CHTR - Charter Communications

[cameronfen]

@Vince (regarding the copy and pasted forbes article) and others I would be aware of confirmation bias and wanting to be true (charter's competitive advantage) to actually be true.  I dont think anyone can argue that we here know less than the people in the Forbes article about broadband.  They could still be wrong, but its bad investing to dismiss an experts opinion because it disagrees with your thesis.   

[Munger_Disciple]

@Vince (regarding the copy and pasted forbes article) and others I would be aware of confirmation bias and wanting to be true (charter's competitive advantage) to actually be true.  I dont think anyone can argue that we here know less than the people in the Forbes article about broadband.  They could still be wrong, but its bad investing to dismiss an experts opinion because it disagrees with your thesis.   

 

I would be careful about outsourcing your thinking to "experts". One of the so called "experts" in the article said 15Mbps is all you need for broadband, so that should be the definition of broadband. Does anyone really believe that 15Mbps internet service is competitive today?

 

[vince]

Rysavy: Because a cellular operator with a dense 5G network can provide both fixed and mobile broadband. A cable operator will only have a fixed network. To support handsets, the 5G network will tightly integrate with 4G for coverage. Cable operators don't have that macro 4G network to fall back on.

 

Bennett: Can’t cable operators build small cells? Nobody has them now.

 

Rysavy: Yes, cable operators can and will build small cells. But, as mentioned, they can't provide the continuous coverage, especially for mobile devices.

 

One More TRY, I was just trying to show that they are plain wrong in one exchange because Comcast is up and running with continuous coverage.  So its not because they disagree with my thesis, it is that he is factually wrong about a specific point.  I guess you could argue that comcast was not up and running at the time but if I was a professional being interviewed by Forbes I would be very  sure that what I was saying was factual and trying hard to to dent my credibility

[Spekulatius]

@Vince (regarding the copy and pasted forbes article) and others I would be aware of confirmation bias and wanting to be true (charter's competitive advantage) to actually be true.  I dont think anyone can argue that we here know less than the people in the Forbes article about broadband.  They could still be wrong, but its bad investing to dismiss an experts opinion because it disagrees with your thesis.   

 

I would be careful about outsourcing your thinking to "experts". One of the so called "experts" in the article said 15Mbps is all you need for broadband, so that should be the definition of broadband. Does anyone really believe that 15Mbps internet service is competitive today?

 

15 Mbps is certainly not enough, you are going to have trouble watching Netflix with it, especially with other devices competing for bandwidth. I don’t think my household is the unusually and I count at least a dozen devices hanging on my wireless network. I think 100 Mbps is the bare minimum now.

[vince]

i hope u are right spek cause one concern i do have is our speed advantage isnt as valuable yet. and the quicker that demand for speeds increase the faster and more permanent values accrue to Charter  i get by with 40 mbps, family of 4, with netflix and about 8 devices. 

[vince]

Hoping that someone cant point me to some good reading on the past and future growth in broadband speed demand(and capacity as well because the future capex requirements will at some point be more related to capacity limits which is why we see caps i think) and some of the applications that will definitly increase demand

[jgyetzer]

Thanks for that post, vince.  This interview seems to reframe the conversation saying that 25Mbps is in excess of what any user could possibly need and therefore 5G broadband could be provided at those speeds on lower bandwidths.  That’s the gist that I’m taking away.  It certainly solves the “mm waves can’t transmit through walls” argument.  This seems to be different from the perspective that the cable companies have taken which is provider higher speed and consumers will find a use and a demand for it.  Does that match what you’re reading here?

 

Anectodally, my experience has been that “25 Mbps” internet service is often inadequate for fast internet browsing, much less video streaming.  Has anyone else had that experience?

[jgyetzer]

A really great way to find out what the service is like is just to test it in one of the early geographies.  Anyone live somewhere where 5G is available as an in-home service?

[cameronfen]

@Vince (regarding the copy and pasted forbes article) and others I would be aware of confirmation bias and wanting to be true (charter's competitive advantage) to actually be true.  I dont think anyone can argue that we here know less than the people in the Forbes article about broadband.  They could still be wrong, but its bad investing to dismiss an experts opinion because it disagrees with your thesis.   

