Landline traffic growth 30%, >terabyte users becoming significant

James Wright bought a 4K TV and suddenly Comcast's terabyte cap hit him. I've written before that Comcast's terabyte cap was reasonable. Bandwidth is cheap but it isn't free. That is no longer true. The bandwidth needed has gone up ~30% per year. The cap hasn't risen despite the cost to deliver each bit has gone down dramatically. The cap is now hindering cordcutting. 

OpenVault found the average bandwidth use in 2019 in the US was 271 gigabytes, up 25%. Five years ago, very few drew a terabyte per month. Now, the number is meaningful and rising, particularly among those who don't take cable TV. Internet-only households consumed 85% more bandwidth, 390 GB per month. 

Many 4K TVs now cost US$300-700, including a remarkable new one from Huawei. A typical American home watching 4 hours of TV a day at 4K is close to the terabit. Add a kid or two, and overages will be hard to prevent.  

The European average in 2019 is 170 GB, up 28%. Unless Comcast rapidly raises the cap, users are pressured into taking Comcast's TV. 

 (Thanks to Robert Conger of Adtran for pointing me to how 4K TVs may be an obstacle to fixed wireless in large volumes.) 

Chip bottom: Sales down 7%

IHS forecasts a 7% drop in 2019 chip sales as prices plummet in memory, blockchain miners disappear, and mobile phone sales drop. This is consistent with many other data points, such as TSMC's quarterly earnings. Lower prices for memory chips and most others are holding down equipment pricing, including PC's and phones. 

Four sectors stand out in the chip business.

5G wireless chips can only be produced on TSMC's 7-nanometer production line or by Samsung, mostly for its own use. Huawei and Qualcomm are producing 5G chips with reasonable yields at TSMC. Six months ago, 5G phones were not expected before the summer because Apple had bought out most of TSMC's 7 nm production. The decline of iPhone sales opened some capacity and Qualcomm is supplying chips to Xiaomi, Oppo, Vivo, and ZTE. China Unicom is offering phones from those four, Huawei, and I believe Samsung.

Qualcomm's prices are reasonable enough that Xiaomi announced 5G phones at US$600, which others will match. Intel is now out of the market. MediaTek and UNISOC are behind, so Qualcomm has little incentive to adjust prices. IHS emails me:  

In the near term, our analysts don’t see much pressure on BOM pricing due to the strong Qualcomm market presence but in the longer term, BOM prices will be under pressure as soon as China Mobile comes online with their 5G SA network. It is also unlikely that semiconductor manufacturing (of application processors and modems) will drive the market into oversupply.

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Mobile World Congress 10 gig - on fiber

A year ago, people refused to believe Xavier Niel's Salt was selling 10 gig for US$53 in Switzerland. In August, I reported Huawei can bring 10G prices within US$5 of GPON prices. 

10 gig is now planned at Bell Canada, in Korea and I believe parts of China, and by smaller carriers in England and the U.S. The cost is so low I expect to see it many more places. 

Ookla, developers of the popular speedtest.net, brought their new 10 gigabit test software to the Mobile Web Conference. There is no mobile offering that can confirm the speed. Instead, they brought two Mac Minis and hardwired them. 

Samsung claimed 5G will go 40 gigabits. Others suggest 60 gigabits or more. Those are politicians' truths.  

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Wikipedia edits Cloud & Edge computing

I began the process of updating and clarifying the first paragraphs of these articles. Improvements welcome.

Cloud computing makes computer system resources, especially storage and computing power, available on demand without direct active management by the user. The term is generally used to describe data centers available to many users over the Internet. Large clouds, predominant today, often have functions distributed over multiple locations from central servers. If the connection to the user is relatively close, it may be designated an Edge server.

Clouds may be limited to a single organization (enterprise clouds,) be available to many organizations (public cloud,) or a combination of both (hybrid cloud.) The largest public cloud is Amazon AWS.

