2 Days, US$25B gap between VZ (More networks) & AT&T (DirecTV, TimeWarner)

Verizon wireless pulled up earnings, AT&T media held back profits. Both cut back capital spending, once more proving the "High cost of 5G" is a myth. Meanwhile, the prices of wireless service in the U.S. are going up as competition weakens.

The stock market response was extreme. By the end of the day, AT&T was down 8%, about US$20 billion. During the last year, Verizon is up 17% and AT&T down 13%. The difference is about US$60 billion. AT&T clearly overpaid for DirecTV & TimeWarner, given the realities of the business, but I wouldn't estimate US$60 billion.

Craig Moffett's take is that AT&T (and Sprint) are in thrall to the bondholders while Verizon and T-Mobile are delivering growth because that's what the stock market demands. His analysis today was devastating, including speculation T might have to cut the dividend for the first time in 30 years. "AT&T is prioritizing margins and cash flow over revenue and subscriber growth. ...Virtually every single part of legacy AT&T is shrinking. There are holes in every part of the story."

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20% of Britain getting fibre from Goldman Sachs supported CityFibre

People are buying speed, so CityFibre could win enough customers to decimate British Telecom. CEO Greg Mesch was a pioneer at Versatel and finance guy James Enck is one of the most creative in the business. I wouldn't bet against these guys. Vodafone is the anchor tenant, which should give them enough scale to be in the game. 

They are budgeting US$3.2 billion for 5 million homes passed, $600-700/home. That's higher than the actual cost at Telefonica, but Spain has far more apartment buildings than England. It's about half of what Deutsche Telekom is telling its regulator; I refuse to believe DT's engineers are that incompetent. The network is currently GPON. My opinion piece, GPON is Dead! Long live 10G. From Poland to Hong Kong, the low price of 10G is inspiring the switch, made be a little early.

Fibre to the home has been exploding worldwide, surprising industry experts. I missed it as well: I was amazed when researching Fibre is on fire again for clients of  STL Partners. Telefonica and Orange have each passed over 20 million homes. 20% per year growth rates are common. 

Telus CEO Entwistle explains, "We see churn rates on fibre that are 25% lower than copper. And that's encouraging, 35% lower in HSIA and 15% lower on TV, 25% lower on average. We're seeing a reduction in repair volumes to the tune of 40%. We're seeing a nice improvement in revenue per home of close to 10%." 

Their network costs should be > 50% lower than British Telecom. Any well-designed new network is half as expensive as the current telco networks. Lee Hicks at Verizon is ripping out 200,000 pieces of equipment left over from the many networks Verizon once had. (Phone, wireless, broadband, business, etc.) His One Verizon plan will replace all of them with a single IP network with only about 20,000 boxes.

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10 biggest Internet & telecom stories 2018

1. 250 million 4G connections in 25 months at Reliance Jio India.
2. 344 million fibre to the home connections bringing China gigabits
3. 5-10 times more capacity with Massive MIMO and Carrier Aggregation, 4G or 5G. Real speeds 100-400 megabits.
4. Verizon's millimeter wave, the most advanced network in the world.
5. Wireless costs falling 40%/year.
6. Google and Facebook, web-scale giants building their own international backbone.
7. 5G is just a name; 80% to 90% of connections little faster than 4G.  More below.
8. 10G fibre almost as cheap as GPON.
9. Almost no 5G phones until Samsung and TSMC build more 7 nm capacity.
10. Still to come

J., a brilliant and successful Internet entrepreneur, was shocked when I told him what was happening around the world. He wanted to know more about changes that matter to his companies. I created a presentation. 

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Cable future: Gigabits of upstream, 5G latency, worldwide gigabits

80% of American homes can receive a gigabit downstream from the cable company. Comcast announced they can reach 58 million locations with gigabit DOCSIS, almost their entire network. Charter, with almost as large a network, and #3, Cox, are also nearly all gigabit enabled. Customers are responding to the speed: in Q2, U.S. cable added about 585,000 subscribers while telcos lost about 130,000.

Similarly, Rogers in Canada offers a gigabit to all 4 million customers. They just reported their best quarter in years. 

Cable wireless in the U.S. will be "humongous," a guy building the networks tells me. With fiber and power very close to most Americans, they will put small cells - 4G & 5G - almost everywhere. To match the Verizon & AT&T 5G nominal latency, DOCSIS latency needs to be < 10 ms. John Chapman at Cisco and Jennifer Andreoli-Fang at CableLabs have demonstrated a solution, DOCSIS pipelining. (Test pictured.) 

Chapman tells me Full Duplex upstream is ready to come out of the labs. He expects wide deployments to begin in 2020. Speeds could reach a gigabit. Comcast and Charter are readying their networks.