 

I would be careful about outsourcing your thinking to "experts". One of the so called "experts" in the article said 15Mbps is all you need for broadband, so that should be the definition of broadband. Does anyone really believe that 15Mbps internet service is competitive today?

 

I wouldnt say I'm outsourcing my thinking to experts, but when four people who are basically wireless/cable insiders basically (with maybe half a dissent) agree on something and I'm on the other side of the trade (which I am--I have a small position in charter to incetivize information gathering), I at the very least have to question whether I the patsy at the table.  Obviously not all experts agree, Carlos Slim said on the america movil q1 call that said that 5g is not competitive with cable.  However, instead of outsourcing to experts, maybe research the short thesis (ie like a pre-mortum) before investing.  For example I think a good way is to try it out like jgyetzer suggested above. 

 

For what its worth I think 4g hotspot on my phone is sufficient for streaming netflix as a consumer, but I also thought video games didn't need better any graphics in like 2008 and that twitter was gratuaitous for example, so I may be on the way low matainence side of the spectrum

[Shooter MacGavin]

Thanks for that post, vince.  This interview seems to reframe the conversation saying that 25Mbps is in excess of what any user could possibly need and therefore 5G broadband could be provided at those speeds on lower bandwidths.  That’s the gist that I’m taking away.  It certainly solves the “mm waves can’t transmit through walls” argument.  This seems to be different from the perspective that the cable companies have taken which is provider higher speed and consumers will find a use and a demand for it.  Does that match what you’re reading here?

 

Anectodally, my experience has been that “25 Mbps” internet service is often inadequate for fast internet browsing, much less video streaming.  Has anyone else had that experience?

 

Yes, I have a 200mpbs wired connection straight to my tv and I've found the live OTT apps subpar.  They all buffer switching between channels, and correct me if I'm wrong but they're 720p connections not 1080p.  Maybe the point isn't the speed but the latency and I live in a congested area.  Maybe when people are demanding higher speed, they're actually demanding and getting decent speed and lower latency? 

[vince]

Thanks for that post, vince.  This interview seems to reframe the conversation saying that 25Mbps is in excess of what any user could possibly need and therefore 5G broadband could be provided at those speeds on lower bandwidths.  That’s the gist that I’m taking away.  It certainly solves the “mm waves can’t transmit through walls” argument.  This seems to be different from the perspective that the cable companies have taken which is provider higher speed and consumers will find a use and a demand for it.  Does that match what you’re reading here?

 

Anectodally, my experience has been that “25 Mbps” internet service is often inadequate for fast internet browsing, much less video streaming.  Has anyone else had that experience?

 

Well its clear the interviewees believe cable is in trouble and they go on to list all the reasons why.  You can be sure of one thing JG and that is there is no way 25 is going to be anywhere near enough.  It can be right now for lots of users but it will change pretty quickly.  My earlier concern was how fast we blow thru 250 cause thats in the range where copper and all its messy solutions top out at (in Europe they are having some success with 100-200 speeds with copper).  So we have a major speed advantage now (and looks like for the next few years) and its relatively capital light, and so this is where lots of customers can be taken.  And the further pressure that is put on speed leverages our advantage to the point of a good performing investment even tho its going to get tougher in the out years imo.  and one other thing to answer your earlier question is that netflix is thriving which is bringing lots of revenue which allows them to invest in more exclusive content.....which attracts more cust...which gives more revs..... which gets better content..... and I think they are doing better than most thought which is putting pressure on video subscriber counts, imo

[jgyetzer]

This is a great conversation.  I found this interesting and helpful.  Some of it beyond my technical comprehension, but still good.  What I take from this research is that the existing wired systems are the most practical and economic way to go for most situations to achieve high speed connectivity, but there may be situations where a wireless solution is better.  As to who is best positioned to provide that wireless solution, it’s up for grabs.

 

https://www.nctatechnicalpapers.com/Paper/2017/2017-can-a-fixed-wireless-last-100m-connection-really-compete-with-a-wired-connection-

[vince]

Thanks for that post, vince.  This interview seems to reframe the conversation saying that 25Mbps is in excess of what any user could possibly need and therefore 5G broadband could be provided at those speeds on lower bandwidths.  That’s the gist that I’m taking away.  It certainly solves the “mm waves can’t transmit through walls” argument.  This seems to be different from the perspective that the cable companies have taken which is provider higher speed and consumers will find a use and a demand for it.  Does that match what you’re reading here?

