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

The 3.3-4.2 spectrum should be shared, not exclusively used by one company, concludes an important U.S. Defense Innovation Board report. If more wireless broadband is important, sharing is of course right because shared networks can yield far more

It does work! Verizon's mmWave tests over a gigabit in the real world. 
The $669 OnePlus 7 Pro outclasses the best Apples and probably the new Galaxy 10 or Huawei P30 Pro. Optical zoom, three cameras, liquid cooling, Qualcomm 855 and more.
Korea at 400,000 5G May 15. Chinese "pre-commercial" signing customers, 60,000-120,000 base stations in 2019, million+ remarkable soon. 
5G phones Huawei Mate 20, Samsung Galaxy 10, ZTE Nubia, LG V50, and OPPO are all on sale at China Unicom. All cost US$1,000 to 1,500 before subsidy. Xiaomi promises US$600.
Natural monopoly? Vodafone & Telecom Italia to share 5G, invite all other companies to join.
Huawei predicts 5G phones for US$200 in 2021, $300 even earlier
NY Times says "5G is dangerous" is a Russian plot. Really.
Althiostar raised US$114 million for a virtual RAN system in the cloud. Rakuten, Japan's new #4, is using it and invested.
Ireland is proposing a US$3 billion subsidy for rural fibre that will be much too expensive. Politics.
Telefonica Brazil has 9M FTTH homes passed and will add 6M more within two years. Adjusted for population, that's more than the U.S. The CEO publicly urged other carriers to raise prices together.
CableLabs and Cisco have developed Low Latency XHaul (LLX) with 5-15 ms latency for 5G backhaul,  U.S. cable is soon to come in very strong in wireless. Details 
Korea Telecom won 100,000 5G customers in the first month. SK & LG added 150,000 more. KT has 37,500 cells. planning 90% of the country by yearend. 
The Chinese giants expect 60,000 to 90,000 5G cells by the end of 2019.
China Telecom's Yang Xin warns, "Real large-scale deployment of operators' edge computing may be after 2021." Customers are hard to find.
Reliance Jio registered 97.5% 4G availability across India in Open Signal testing. Best in world.

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Welcome On Oct 1, 2019 Verizon turned on the first $20B 5G mmWave network with extraordinary hopes. The actual early results have been dismal. Good engineers tell me that will change. 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.