This is the most interesting time for wireless since the invention of FM, and that’s no hype. Innovative solutions are challenging long-held truths, and the thinking–largely from Silicon Valley (and even Slovakia) is imaginative, bold and positively brilliant.
For starters, high-speed wireless to the home is a brand new reality. Price/performance has become so compelling that even Google “Fiber” has gone wireless. Their short trial with fiber to the door proved that wireless is the best way to go, reaching more consumers faster.
Wireless to the home is huge news and I wonder if anyone’s hearing it.
Consider the scope of the opportunity. We forget that there are thousands of suburban tracts and towns across America that are still waiting for high-speed internet. We’re talking millions of people. But if you think it’ll take years for wireless to roll through suburbia, think again. Tens of thousands of homes have already been lit up by fast-moving WISPs, like Triad Wireless, Sail Internet, and Prairie Hills Wireless, and the business case is so compelling and entry barriers so low, that we may be seeing a new gold rush.
And whose imagination isn’t stimulated by Google and Facebook testing balloons and drones to beam the internet from the stratosphere? They’re approaching Nikola Tesla’s vision to connect the entire planet.
But let me tell you why 5G is a bigger story.
Contrary to my preamble about today’s wireless technology, 5G is still eons away. It’s like a glacier moving imperceptibly toward us from the other side of the world. It will be 2020 before it gets here (specs established), yet 5G is the hottest ticket in telecom. That my friends, is no accident; it’s freaking brilliant.
Meanwhile, no one has a 5G crystal ball, which is why I’d rather throw myself on the nearest train tracks than hear another expert’s cliché-laden, mind-numbing insights on “the future of 5G”. Yet the magnitude and nature of the hype merits greater scrutiny as a business case, because I think it’s appealing to investors on two counts. First, as a promise, and second as an artifice that boosts profitability by tamping down 4G CAPEX. After all, 4G is old hat, right? Investors don’t want to hear about that.
5G and the audacity of desperation.
Carriers really want you to think 5G is right around the corner. Already there are 10,200 entries in Google for “5G rollout”.
In reality, it's not 5G that’s rolling out, but content. Have you heard that content is valuable? Well, there you have it. Imagine the days, weeks and months it takes to create and distribute so much content (about nothing).
And here are some recent cases that I think are pretty absurd. Last week the Wall Street Journal carried this story: “Ericsson to Start Delivering 5G Components in 2017”. Subtitle: “International groups set 2020 deadline to agree on frequencies and standards for the new equipment.” Say, WHAT?! I would give that the Drumpf Award for the most contradictory headline and subtitle.
Nokia has a different approach. They say they're pushing the needle all the way to 4.9G. Last I heard they were at 4.5G. Did you know those were standards? Damn, I heard that 4.6G was amazing, but I stepped out for a sandwich.
It’s an art to come up with more and different ways to say nothing. Recently a weatherman in Phoenix threw up his hands, begging the internet for another way to tell his viewers, “It’s gonna be HOT!”. But Verizon, not to be outdone, issued a press release announcing that they’re “the first U.S. carrier to complete 5G radio specifications”. How much value does that have to you?
And not to belabor the point, because there are endless examples, but check out “5G Magazine”, “designed, produced and distributed by a team of word class experts”. No other publication compares to it in my opinion, with the possible exception of “Bigfoot Magazine”, which in fairness I’m also giving you a link to.
No one talks about 4G anymore, and THAT’S the point.
Sometimes what seems obvious is just a sleight of hand, like when magicians draw your attention away from where you want to be looking. I’m starting to believe that the 5G hype is serving a dual purpose by taking our eyes off of 4G deployment. Imagine the CAPEX savings if instead of carriers giving us more 4G, we get served another heap of 5G content.
Big carriers are hard pressed to grow by subscriptions, and the problem of limited growth was foreseen years ago. Global management firm, Bain and Company, warned as early as 2011 that carriers would have to find savings or perish. They added, “Increasingly, wireless companies must hunt for ways to squeeze more from their business model—but where and how?” Hmm....
It's no secret that carriers have been holding back on CAPEX. In January 2016, Telecom Lead reported: “Verizon lowers telecom network Capex...”. In April 2016, AT&T's CTO remarked on CAPEX: “It's certainly not going up. It's certainly going down.” Days before, Fierce Wireless reported: “Sprint's shrinking spending drags U.S. wireless CAPEX down 10% in Q2.”
Suppliers feel the pinch of CAPEX cutbacks.
Fortunately, 5G’s long timeline gives carriers space to navigate their futures, but meanwhile suppliers that rely on them have fallen on hard times. In “AT&T CapEx - No more guessing!”, telecom analyst John Celentano writes: “Companies selling infrastructure products and services to AT&T continue to feel the pain of the company’s significant capex cutbacks since mid-2104. Many marketers across the supply chain still are trying to comprehend the depth and breadth of that pain, or how long it might persist.”
Component suppliers and broadband microwave vendors have been hit the hardest, reeling already from heated competition and downward price pressure. WSJ reported, “Ericsson and several of its industry peers are haunted by declining (4G) sales volumes,” said Mathias Lundberg, an analyst at Swedbank.
The pain extends as well to the tower leasing business. Here's a quote from Alex Gellman, CEO of Vertical Bridge from a report by AGL Media Group: “It would be hard for 2016 to not pick up compared with 2015, which was the weakest in memory. I’m cautiously optimistic that 2016 is going to be better, but I’m not sure how much better. There are certain things the carriers do when they are gearing up to spend money, and I am not seeing that on a big scale.”
4G is such a boring topic these days. No one wants to talk about it, yet I don’t believe we have anywhere near adequate coverage. And by that I don’t mean how many 4G or LTE bars you see on your phone. Connection is one thing. Capacity is another.
No doubt there's plenty of work to do.
Open Signal lists the U.S. at 55th in the world for LTE speed in 2015, and CTIA predicts: “By 2019, mobile data traffic will be nearly six times 2014’s traffic.” Six times the traffic, and that's a year before the 5G spec is even supposed to emerge.
The below chart is from the same CTIA white paper:
If there’s a brisk debate about cell coverage, I’ll come back with a bevy of stats, however anecdotal evidence is strong enough. For instance, I write from WorkStation, a coworking space that attracts entrepreneurs from several communities south of Boston. Recently, the owners relayed that one of the top reasons members cite for joining is that cell quality from their home is poor. Ditto, because I often have to stand in my front yard to keep a signal. I also drive between Boston and New York a lot, and while call quality is generally fine, I can scarcely download a jpeg or attachment on my 4G phone.
Big Cellular needs to roll out more 4G.
“Densification” is one of the most frequently used terms in the 5G lexicon, and for good reason, but that technology is here now. Why wait? The fact that I get lousy service so close to a major city isn’t because 4G sucks. It's because my carrier lacks coverage, and my story is quite typical. I’d like to see the mobile industry harder at work with the technology it has, rather than selling us ponies and rainbows that don’t exist. I’d sell my 5G soul for more 4G today. How about you?
Let me know what you think, and stay tuned for my next post, where I’ll take you from Silicon Valley to Slovakia–of all places, to visit RF elements to find out more about their crazy horn antennas. They’re shattering traditional 5GHz performance by improving signal to noise with a distinctive antenna design that installs in minutes and costs more to ship than the product price. If these antennas live up to what I’ve heard, then they could do wonders to reclaim the RF ecosystem, and that helps everyone.
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