Biggest Chip Tool Maker May Produce in Singapore to Evade U.S. China War

Gary Dickerson, CEO of Applied Materials, pointed out to investors they might assemble their equipment in Singapore to evade fallout from U.S. sanctions. China is the largest purchaser of chip gear today and has committed over US$100 billion to chipmaking. The world #1 foundry, TSMC, doesn't want to lose orders from Huawei, which buys about $5 billion each year. I'm sure it would prefer that Applied sells it Singapore gear. TSMC needs more flexibility to respond to whatever comes next from the U.S.

Dickerson is confident the U.S. rules will have "minimal impact on our business." His CFO, Dan Durn, added, "We think there's a path forward on this based on our discussions with the ecosystem where it doesn't impact our expectations around the business."

Sensible businessmen from Europe to California are finding ways to protect their businesses from current and possible future U.S. restrictions.

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The Big Backbones: Level 3, Orange, AT&T

Verizon used to claim "half of all Internet messages pass through our network." That's unlikely today, as several carriers have networks as global as what Verizon built after acquiring UUNet. There are many ways to measure size of backbone providers, but this chart from Telegeography is highly suggestive. Level 3/CenturyLink, Orange, and AT&T most frequently offer Direct Internet Access in165 global metros. Cogent, Sprint, Tata, and Deutsche Telekom also are found in more places than Verizon. NTT and BT follow. 

Their colleague, Brianna Boudreau, separately looked at the trend in international bandwidth costs.  https://blog.telegeography.com/global-bandwidth-prices-are-converging-somewhat 

      "Across critical global routes, weighted median 10 Gbps and 100 Gbps prices fell an average of 14% and 23% compounded annually since 2016. ... 100 Gbps cost 4.3 times 10 Gbps while delivering 10 times the capacity."

Huge disparities continue. 10 Gbps from Los Angeles to Tokyo (5500 miles) costs ~US$5,000. Los Angeles to Sydney is about 40% further (7500 miles) but costs more than three times as much.  I've reported the disparities to Africa are even higher; the cartel-like pricing of transit and backhaul is the largest international factor in high African Internet prices.

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China Unicom's Big Edge Claims First in World (Eng Newsbreak)

China Unicom is rapidly building an Edge Network covering 71 million people in the Greater Bay Area. It services Guangzhao, Shenzen, Dongguan, and apparently Hong Kong. Unicom is deploying thousands of Edge nodes across the country in 2020, supporting the 230,000 5G cells it will build with China Telecom before the end of the year. No other carrier in the world has revealed an actual network like this, covering more people than live in France or England.

Minister Miao Wei in 2017 set a goal to move the edge closer to over a billion Chinese. (I think I was the first to report that in English,) In 2019, Miao told the telcos to "accelerate 5G." 2020 was originally planned as a testing year, but Unicom also open MEC centers in Beijing, Shanghai, Chongqing, Tianjin, Zhejiang, Fujian, and Jilin. 

Huawei, Intel, ZTE, and giant Inspur are providing equipment. Tencent, Country Garden, and Gree are the announced partners and nearly 100 other projects are testing.

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Bravo Pai! Doubling Wi-Fi One of the Most Important Moves of the Decade

Ajit Pai is better at getting things done than any FCC Chair in my 25 years experience. Suddenly, he's added 1200 MHz of spectrum to the 80 MHz at 2.4 GHz and the 480 MHz at 4.9 GHz. 4.9 GHz generally has plenty of capacity today and the new spectrum means the capacity needed will be there for years.

AT&T is opposed and I was sure the expanded spectrum proposals would be tied up for years. FCC staff analyzed effect on existing users of opening the 6 GHz spectrum and concluded it would be minimal. Pai, backed by the other four commissioners, believed the FCC technical staff.

Pai has a good explanation of why this matters.

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Verizon Running Scared of T-Mobile 5G

In 2020 and 2021, U.S. telecom will be driven by how fast T-Mobile builds and markets its "best in the Western World" 5G network. It now has a better network than Verizon in much of the U.S. It will offer 5G at over 100 Mbps to 80-85% of the U.S. in about three years. I believe much of that will be in the next 12 months. There's little practical advantage, of courage, of speeds over ~25 Mbps, but customers still want to buy.

