From $10: Jio expects 35M FTTH

15 million Indians have put in reservations for Jio fibre. Starting Sept 5, Jio will be connecting millions of people. With 300,000 kilometres of fibre in place and 500,000 "trial" customers, deployments will begin in 1,500 cities. Jio will expand rapidly from there.

Prices begin at ~US$10 for 100 Mbps. Other offerings, including video services and much more, will be priced up to $150. Ambani promises that next year he will include Bollywood films on the same day they open in theatres.

Reliance Jio in three years has connected 340M Indians to 4G, more Internet subscribers than the US has people. Neither I nor many other people believe that possible. I'm no longer a doubter.

He's invested over $30 billion to build the network and reached (modest) profitability. Reliance sold 20% of its refining business to Saudi Aramco for $15 billion. Towers and fibre assets are likely to be sold for more cash. The funds are there to manage $billions in initial losses.

Jio bought several cable companies to have people on the ground for installations and an initial customer base. It has a massive retail presence that will help sales.

The Internet is no longer a Western lake.

$536 5G Vivo iQOO Pro

Vivo took 600,000 reservations before the official August 22 launch at US$536. It's a 6.4' premium quality phone. Previously, the cheapest phone was $580, the iQOO 5G from OPPO. 

Vivo hasn't put a particle accelerator in the phone, but I couldn't resist the illustration. It has 3 cameras in the rear, a 4500 mAh battery, hybrid zoom, etc. OPPO may include AR glasses in a promotion. 

Except for one Xiaomi, all the phones in the west are over $1,000. Airfreighting a phone costs about a dollar. Any carrier that wants 5G customers should send an exec to China, talk to OPPO, Vivo, Xiaomi, and ZTE, and have the most affordable 5G offering in the market.  

Landline traffic growth 30%, >terabyte users becoming significant

James Wright bought a 4K TV and suddenly Comcast's terabyte cap hit him. I've written before that Comcast's terabyte cap was reasonable. Bandwidth is cheap but it isn't free. That is no longer true. The bandwidth needed has gone up ~30% per year. The cap hasn't risen despite the cost to deliver each bit has gone down dramatically. The cap is now hindering cordcutting. 

OpenVault found the average bandwidth use in 2019 in the US was 271 gigabytes, up 25%. Five years ago, very few drew a terabyte per month. Now, the number is meaningful and rising, particularly among those who don't take cable TV. Internet-only households consumed 85% more bandwidth, 390 GB per month. 

Many 4K TVs now cost US$300-700, including a remarkable new one from Huawei. A typical American home watching 4 hours of TV a day at 4K is close to the terabit. Add a kid or two, and overages will be hard to prevent.  

The European average in 2019 is 170 GB, up 28%. Unless Comcast rapidly raises the cap, users are pressured into taking Comcast's TV. 

 (Thanks to Robert Conger of Adtran for pointing me to how 4K TVs may be an obstacle to fixed wireless in large volumes.) 

China Mobile leasing radios to keep reported expenses down

Huawei, ZTE, and Ericsson are financing China's 5G build by leasing/renting radios to China Mobile.  Edison Lee of Jeffries estimates the carrier is paying about US$6,500.year instead of buying the units at $35,000. Radio prices in the US and Europe can be twice the China price.

Chinese carriers intend to deploy over a million radios in the next two years, which could mean $25,000,000,000 in off-balance-sheet financing. The carriers are honouring the government mandate to accelerate 5G while also claiming to hold capex flat. Wang Xiaochu, chairman and CEO of China Unicom, predicted that “the capital expenditure in the whole year will not exceed RMB 58 billion, and the 5G capital expenditure for this year will remain unchanged at RMB 8 billion."

Under government pressure to bring down prices, China Mobile saw an actual decline in sales in the last quarter.  China Unicom saw a decline in mobile revenues.

ZTE has a $10,000,000,000 line of credit with government-owned banks. Huawei has over $30B cash on hand and minimal debt and can also cover the cost. 