 

Anectodally, my experience has been that “25 Mbps” internet service is often inadequate for fast internet browsing, much less video streaming.  Has anyone else had that experience?

 

Ya well unfortunately there are lots of factors that determine speed and latency that sometimes are not related to ur mbps performance.  havent determined if this is a net positive or net negative to providers

 

Yes, I have a 200mpbs wired connection straight to my tv and I've found the live OTT apps subpar.  They all buffer switching between channels, and correct me if I'm wrong but they're 720p connections not 1080p.  Maybe the point isn't the speed but the latency and I live in a congested area.  Maybe when people are demanding higher speed, they're actually demanding and getting decent speed and lower latency?

[Munger_Disciple]

 

Does anyone really believe that 15Mbps internet service is competitive today?

 

 

Just to clarify, I meant this to be a rhetorical question. Naturally 15 Mbps is way too low for today's customers' broadband needs. I posed it to point out that "experts" opinions can be way off.

 

I think both speed and latency are important for broadband. High speed gives us the ability for example to play multiple 4K/HD streams at once and latency enables better interactivity whether it is gaming or other apps.

[Shooter MacGavin]

This is a great conversation.  I found this interesting and helpful.  Some of it beyond my technical comprehension, but still good.  What I take from this research is that the existing wired systems are the most practical and economic way to go for most situations to achieve high speed connectivity, but there may be situations where a wireless solution is better.  As to who is best positioned to provide that wireless solution, it’s up for grabs.

 

https://www.nctatechnicalpapers.com/Paper/2017/2017-can-a-fixed-wireless-last-100m-connection-really-compete-with-a-wired-connection-

 

Thanks for posting.

 

At the liberty investor day from last year, they do a pretty good Q&A of this issue too.

[Spekulatius]

I think most people will find that they need a better internet connection , once they cut the cord and switch to streaming. I think my 100Mbps minimum speed requirement is about right.

 

I upgraded to FIOS gigabit after cutting the cord. I bet Verizon makes more money now from our household than they did before, even though our bill is lower.

[Guest longinvestor]

Fwiw here’s some data on global broadband speeds and costs.

http://www.websiteoptimization.com/bw/0711/

 

Same laws of physics apply. The US has some catching up to do. Masa Son has it right in that the duopoly (actually monopoly) in the US keeps us  where we are. They simply dividend away earnings.

[Munger_Disciple]

Fwiw here’s some data on global broadband speeds and costs.

http://www.websiteoptimization.com/bw/0711/

 

Same laws of physics apply. The US has some catching up to do. Masa Son has it right in that the duopoly (actually monopoly) in the US keeps us  where we are. They simply dividend away earnings.

 

The data shown in the link is from 2007, thus not very relevant to present time. In addition the US is very different geographically when compared to Japan for instance, where population densities are much higher. It takes a lot more capital to provide high speed access to a suburban or rural neighborhood than a tall apartment building on a per customer basis.

[gokou3]

For those of you in the US who has a "X" Mbps broadband connection, do you usually get close to "X" Mbps or a lower speed?  Which provider / service do you use?

 

I use DSL here in Canada from Telus (telco) and they can usually provide their advertised speed (based on speedtest.net results).  I haven't used cable broadband for a while but the last I used it I didn't get close to the advertised speed.

[Guest longinvestor]

Fwiw here’s some data on global broadband speeds and costs.

http://www.websiteoptimization.com/bw/0711/

 

Same laws of physics apply. The US has some catching up to do. Masa Son has it right in that the duopoly (actually monopoly) in the US keeps us  where we are. They simply dividend away earnings.

 

The data shown in the link is from 2007, thus not very relevant to present time. In addition the US is very different geographically when compared to Japan for instance, where population densities are much higher. It takes a lot more capital to provide high speed access to a suburban or rural neighborhood than a tall apartment building on a per customer basis.

We will see when S / T Mobile merger goes through. Masa is chomping on the bit to pull off a 100 year disruption of telecom just as he’s done in Japan. Unless of course if the incumbents  lobby the merger away like they did the last time.

 

 

[oddballstocks]

Bandwidth latency...