That drives a stake into Verizon's business model, which was built a decade ago on premium prices justified by the better network. All the U.S. carriers have been hemorrhaging subs to T-Mobile because of lower prices. T-Mobile and AT&T came close to network parity with Verizon about three years ago and consumers are catching on. The $billion restoration in Verizon capex will not be enough to pull them ahead,

T-Mobile is committed to spending ~$10 billion a year in capex for three years. That's easily enough to reach 35-45,000 towers, over 80% of the population. Sprint's golden 5G 2.5 GHz spectrum is remarkably cheap to upgrade to 5G and over 100 Mbps.

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B_______ "Our priority continues to be investing in technology and capabilities that will ensure Canadians remain leaders in the global digital economy over the long-term."

Rogers CEO Joe Natale's priority obviously is not, "Investing in technology and capabilities that will ensure Canadians remain leaders." in technology and capabilities that will ensure Canadians remain leaders." In the same investor presentation, CFO Tony Staffieri said, "We expect CapEx for the year to come in well below the guidance range we previously provided." He is not reducing the dividend despite lower earnings. The company has withdrawn guidance because of increased uncertainty.

Rogers is Canada's cable leader and one of the three dominant wireless carriers. The cuts are bad news for Canada's 5G deployment, already far behind the U.S. (Canadian 4G speeds are excellent, averaging over 70 Mbps.) 

Belgium’s Proximus, Sweden’s Telia, and most recently, France’s Orange have already cut dividends. Their stock prices have done relatively well, however. Telefonica, DT, BT, and Vodafone may follow.

If Telus of Bell Canada moved aggressively on 5G, Rogers would have to do so as well. The Capex cut by Rogers only makes sense if they have an understanding the others will go slowly.

Verizon CEO Vestberg: "No major impact from a network point of view, the wireless, the wireline, or the fiber network."

There have been essentially no major traffic disruptions reported on any major data network in the world despite the traffic increase. Almost all networks have enough spare capacity to handle what's come and probably what is next to come. The NY Times and others are overdue for a correction. Verizon CEO Hans Vestberg tells HBR's Adi Ignatius

We have seen no major impact from a network point of view, the wireless, the wireline, or the fiber network. That’s very important. The network is robust. We are prepared for it. 

Over a dozen other networks - from England to India - also have reported minimal disruption.

Hans, a very decent guy for a CEO, also said

You need to support the most vulnerable in our society in these times, especially if you’re the size of company we are. We are waiving all late fees and suspending terminations for nonpayment in order to keep our small business, enterprise, and residential consumers running. For our wireless consumers, we have automatically increased data limits by 15 gigabytes per month. You don’t need to apply. We just give them more. We’re also prioritizing data and communication of first responders and hospitals.

He announced a capex increase, which had previously only been hinted at. 

We had guidance for 2020 to spend $17.5 billion on our networks during 2020. Two weeks ago, we decide to increase that to $18.5 billion. 

The apex increase is necessary as T-Mobile is building a network that will be noticeably better than Verizon, using Sprint's 160 MHz of golden spectrum at 2.5 GHz.

Germany: $8B for 6M Fiber Homes in Ill-served Germany

Deutsche Telecom is years behind Telefonica and Orange/FT bringing fiber to homes, leaving it vulnerable to challengers like Deutsche Glasfaser. OMERS, a Canadian pension fund, and EQT, an affiliate of the Wallenbergs. EQT is partially funded by pension funds.

Uwe Nickl, Group Managing Director, will "focus primarily on the white and gray spots that are still there today - regions that so far could only dream of sustainable and energy-efficient digitization and that we want to send into the fiber-optic age with at least 300 Mbit / s." If Nicki delivers as promised, that is the best news for the German Internet in more than a decade.

Amidst the noise about 5G, few have noticed how fast fiber is growing. France, Canada and Spain are mostly fibered, Italy, Britain & Germany are growing at 20% per year. While AT&T cut back, a nearly unique competitor, Sonic, has fibered much of San Francisco and neighboring areas. PC named them the best ISP in the US.

Of course, nothing compares to the 400 million fiber to the home in China.

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