issues are important for the neutrality debate. I personally am a strong supporter of neutrality for freedom of speech reasons. I don't want Verizon and Time Warner limiting what I can watch on TV. People I respect, like Jeff Pulver and Dave Farber, disagree, because they fear the side effects of government getting involved. If the money collected at the tollbooths hurts consumers and mostly goes to the shareholders, that's a strong argument for neutrality. If most of the money collected goes to lower prices/better service for consumers, that makes sense. The latter resulted is implied by "two-sided market theory." Two-sided markets do develop if strong competition forces the companies to pass on most of the benefits. Empirically, I see the opposite result in markets like the U.S. and Germany, with less effective competition. Two-sided market theory only works well with strong competition, making it an ivory tower mostly irrelevant to policy. I expressed this strongly at a Silicon Flatirons conference and was treated like Ibsen's Dr. Stockman.
“Datapoint articles” are my experiment in journalism, hence the petri dish illustration. Success will come if others enhance this analysis, in their own work or through letters to the editor/articles for me to publish. Please fill in the
From Seeking Alpha http://seekingalpha.com/article/3514786-at-and-t-inc-t-presents-at-goldman-sachs-communacopia-brokers-conference-transcript?part=single
- There's about a $17 difference on average between the price the U-verse platform pays for content on an apples-to-apples basis than the DirecTV platform pays. And on $6 million customers, you can get your head around about $100 million a month of expense. So that's the easy math to get to kind of a conceptual size of the number.
- Secondly, those differences are just based on existing contracts. It's not based on getting a better deal for DirecTV. It's just taking the U-verse contract to the best deal in the house today which is the DirecTV contract.
- What we can do is a couple of things. One, these contracts come up on a regular basis, so it's not an every three years 100% of our contracts come due. They come up on a quarterly basis, some number of contracts and whether they are a three year average term or five years, maybe in some cases, they'll come up and they will continue to come up over time.
- So we are working with those content providers today to say, hey, let's work together, let's bring these prices in line, let's move towards the most efficient contract pricing and now we have the scale at 26 million subscribers to really make an impact on that. In addition though, we have 75 million wireless smartphones and tablets and 50 million broadband locations that we don't sell video to today.
- So we have 125 million locations that we can take to the content teams and say, here, let's work together to sell something. So this doesn't have to be an adversarial situation. It's here's your opportunity for growth and we built this integrated carrier model so that we can take advantage of that. So we will go through that in a long process.