Cents per gig 230Lee Hicks, Verizon Vice President - Network Planning, reiterated that Verizon has been reducing cost per bit by about 40% per year and expected to continue to do so. That corresponds to then-CEO Lowell McAdam's comment that mmWave would bring down the cost per bit by 9/10ths. Verizon's profit and loss confirms this general trend: costs and profits haven't changed much while traffic growth remains high. That would be impossible without a large increase in efficiency.

Traffic growth is falling towards 30%, according to the Cisco VNI. Unless capex falls, the glut of capacity without a market will get worse. 

Verizon expects to save half by replacing ~200,000 old routers, etc. with new, more efficient, standardized gear. They are active in SDN/NFV, including some pioneering work. CEO Hans Vestberg said that 5G equipment prices are coming down so fast it can afford to cover "the whole country" in much less than ten years. (Comments like that usually mean 85% to 95%.) He hated the price drops when he was at Ericsson and loves them now that he is at Verizon. All telcos are seeing dramatic falls in costs.

The other U.S. and Canadian telcos are also seeing a decline. The implications include:

  • Price per bit will go down almost everywhere for the foreseeable future. With cost per bit going down 75% in a few years, some of that will be passed on to customers. 
    Traffic growth is slowing, with Cisco estimating wireless growth will fall to 30%/year.
    Ergo: The current excess capacity will continue and possibly worsen.
  • With data costs now very low, even the average price per customer has been falling where competition is working. (~60% in India, ~5% in the U.S., something like 15% in Italy as Xavier Niel deploys.)
  • The drop in wireless cost will be extremely important in India, Indonesia, and Africa. There are few landlines so almost all net connections are wireless. Until now, with lower prices and rising caps, most Internet sucked. With 225M 4G connections at Reliance Jio alone, India now has more Internet connections than the U.S. has people. Africa is close, despite two very disappointing years.
  • The cost per bit of wireless is now low enough for lots of video. I don't watch much TV, so a 30-100 gigabyte service would cover me. Jennie is a TV watcher, so it will be a few years before wireless would be enough for her.
  • There has been a modest trend to going wireless only for several years, rarely more than 10% in the developed world. This is less than expected; I mistakenly predicted a faster shift.
  • The claim in the T-Mobile-Sprint merger that prices will go down will almost certainly prove out. However, T-Mobile-Sprint will almost certainly result in higher prices than without the deal. 
  • Reporters will often l get this wrong, one reason a very anti-consumer merger might go through. 

Thanks to Adtran, who covered my expenses to hear Lee and others at Adtran Connect

Follow-up story: To achieve these savings, Hicks is replacing ~200,000 major pieces of equipment, especially routers. He is consolidating Verizon's several networks into one, which will require far less hardware and space. He expects to save half from the beginning. Savings will get larger from there.

dave ask

Newsfeed

Samsung has delivered 5G chip samples to BBK's Oppo and Vivo, the #2 or #3 phones manufacturer. Samsung is facing off against Qualcomm in the 5G market. Qualcomm is unfazed and reportedly moving the production of their next chip from TSMC to Samsung. 

Sprint's 2.5 GHz 5G is delivering 100-500 megabit downloads consistently. That bodes well for China Mobile, using the same frequencies.

Vodafone, BT, and soon 3UK are delivering modestly sized 5G mid-band networks. Vodafone is also live in Spain and Italy. 

Sunrise in Switzerland is using 5G mid-band for fixed wireless in rural areas.  

More newsfeed

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Welcome  1,000,000 Koreans bought 5G in the first ten weeks. The demand is there, and most of the technology works. Meanwhile, the hype is unreal. Time for reporting closer to the truth.

The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while reducing capex. Deutsche Telekom and Orange/France Telecom also confirm they won't raise capex.

Massive MIMO in either 4G or "5G" can increase capacity 3X to 7X, including putting 2.3 GHz to 4.2 GHz to use. Carrier Aggregation, 256 QAM, and other tools double and triple that. Verizon sees cost/bit dropping 40% per year.

Cisco & others see traffic growth slowing to 30%/year or less.  I infer overcapacity almost everywhere.  

Believe it or not, 80+% of 5G (mid-band) for several years will be slower than good 4G, which is more developed.