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Stanton "We have seen component shortages throughout the year"

"As economies pick up, so does demand. The effect on us is slightly longer lead time. Nothing is materially different now than six months ago." Reporting on shortages is tricky. When rumors begin about shortages, people over order for protection. That just makes things worse, and news stories on the subject can scare people into building more inventory. Often, that's overdone and the product market crashes a few quarters later. 

Adtran made a Q3 profit of US$8 million after three quarters of disappointing sales and net losses. Sales were up 10% although still down from a year ago. It is shipping G.fast Version 2/Amendment 3 to Australia's nbn. AT&T, whose Tom Starr was a driving force behind G.fast, is only "sluggish." T has upped their fiber home to 5 million passed this year while slowing down on 5G mmWave.

Adtran and Huawei are cutting the price of 10G to little more than GPON to win sales. See GPON is Dead! Long live 10G. From Poland to Hong Kong, the low price of 10G is inspiring the switch.

Swisscom tells me they are getting similar G.fast units from Huawei and deploying across the country. G.fast speeds on short loops are going up from 500 megabits to over a gigabit.

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GPON is Dead! Long live 10G. From Poland to Hong Kong, the low price of 10G is inspiring the switch

For just $5 or $10 more, it's a no-brainer to go 10G and let GPON fade away. A world class telco tells me they will switch in 2019. Xavier Niel's Salt tells me customers love the 10G. Poland's Inea is ready to serve 30,000 homes. (below) Jeremy Chelot's Community fibre has reached almost as many in London and has raised 40 million £. Hong Kong Broadband is well ahead. Frontier in the U.S. is upgrading some of the Verizon BPON lines they bought. 

AT&T has supported an Open Source 10G ONT and done extensive trials. If they deploy, that could be five million lines/year. Adtran is making a big push to displace Nokia. (pr below) Back in August, they told me 10G was a no-brainer. They now are proclaiming that to the world at BBWF. Huawei has confirmed to me how close the prices are to volume buyers. Nokia is staying mum, as they do so often these days.

Tom Rutledge, the CEO of Charter, has 25 million cable customers, nearly all of whom can get a gigabit. Comcast has 30 million. That's why AT&T is building gigabit fibre at the fastest pace in the western world; cable is killing them in the old DSL areas. Rutledge is telling Wall Street he's not worried about telco gigabits. "Fibre is going to 10 gigabit upstream and down." Soon.

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Academician Ding Wenhua of CCTV: Our 36 megabit UHD is world class

Ding Wenhua tells me China will distribute the coming generation of TV, UHD, at 36 megabits. Bell Canada intends to use 24 megabits and I believe most in the U.S. 15-25 megabits. The comparison with America is mine. Ding merely provided his specification; I drew the conclusion.

The actual difference in the picture will be modest; most networks are sacrificing a little quality to save money. You'd have to look closely at an excellent TV to see the effect. It remains an impressive achievement.

China can support the higher data rate because of the extraordinary broadband network they have built in the last six years. 344 million homes have been connected directly to fiber, most capable of a gigabit. China Mobile continues to add four million more fiber home connections each month. That rate must slow soon: there are only 455 million homes.

Not long ago, many of those homes were effectively limited to speeds under 50 megabits by insufficient backhaul capacity. The situation has improved dramatically in the last year or two. A friend in Shenzhen tells me 500 megabit service is common in her city.  

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Huawei won't stop: 50G PON, 50G Ethernet, G.fast Revision 3, 5G & 10G microwave backhaul for small cells, low-cost 4G, remarkable Kirin 980

Tim Cook claims Apple's "A12 Bionic is the smartest, most powerful chip in a smartphone." He's probably mistaken because Huawei's Kirin 980 will probably beat it by some measures and do about as well as Apple in many others. Both are great chips, produced on the same TSMC assembly line. Hundreds or more likely thousands of first-rate engineers worked for years on both. Neither is significantly superior; Qualcomm, Samsung, and Intel also will soon have chips. 

Similar rankings are true across telecom. Huawei spends US$15 billion each year on research and now has the broadest product line. At the Geneva UBBF, Swisscom told me the new G.fast (Amendment 3) is shipping and will deploy across the country. 10 GPON costs have come down so much that Xavier Niel's Salt Switzerland is selling 10G for the same price as GPON. I stopped by the Salt store and they told me customers love the 10G. If that's not enough, Huawei demonstrated 50G PON. 

50G Ethernet looks to be the primary backhaul in China and was display. Verizon is strong on NG-PON2 but most western companies are content with 10G. The boards featured state of the art HiSilicon network processors and some of Huawei's own optical units. 

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