Verizon Running Scared of T-Mobile 5G

In 2020 and 2021, U.S. telecom will be driven by how fast T-Mobile builds and markets its "best in the Western World" 5G network. It now has a better network than Verizon in much of the U.S. It will offer 5G at over 100 Mbps to 80-85% of the U.S. in about three years. I believe much of that will be in the next 12 months. There's little practical advantage, of courage, of speeds over ~25 Mbps, but customers still want to buy.

That drives a stake into Verizon's business model, which was built a decade ago on premium prices justified by the better network. All the U.S. carriers have been hemorrhaging subs to T-Mobile because of lower prices. T-Mobile and AT&T came close to network parity with Verizon about three years ago and consumers are catching on. The $billion restoration in Verizon capex will not be enough to pull them ahead,

T-Mobile is committed to spending ~$10 billion a year in capex for three years. That's easily enough to reach 35-45,000 towers, over 80% of the population. Sprint's golden 5G 2.5 GHz spectrum is remarkably cheap to upgrade to 5G and over 100 Mbps.

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B_______ "Our priority continues to be investing in technology and capabilities that will ensure Canadians remain leaders in the global digital economy over the long-term."

Rogers CEO Joe Natale's priority obviously is not, "Investing in technology and capabilities that will ensure Canadians remain leaders." in technology and capabilities that will ensure Canadians remain leaders." In the same investor presentation, CFO Tony Staffieri said, "We expect CapEx for the year to come in well below the guidance range we previously provided." He is not reducing the dividend despite lower earnings. The company has withdrawn guidance because of increased uncertainty.

Rogers is Canada's cable leader and one of the three dominant wireless carriers. The cuts are bad news for Canada's 5G deployment, already far behind the U.S. (Canadian 4G speeds are excellent, averaging over 70 Mbps.) 

Belgium’s Proximus, Sweden’s Telia, and most recently, France’s Orange have already cut dividends. Their stock prices have done relatively well, however. Telefonica, DT, BT, and Vodafone may follow.

If Telus of Bell Canada moved aggressively on 5G, Rogers would have to do so as well. The Capex cut by Rogers only makes sense if they have an understanding the others will go slowly.

$400 Decent 5G Phones Come West

With 5G phones as low as $285 in China (Xiaomi), it was inevitable that low prices would expand worldwide. Giant TCL just announced a US$400/Euro 400 6.5" smartphone with a Qualcomm Snapdragon 765G processor and four cameras on the rear.

Chinese company TCL has been selling under the name "Alcatel" in the west. Its sales were over 60 million phones in 2016 but it has fallen behind. It intends to deliver between June and September. The Chinese factories, include Foxconn, are close to full production.

Oppo, Vivo, Xiaomi, and ZTE are similar phones in China at $285-$400. Samsung and Huawei will soon follow. As soon as these prices come West, demand for 5G will expand rapidly.

Unless everyone decides to buy the new iPhone SE at a similar $400.

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Fastest Corona Upgrade: Massive MIMO 4G/5G on Existing Towers

VTEL Wireless can now deliver 100 Mbps to 80% of Rutland, Vermont. With help from Ericsson, this took less than 2 weeks. The company is contributing modems and service, the school district is providing Chromebooks. The kids are learning.

~8 million U.S. homes do not have cable or a decent landline. Most can be reached from existing towers and upgraded in weeks. It should be done, whether by T-Mobile, Verizon, AT&T, or regional carriers. Ajit Pai should make this so.

Massive MIMO, invented at Bell Labs in 2010 by Tom Marzetta, uses 32-128 small antennas to deliver multiple data streams where the local demand is highest, 

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Nokia Chooses 4G Over 5G for Poland

Below 1800 MHz, 5G has almost no performance advantage over today's 4G LTE. For a major power grid running at 450 MHz, PGE Systemy chose Nokia 4G, resulting in a major saving. 5G is overkill for almost all IoT applications. 5G's NB-IoT is almost exactly the same as 4G NB-IoT.

