Xavi's Intel strategy: Fiber to the home to 80+% of Ireland, France

Published: 04 September 2018 04 September 2018

Intel under Gordon Moore and Andy Grove stayed ahead of the competition by always investing, even in the periodic slumps. It worked very well: except for the Japanese memory chip onslaught, no one caught Intel for 25 years. (No longer true.) Xavier Niel had a down first quarter this year, the first since 2002, and only a modest recovery in Q2.  His response: FTTH built ASAP, in order to pull ahead of the competition. 

Most dramatically, he is offering 10 gigabits for a 1 gig price at Salt in Switzerland. He just added 1.4M passings to his plan for Eir, the former Irish incumbent he recently bought. That will take Eir to ~1.7M, more than the country has households. Even including businesses, that easily over 90%.(Below)  In France, he is at 8M, going to 20M in 2022. Meanwhile, in Italy he has signed up 1.5M mobile customers in just a few months.

Most of that growth is being financed internally, with low debt levels.

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Remarkable success from FCC "unserved" reverse auction

Published: 29 August 2018 29 August 2018

700,000 unserved rural homes will now be connected. The cost, $1.488B, just over $2,000/home, startled me. Rural builds are expensive; I was involved in one in Vermont that came in over $4,000 home. $2,000 is half or less of the costs in the CAF program for the big telcos or New York State's separate program. The government saved $billions.

Nearly all will have speeds of 25 megabits or more. Half will receive 100 megabits. Some will get gigabit fiber. About 1/4th will receive Internet from a Viasat satellite, which keeps getting better. Bids were rated by the speeds offered, with a preference for higher speeds. Favoring faster service in the bidding process paid off. 

Almost half the money went to independent wireless operators, WISPs. Rural electric coops also are deeply involved. The traditional telcos won few of the bids.

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50 kilometers Super-PON from Google

Published: 25 August 2018 25 August 2018

Google Fiber has developed Super-PON, designed to go 50 kilometers. That's more than twice the reach of today's GPON. The illustration at left is a mid-sized city served by three central offices. Below, the same city using today's PON. It requires 16 COs. 

Working units are in the field, probably from Adtran. That's not official, but I doubt DeSanti would have keynoted an Adtran event if an Adtran product wasn't close. 

DeSanti made the surprising comment, "Aerial is prohibitively expensive due to policy restrictions of pole sharing with utility companies." The common wisdom is that aerial is much cheaper than underground.

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"Worldwide shortage of components"

Published: 08 August 2018 08 August 2018

Carl Russo of Calix, Earl Lum confirm reports from Nokia & Joe Madden. Russo on the call said

"The caution on the revenue side is an extension of what we struggled a little bit within Q2. But we don't see that challenge going away and we're going to make some additional investments in inventory to deal with it, but there is a worldwide shortage of components that run straight through our product sets. Especially those product sets that are more subscriber edge premises oriented."

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Broadband means you sleep less

Published: 06 August 2018 06 August 2018

"Just one more level," and other Internet temptations cut your sleep. "Individuals with DSL access tend to sleep 25 minutes less than their counterparts without DSL Internet. They are significantly less likely to sleep between 7 and 9 hours... Furthermore, they are less likely to be satisfied with their sleep. These effects are mostly concentrated among younger adults."

I at first thought that claim implausible. Then I thought of all the nights I went to bed later to finish something on the computer, or when I just lost track of time surfing."High-speed Internet makes it very enticing to stay up later to play video games, surf the web and spend time online on social media."

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Fiber to the Home near-explosive growth

Published: 04 August 2018 04 August 2018

20% growth is common. Telefónica Spain has passed twenty million premises - over 70% - and continues at two million a year. Telefónica Brazil is going from seven million in 2018 to ten million in 2020. China has 328 million connected and added 5M in the month of June. AT&T on July 26 announced 5M more in the next 12 months. Fiber is now a proven moneymaker, bringing new customers every quarter.

What's going on? We're doing the edits on a report for the clients of STL Partners. The working title is Fiber to the Home near-explosive growth. I use the strategies of 15 major companies to frame the analysis. 

Credit Suisse believes that for an incumbent, “The cost of building fibre is less than the cost of not building fibre.”

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Suri of Nokia: Component shortage real

Published: 03 August 2018 03 August 2018

Your equipment could be delayed, especially if China goes ahead with a huge deployment of 5G,  Suri was explaining to investors a sales shortfall caused by an inability to get parts. Suri said

"There is a tight supply for some standard components, such as various capacitors, diodes, and transistors that are used in our sector and many others, as well. The root cause of this situation is the fast growth of digital technologies in areas such as automotive as well as supplier consolidation delaying capacity investments.

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Latin America broadband growth ~6% in 2017: TeleG

Published: 28 July 2018 28 July 2018

Pete Bell's TeleGeography data (below) show 10% growth at Argentina, Guatemala, Ecuador, Costa Rica, and El Salvador. Puerto Rico and Venezuela actually lost subscribers. Brazil added 2,083,000 to 28,670,000 (7.8% growth.) Telefónica Vivo is rushing to 10M homes with FTTH in order to win market share.

Uruguay has 79% household penetration. Government-owned Antel has covered 82% of the country with fiber home. Chile and Mexico are far behind at 61% and 59%. Brazil is at 43%. I don't have data, but I'd bet San Paulo and the Southern part of Brazil are closer to 60% and the North much lower. Brazil has extreme income and racial inequality with a Gini coefficient of 50. (The U.S. is the most unequal of developed countries, at 40; France is 32.) 

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