Andre Fuetsch, AT&T CTO, paused for a moment to think before answering my question about telco cost trends. "“We've gone from 10 gigabits to 100 gigabits to now 400 gigabits on our fiber. MIMO and massive MIMO are extremely productive. Yes, I think 40% per year is a reasonable estimate of how our costs are going down. AT&T’s leadership in open white box and SDN will continue to drive that number higher, which is needed as network demand increases.""

Lee Hicks and others at Verizon estimated their costs were falling 40%/year. Does that that sounds right to you, I had asked Fuetsch. Andre had just presented the challenge he faces of continued traffic growth. Whether cost savings can cover the increased traffic carried is a major question.

I know cost accounting is heavily subjective; in a past life, I wrote accounting software. For example, Fuetsch leads both AT&T's capital spending and its operation. How much of his salary should be allocated to each?

The remarkable Reliance Jio has added an almost unbelievable 300 million customers in just three years. Is it profitable already? The financial releases claim it is, but Economic Times believes Jio has chosen an inappropriately low figure for depreciation. Accounting statements are indicators, not absolute answers. 

If Cisco's traffic forecasts are accurate and the 40% productivity improvement continues, AT&T faces overcapacity if it maintains the current capital spending. Cisco has been reporting a consistent fall in traffic growth for several years. It anticipates U.S. growth falling to ~30% in 2021. Tower company Crown Castle, a major supplier to all U.S. carriers, is seeing a similar trend. To be proven.    

I have been able to confirm that the 40% Verizon efficiency savings figure is on target if not exact. You can replicate my thinking. Traffic has been growing 40% per year. Sales have been roughly flat for the similar time period. If productivity growth hadn't been a similar 40%, profits likely would have trended down. In fact, they have been flat or slightly increasing.

That's not absolute proof but does support Lee's expert opinion. I can't perform a similar analysis on AT&T's figures, which also include Time Warner and DirecTV. Top analyst Craig Moffett tries to break things out but doesn't find enough information in the AT&T financial reporting.

Andrew Collinson asked me, "Exactly how and where, and how does it work with write-offs/write-downs etc.?" While I can confirm the overall figure with the macro analysis above, I don't think anyone has the data to be exact on the details. Fuetsch in his presentation pointed to the success they are finding with Open RAN as well as the improvement in wireless and fibre technology.

Hicks is particularly proud of the "One Verizon" work that is rebuilding the transport and core. Verizon over the years has accumulated about 200,000 routers, switches, and the like. The wired, wireless, and enterprise networks had enormous duplication. He's replacing them with about 20,000 modern boxes, which are very efficient. He estimates the first year savings is about 50%.

In 2014, Paulraj and others predicted a pace of wireless improvements others found unbelievable. MIMO, carrier aggregation, 256 QAM, and other technologies were reaching the market.

Five years later, Paulraj is proving right.

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.

More newsfeed

----------

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.