Nokia CEO Rajeev Suri has cut back in China, refusing to give the carriers what they demanded.

Latency data: 5G mostly 30 ms, new 4G ~33 ms, old 4G 35-55 ms

The typical latency difference between existing 4G and new 5G is about 10-15 ms. 5G latency in 2019 is ~30 ms in independent tests in the US, Korea, and England.  The latency is about the same in the other two dozen 5G deployments in 2019. That's what 5G equipment is designed for. 

The chart is based on Open Signal data from Germany early in 2019. In LTE, Vodafone had 40 ms latency and Deutsche Telekom 42 ms. That's higher than the 30 ms typical of 5G, but not wildly so. Very few applications will be affected. 

Latency on LTE networks will continue to fall as older equipment is replaced. New LTE equipment from Ericsson & Huawei brings air latency down to ~13 ms, only 3 ms more than today's 5G.

Latency will be reduced in many locations with Edge Networks (all of China) and/or improved backhaul/transport. (Verizon is doing both over the next few years.)

4G latency tests around the globe generally produce results between 35 and 55 ms. One LTE test at Verizon showed 23 ms and more than 55 ms is not uncommon. 

1 ms latency is a myth outside the labs for years. 

 

China 5G: 2-3M August 5-6M Sept 15-25M December 150M 2020 (Best guess)

In the first 15 days of August, Huawei sold in China 1 million Mate 20 5Gs for US$900. ZTE is also selling 5G in China, with 6 more phones soon to hit the market. Oppo has announced a 5G price of US$580 for what looks like an excellent phone.

Sales have been growing month to month in Korea, now past 2 million. KT has estimated 10% of Koreans (about 5 million) will buy a 5G phone in 2019 and 30% by the end of 2020. I doubt China will go quite that fast, but the number will certainly be large.

There's every reason to expect the Chinese subscription figure to grow rapidly. The current plans are 100,000 to 200,000 radios in 2019, which will cover important parts of major cities. Beijing is mostly covered inside the 5th Ring Road already. 600,000-800,000 radios in 2020 will cover at least 50% of the population and possibly 75%.   

I'm calling the December 2019 and December 2020 figures "guesses," not estimates. They could be low.

 

China 5G: $29-85/month

A million phones will ship in August, but the carriers are scrambling to deliver plans.  They weren't ready when the government moved the startup date and are still scrambling to develop systems. In particular, they are holding back on announcing pricing. For now, all customers are on a free, 100 gigabyte/month "experience" program. With two million phones likely out in August and three million more likely in September, the telcos are looking forward to paid service soon.

Sina.com and other Chinese press sites report rumours that prices will be 199 to 599 yuan, US$29 to $85 per month. I suspect the figures are a trial balloon from the company because several pubs have the same details. In addition, the government is sure to want at least a low entry-level price to encourage takeup.  

Chinese analysts speculate that 5G prices, at least as measured per bit, will soon fall.

 

Charlie Ergen's dream of a new network

Lee Hicks of Verizon has driven his cost down by 50% with his "One Fiber" program. He's replaced 200,000 old boxes with 20,000 modern, efficient pieces of gear. This is definitive proof that new networks are much more efficient than older ones. The technology is much better. (The latency also comes down.)  Reliance Jio now has 330,000,000 million Indians on a network with such low costs that it is profitable at a price of US$5/mpnth.  (Audited financials.)

Charlie Ergen's DirecTV will buy Boost from Sprint, assuming the state suits don't block the Sprint-T-Mobile deal. Boost will bring 9 million customers, a full retail operation, and some important spectrum to DirecTV, a very good start for a new network. All will be initially served through an MVNO deal with T-Mobile, but Charlie wants to build his own network as fast a practical. Ergen sees it this way: 

"We have a lot of incentives to build our own network. I think it would be -- and not the least of which are severe penalties if we don't, but irregardless of that, we're going to build this network out and it's hard. All the incumbents have built networks that were primarily designed for voice and were built and designed architected in the '80s, but we're -- this is 2019.

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