Musings on the Industry

So much hype around 5G without it really being deployed as anything different than 4G. 5G for the most part will run on new spectrum; hence, no phones in existence can pick up that 5G spectrum nor can these phones receive millimeter wave (unless they have a soft-radio that can be tweaked by PLR settings).

We are really seeing 4G LTE improvements like we did with 3G from 2.5G if anyone remembers that AT&T mess.

5G millimeter wave trials can’t go around corners since it is line of sight and effected by rain! Like satellite TV.

VZW is pushing fixed mobile again. They did it with Fixed LTE and now fixed 5G.

I think that the cellcos will spend big on 5G, but how much can they raise prices? The key is to pick up IoT customers to pay for the expanded network. I truthfully don’t know how this works out for the cellcos. Turn up thousands of small cells while prices are flat and going unlimited – but have to pay more tower leases and backhauls. They do make some of it up with SD-WAN back-up and added devices like iPads, security systems, and monitoring gear. I don’t have a bright outlook for telecom.

8×8 grew revenue and grew losses while decreasing the cost of sales and service delivery.

  • AT&T debt is $179B;
  • VZ debt is $109B;
  • Comcast $107B;
  • Spectrum at $80B

With what new services do they pay down that debt? Streaming TV?

FTR’s problem was like retail: highly leveraged to get declining assets (copper). Then service problems mounted and customers left. Boom! BK.

Windstream is the showcase of the ILEC problem: buy up assets, misuse said assets (like Allworx, Broadview, KDL, fiber, USF monies); pay financial roulette and miss. Boom! BK. They have no plan to exit BK and turn a profit. Frontier has that problem. CenturyLink is heavily reliant on business fiber sales without cellular or data center to make up for rural ILEC holdings, which was an issue for Windstream & FTR as well.

AT&T and Verizon are global (C-Link is too); have entertainment holdings (Yahoo/AOL and WB); own a large cellular business; Big Brand with equally large marketing spend; and no one ever got fired for buying either one.

MPLS losses are hurting all 3 (AT&T, VZ, CTL). SD-WAN dollars do not replace MPLS losses. Globally that hits revenue harder than it hits EBITDA since those global assets are largely Tier II circuits.

T-Mobile buying Sprint helps VZW and AT&T. Comcast and Spectrum are hurting VZW by taking away accounts that VZW has to move to wholesale, which might help EBITDA since support costs for wholesale is lower.

DISH buying Boost and now Ting Mobile may someday be a contender, but since Charlie Ergen couldn’t win with DISH + Sling… he won’t beat the Big 2 here either. Altice USA (formerly Cablevision, Optimum and Suddenlink) is partnered with Sprint for MVNO, so this merger will disrupt them some. Plus Altice walks around with its shoelaces tied together anyway.

This pandemic showcased the Digital Divide, racism, stupidity and so much more. It also highlighted how the ILECs have been grabbing USF monies for years without really delivering on promises. Several have pointed this out before to a gutless FCC but now it was glaringly ugly in the spotlight.

Zayo, GTT, Cogent, FiberLight and others had a chance until the pandemic moved most of the buying away from commercial properties. Yes, data center capacity will fill up and carriers will get some dollars on bandwidth there but will it be enough?

FirstLight is an example of a residential fiber provider in rural that has pieced together a sizable network. By pulling in rural healthcare and E-Rate money while landing anchor tenants for fiber builds, FirstLight is doing better than the ILEC (Consolidated (formerly Fairpoint) is the main ILEC they compete against in New England.

If the exodus from NFL cities is real and not temporary and work-from-home for 20-30% of the population remains beyond 2021, what does that mean for all of it? That wasn’t the network that anyone was really building for.

Truthfully 3Q 2020 financials will give a better picture than we have today. More of the bad money will have hit the spreadsheets, but watching RIFs (layoffs) at CTL and others foreshadows what is to come.

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