The key exception is when connecting an enormous number of devices. 5G can address a million devices from a single tower. So far, I haven't found any application that needs more than 4G can handle. It's not clear whether intense concentrations of cars, all on one network, will need that. Perhaps when 5G controls munitions, the U.S. will need that capacity on the battlefield. The U.S. military is massively funding 5G research, especially on how to manage spectrum in a presumably crowded environment.

Nokia virtually "bet its future" on corporate 4G & 5G networks.

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Verizon CEO Vestberg: "No major impact from a network point of view, the wireless, the wireline, or the fiber network."

There have been essentially no major traffic disruptions reported on any major data network in the world despite the traffic increase. Almost all networks have enough spare capacity to handle what's come and probably what is next to come. The NY Times and others are overdue for a correction. Verizon CEO Hans Vestberg tells HBR's Adi Ignatius

We have seen no major impact from a network point of view, the wireless, the wireline, or the fiber network. That’s very important. The network is robust. We are prepared for it. 

Over a dozen other networks - from England to India - also have reported minimal disruption.

Hans, a very decent guy for a CEO, also said

You need to support the most vulnerable in our society in these times, especially if you’re the size of company we are. We are waiving all late fees and suspending terminations for nonpayment in order to keep our small business, enterprise, and residential consumers running. For our wireless consumers, we have automatically increased data limits by 15 gigabytes per month. You don’t need to apply. We just give them more. We’re also prioritizing data and communication of first responders and hospitals.

He announced a capex increase, which had previously only been hinted at. 

We had guidance for 2020 to spend $17.5 billion on our networks during 2020. Two weeks ago, we decide to increase that to $18.5 billion. 

The apex increase is necessary as T-Mobile is building a network that will be noticeably better than Verizon, using Sprint's 160 MHz of golden spectrum at 2.5 GHz.

15M 5G Contracts China Mobile, 8.7M Joined in February

5G is growing by millions per month in China, although the exact status is unclear. The telcos are reporting "contracts," which continue to be far higher than the separately reported 5G phone sales. Some people are apparently signing up to 5G contracts even before they get the phones. The 5G price is the same as 4G and 5G has promotions. 

That said, China Mobile reported 8.7M new 5G contracts in Feb and a 15M total.8.7M new 5G contracts in Feb and a 15M total. Add China Tel & Unicom, China 5G is probably over 30M. China is now on track for >150M 5G in 2020, with the likely world total ~200M.

Xi Jinping has declared 5G a crucial part of the "New Infrastructure" that will be massively funded after the epidemic. CM is doing 300K sites in 2020, CT+CU 250K, China a total of 600K sites 2020.

What's wrong everywhere else?

Rakuten Japan: Advanced New Net Cuts Price in Half, Gives Away 3M Unlimited Accounts

Ashraf Dahod, CEO at Altiostar, is very proud. A year ago, CTO Tareq Amin dazzled the industry with bold promises: 

"Revolutionary technological innovation behind the launch of the world’s first end-to-end fully virtualized cloud-native mobile network. Construction of radio antenna network underway; On track for October 2019 Japan launch ... Soon to be the newest and most innovative mobile network operator in Japan, Rakuten Mobile Network, Inc. is currently building the world’s first end-to-end fully virtualized, cloud-native mobile network. The launch of commercial services planned for October 2019 will leverage an innovative architecture that is set to disrupt not only the telecom industry landscape in Japan but also the rest of the world. Built to serve millions of subscribers and adopting 5G systems architecture from launch, this will be the world’s first cloud-native network that is fully virtualized from radio access network (RAN) to Core, with end-to-end automation for both network and services."

Amin had been a builder of Reliance Jio's remarkably cost-effective network, that connected 370 million Indians in less than 4 years. It runs so well that Jio declares a profit on prices often below $5/ month. It reflected the most advanced thinking, originating from Stanford (CORD, O-RAN, more) and now supported everywhere from China Mobile to the White House. (Where they have no idea what it means.)

It's March 2020 now, and the network is finally ready to go beyond trials. The first 3 million will get a free year and the regular price will be under US$30, much lower than the incumbents.

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