Black Swan poster 230Cable wireless will be "humongous," in the U.S. a cable VP tells me. The cable buildout appears inevitable. I see evidence of that at every wireless event. One possible roadblock: wireless incumbents offering cable an almost unbelievably cheap deal is a rational business move.

The marginal cost of bits on wireless is falling 40%/year and is already very low. If cable is coming in anyway, a telco like Sprint or AT&T could offer a resale deal not far above the cost of cable building their own networks. No one at the telcos has suggested this would happen, but the possibility belongs in the analysis. 

The cablecos are moving already. I see Charter ads in the New York subway. C & C are offering attractive deals to their existing customers, the majority of the population. Both are reselling Verizon service for now and moderating their growth while they build systems.

#4, Altice is working very closely with Sprint. The two jointly plan future network investments.

Charter is leading the testing of the shared 3.5 GHz band. John Chapman at Cisco and Jennifer Andreoli-Fang at CableLabs have developed DOCSIS pipelining, which can bring latency to 10 ms and potentially much lower. The cost of a network of small cells will be relatively modest because cablecos have power and backhaul at nodes close to most U.S. homes.  

Jumping into wireless makes business sense as well. Broadband is still growing but it's close to saturation. Everyone is losing conventional video customers and the alternatives bring in much less money.  While their near-monopoly of a service most people must have allows them to increase prices, Roberts of Comcast and Rutledge of Charter fear regulators will jump in if they take full advantage. Adding wireless is the obvious way to meet Wall Street's demand for growth. 

U.S. wireless pricing is almost cartel-like, twice as high as peers like France. T-Mobile is aggressively attacking and winning customers, but actually keeping prices close to AT&T. Sprint this month raised prices. Since John Legere took over T-Mobile, he has been challenging the cartel with many features and occasional obscenities. Looking at price trends, the change is only modest. U.S. prices are far higher than if we had strong competition. 

The cable guys believe nothing will stop their network deployment of 4G/5G. But they stop and think when I suggest this alternate scenario. It's certainly a possibility.

Black swans happen, although the odds are long against. 

dave askOn Oct 1, Verizon will turn on the first $20B 5G mmWave network, soon offering a gigabit or close to 30M homes. The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while keeping capex at around 15%.

The Koreans, Chinese, and almost all Europeans are not doing mmWave in favor of mid-band "5G," with 4G-like performance. Massive MIMO in either 4G or "5G" can increase capacity 4X to 10X, including putting 2.3 GHz to 4.2 GHz to use. Cisco & others see traffic growth slowing to 30%/year or less. Verizon sees cost/bit dropping 40% per year. I infer overcapacity almost everywhere.  

The predicted massive small cell builds are a pipe dream for vendors for at least five years. Verizon expects to reach a quarter of the U.S. without adding additional small cells. 

In the works: Enrique Blanco and Telefonica's possible mmWave disruption of Germany; Believe it or don't: 5G is cheap because 65% of most cities can be covered by upgrading existing cells; Verizon is ripping out and replacing 200,000 pieces of gear expecting to save half. 

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 5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.