Urs Schaeppi Swisscom 240"We see traffic doubling every 12 months but we don't have quality problems in the network." Urs Schaeppi, CEO Swisscom, on the investor call. "Do we run into congestion problems? No, we will be able to manage it." Swisscom's business model is to offer outstanding service at a premium price, which they have generally done well. Schaeppi closely watches the quality of his wireless network.

At Vodafone, CEO Colao reports "60% of growth in data [but] our network utilization went up only one percentage point." He adds technology is driving down cost per gig by, "40% year-over-year." David Small of Verizon also estimates cost drops of ~40% per year. Depending on who is estimating, the move from 3G to 4G LTE reduced costs from 50%-90%. We're seeing a similar fall as telcos go from LTE to LTE Advanced. 

Capital spending has generally been going down and often is actually below depreciation. Most wireless companies have no net investment.  Telcos are now bonding two or three 20 MHz bands, for a corresponding capacity increase; four bands are now possible. The upgrade for "carrier aggregation" is mostly software in recent generation cell sites. The next step, going to two and four antennas (2x2 & 4x4 MIMO,) requires only a modest hardware upgrade.  

Around the world, wireless speeds have been going up dramatically since Jim Cicconi, AT&T's great lobbyist, insisted  decade ago we faced a "spectrum crisis."

AT&T in 2016 still has 40 MHz of essentially unused spectrum. Genachowski at the FCC embraced the fear mongering, despite strong protests from his own engineers. In 2009 & 2010, I was convinced the "Spectrum Crisis" was bogus. Glen Campbell of Merrill Lynch, as well as Stagg Newman and Scott Wallsten of the Broadband Plan, presented the data that convinced me.

The 1 gigabit LTE starting to deploy in Hong Kong, Korea, and Australia is another 300%-400% capacity increase before we even get to "5G."

dave askOn Oct 1, Verizon turned on the first $20B 5G mmWave network. It will soon offer a gigabit or close to 30M homes. Thousands of sites are live in Korea; AT&T is going live with mobile, even lacking phones. 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 4X 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.


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.