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
Joe Garner of BT claims Britain is ahead of other big Euro countries in "superfast" broadband. BT deserves credit for offering ~80% of Britain 30 meg or more downstream, a little ahead of Germany and well ahead of France, Spain and Italy. "Superfast" is pure hype. BT's deployment is mostly DSL from their 100,000 street cabinets, typically 30-70 megabits. Unlike Germany, Belgium, Swisscom and Australia, England isn't using vectoring to ~double many connections. Half of the UK is able to get 100 meg or more from cable, as well as nearly 90% of the U.S. ~50 meg would have been superfast in 2007 but is only medium in 2015.
One Garner comment in the Telegraph is offbase. French prices by almost any measurement are considerably lower than Britain. Miles Brignall in the Guardian just wrote "Ripoff Britain: why we pay more for broadband than Europe," with a comparison to France at half the price. Garner's comment, "Britain has the lowest landline, broadband and superfast broadband prices among major economies" is a mistake. The original source, Analysys Mason, had it wrong. It should be corrected by sending a letter to the paper.
His argument that separating Openreach from the rest of BT will curtail G.fast investment is unsupported by the data, I believe "BT provides us with ready access to capital. BT’s capital allowed us to meet the rapidly rising demand for internet services by rolling out superfast broadband which is, incidentally, 20 times faster than in 2005 and half the price. Our fibre roll-out might look like an obvious investment today, but it didn’t in 2009. Who other than BT would have had the courage to invest £2.5bn in superfast broadband when no one else was interested?"
AT&T, Telus, Bell Canada, Belgacom, and Swisscom have Fiber to the node/DSL deployments roughly similar to British Telecom. Japan, Korea and now China have generally better broadband networks. China passed 80M homes with fiber to the premises last year alone. BT's network build is comparable to several peers and ahead of Germany, but far from unique.
BT's capex the last four years has been 87-94% of their depreciation, net dis-investment. It's been 13-14% of revenue, lower than France Telecom. In the chart below, BT is in pounds and FT in euros. FT, Verizon, AT&T and Comcast are regularly at 15% and higher. BT's capex overall is at best in-line, not superior.
Openreach is the most profitable part of BT and should easily be able to raise funds if necessary. Openreach is far less risky than the rest of the company. Retail customers can leave far more easily than wholesale. BT Global and the IT Services sector has continuing problems. If split in a reasonable fashion, the balance sheet should be no worse than BT's.
Joe, I'd be happy to introduce you to friends on Wall Street who could meet any of your likely capital needs. The referral fee they would give me would be many years of my income. I expect you already know people at the major banks; the smartest should already be courting you with offers in the billions if you should happen to break off. There may be other sensible reasons to keep the companies together, including the inevitable difficulties in such a big change. Access to capital is not persuasive.
BT sent a thoughtful disagreement. "this is boiling down our arguments against separation a bit too much.
Your investment scenario might be hypothetically possible, but it’s also optimistic. We’ve seen with other infrastructure companies that there’s no guarantee that a separate entity wouldn’t fall in to the hands of a vulture capitalist determined to sweat assets rather than invest in the way Openreach has over the past decade. BT Group has invested £45bn in its network over the years since privatisation – including more than £3bn on fibre that started at the height of the recession - and we’ve just set out ambitious plans to invest further and get ultrafast broadband to 10 million homes in the UK over the five years.
Being a FTSE-100 doesn’t give you an open-ended cheque book, and a separate Openreach would also face a much longer payback period if it invested outside of the BT Group. The BT Group payback period for fibre is low double-digit years by comparison.
Openreach also had confidence to invest in fibre because it had demand from BT’s downstream consumer and business divisions. It offered fibre to the whole market under the same terms, but only BT’s retail arms confirmed that they’d sell it right away, giving Openreach confidence to invest. Sky and TalkTalk subsequently decided to commit to fibre, once they were convinced of the retail demand, but a separate Openreach would lose the benefit of having an ‘anchor tenant’ able to retail at scale. It would also lose other benefits such as access to BT Group’s world class R&D set-up."
Sky's Mai Fyfield's counterargument, also in the Telegraph, is equally unpersuasive. In France, competitive carriers SFR and Free are investing $billions in fiber. The Murdochs of Sky haven't put any investment on the table. Fyfield's "incentives to innovate would be strong on all sides," is almost meaningless. Lobbyists point to "incentives" when they are not really sure anyone will invest. The EU telcos and AT&T time and again have been given "incentives" they demanded. Time and again, when I look a few years later, they haven't actually made that investment.
Neelie Kroes was dead wrong when she allowed anti-competitive mergers in the name of "incentives to invest." Investment hasn't gone up. Her actions would have made sense if the companies spent the added profits on investment. Instead, it mostly went to the company's' shareholders. Investment is flat to down in those countries. Even the very conservative current EU is getting that message. They just blocked the Telia/Telenor merger in Denmark.
BT deserves credit for their ~80% FTTN coverage and support for the government plan for 95% in 2017. That's more than any other large European telco. Cable only covers about 50% of the country, so half the investment is going where they currently have a monopoly. Compare that to Germany, where until this year Deutsche Telekom was not going to upgrade any of the 1/3rd of the country without cable competition. Unlike Germany, they aren't vectoring, preferring to wait for G.fast at ~250 correction 10/10 330 megabits/ while slowing investment. Unlike most G.fast deployments, that will mostly be from existing street cabinets. Although BT has said the G.fast deployment is contingent on the current tests being successful, I think they are committed. Their latest announcement is "10m premises to receive ultrafast broadband with speeds of 300-500Mbps by end of 2020. 1Gbps service also to be provided." The G.fast proponents often combine upstream and downstream rates. In that case, the 300Mbps would be ~250 down. Speeds wll depend on how many cabinets they choose to build, which isn't yet set.
The 1 Gbps plan is interesting, because it is unlikely that they will be able to receive that speed with a single line. It implies they will offer bonding, which I've reported is already in test at Adtran.
Editor's note: I haven't studied the Openreach separation closely enough to have an opinion. My comments above are about dubious statements authors on both sides made, not what is the right policy. The breakup may be the right thing but certainly won't be a magic bullet.
Special thanks to BT's press people who helped me get updated data.