Edge computing brings memory and computing power closer to the location where it is needed. Definitions vary.

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AR/VR: China's Gov says Go!

China is already far ahead in VR, experts tell me.  The gap is likely to widen as this MIIT opinion puts the full force of government behind AR/VR promotion. Cities and provinces are expected to provide support. Banks are "encouraged" to provide financing. Any "patriotic" company will be expected to provide support.  

 ‘Guiding Opinions of the Ministry of Industry and Information Technology on Accelerating the Development of Virtual Reality Industry’, provides guidance for the development of virtual reality technology in the country. Standards will be developed and supported. 

The goal is "By 2025, China’s virtual reality industry as a whole has entered the forefront of the world, mastering key core patents and standards, and forming a virtual reality backbone enterprise with strong international competitiveness." In Europe, the telcos are pleading for support from other industries like entertainment. The German automakers are pleading for the telcos to build networks ready for connected cars. The Chinese government has the power to make things happen. (Which, of course, also has a downside.) 

Separately, I'm reporting Minister Miao Wei has instructed the telcos to bring 90% of China within 25 ms of the cloud.

In Google translation, here is the 8 step program 

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Guo Ping complete speech: Huawei New Year: $108B sales, "The greater the difficulty, the greater the glory."

Huawei employees are among the hardest working in telecom, with a dedication rare in the West except at inspirational startups. Guo Ping now asks them to work harder. "We will encounter even greater difficulties." Ren has weathered far worse.

Sales in 2018 reached US$108.5 billion, up 21%. It shipped over 200 million phones, ahead of Apple and gaining on Samsung. 10,000 5G base stations had shipped by November.  (I wouldn't be surprised if that figure is 100,000 a year from now.) Huawei Cloud is deployed in 22 regions. 

Guo Ping has just delivered a message intended to inspire the people at Huawei. It's far more intense than annual messages in the West and gives you a sense of the spirit,

Fire is the Test of Gold

—A New Year's Message for 2019, Guo Ping, Rotating Chairman

Marcus Tullius Cicero, a Roman philosopher, once said, "The greater the difficulty, the greater the glory." Truer words were never spoken as we bring 2018 to a solid close. It has been an eventful year, to say the least. But we have never stopped pushing forward, and as a result our 2018 sales revenue is expected to reach 108.5 billion US dollars, up 21% year-on-year.

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US$170M fine for Charter consumer fraud, $330M Sprint tax cheating, FCC investigating Verizon & T-Mobile for False Claims

Charter CEO Tom Rutledge was paid US$98 million in 2016. For that kind of money, most of us would lie, cheat, or steal. Charter has just agreed a fine of US$170 million for consumer fraud. Working pro bono, Columbia Professor Tim Wu made crucial contributions to the case. The court decisions made clear telcos and ISPs must obey ordinary laws on fraud and false advertising. The national FCC does not pre-empt consumer law.

Marcelo Claure of Sprint is on track to make $61 million from Sprint. They have just been fined $330M for cheating New York State on taxes. The FCC is investigating Verizon and T-Mobile for false claims on coverage, which affect US$billions of subsidies.

Charter/Time Warner ripped off New York consumers for hundreds of millions, as I reported last February.

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Frontier, Windstream bankruptcy predicted by stock price

Windstream's total market cap is US$117 million on sales of US$5 billion. Frontier is valued at US$283 million with sales over US$9 billion. Those prices do not make sense unless the companies are likely to go bust soon.

I am not, repeat not, predicting the bust. I haven't done the research. I have no malice. Repeat: this is not my prediction. I hope this proves wrong.

What I am saying is the investor consensus implies a very high risk that cannot be ignored by regulators.

Government and vendors must have a contingency plan. I'm asking the FCC and state regulators what their plan is. I doubt many have one. I expect few if any will give me a meaningful answer. I'm writing this story as a wake-up call; being unprepared has been very costly in the past.

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