 

Seems like there is a lot of confusion, where people are equating bandwidth to speed.

 

Think of this like a highway.  The "mbps" or "gbps" is how wide the highway is, that is how many simultaneous cars can be packed onto the road at once.

 

Latency is how fast those cars are moving.  A narrower highway at a high speed can move more information compared to a wide slow speed highway.

 

Netflix will work perfectly fine over 15Mbps, according to Netflix you can have 10 simultaneous streams open at this speed at normal speed, or 3x streams at HD quality.

 

There are other variables at play as well, the transport medium (copper or fiber), and distance.  Cable uses copper and has a natural speed ceiling.  This is because as the bandwidth increases the power requirement to move that data.  Compare the power per port for a 10GBase-T connection vs a 10Gbe using SPF+.  10Gbase-T (10Gbps using traditional Ethernet cable) is mostly a DOA product in the enterprise because the power requirements don't make it cost effective.

 

When you're forcing a ton of power onto a copper line it increases cross-talk, that means two wires next to each other can interrupt and cause data errors.  Ethernet handles these errors by re-sending packets, but if you are re-sending a lot of packets it lowers your speed.

 

Fiber doesn't have these problems, fiber is cabling made of small glass strands that move data at the speed of light.  Fiber cables are limited by the transceivers at each end of the cable, and the switches used.  For example if you lay a 10km fiber cable and have a 1Gbps switch with 1Gbps transceivers and in 10 years you want to move to 25Gbps all you need to do is upgrade the switches and endpoints, the cable is fine.  A single fiber maxes out at 1 Petabit per second, which is 1,000 terabits per second, or 10,000 Gbps.

 

The reason people are going higher and higher at home is because providers underprovision the network.  That is they might have a 10Gbps pipe that they resell to 100 or more customers at 1Gbps.  The ISP will then apply QoS and shaping to traffic flows so it 'seems' fast enough.  The idea is not everyone is saturating their connection at the same time.  While one person might be using 1Gbps, another might be surfing Facebook and pulling 2Mbps.  Sometimes the division is even more extreme.

 

If you ever work with enterprise connections you'll be shocked at how fast a small amount of bandwidth works, and that's because it isn't divided up like that.  We have a co-location with 100Mbps of dedicated bandwidth.  There is a 100Mbps block that's 100% reserved for us.  We're next to Zayo's switches, so there's little latency, but EVERYTHING is blazing fast there, we have no competition.

 

The second item on speed is distance.  The further you are from the switch the slower your connection.  Both copper and fiber employ repeaters to boost the signal.

 

What you see in the residential market is a lot of people sharing the same uplink connection, and in most cases it works out fine.  And to compensate for the increased latency providers increase the pipe size to squeeze more data through at the same time with higher latency.

 

For reference you can buy a 10Gbps fiber drop for ~$5,000/mo.  The colo we're at has three fiber termination points and each fiber run is 300Gbps, so slightly less than 1Tbps.

 

Oh, the other factor in speed is device speed.  This is where providers have an enormous advantage.  You're limited on how much data you can consume by your bandwidth, and also your disk speed.  A consumer computer with a spinning disk (which is probably 60% of computers) is going to get 150MB/s in a sequential read, maybe 120MB/s in a sequential write.  That's about 1Gbps.  If you're uploading a giant file you can potentially saturate a 1Gbps connetion.  But if you're doing a random read or write you're down in the 5-10MB/s range, which is in the 80Mbps range.  Remember there are eight bits to a byte.

 

Most web pages are a few megabytes, they require little bandwidth.  Streaming HD to a giant screen is probably the largest consumer of bandwidth.  But there are compression algos that help with that.  Also video is naturally limited, you can only consume what your mind can comprehend at once.  I.e. humans can see about 1,000 fps, but static scenes you need 30fps, it makes no sense to send 300fps, there'd be no discernable difference.

 

I just ran a speed test, we pay for 50/50, I pulled 56/42 with 45ms of latency.  For comparison I ran a speed test from one of our servers, latency between 3ms and 10ms and right around 100/100 on a 100/100 connection.

 

[Liberty]

Couldn't range on 5G still be better than wifi because the transmission power will be higher?

 

Power may make some difference on the edges but not much if the access point antenna is omnidirectional and there are significant obstructions like walls. You can test this by increasing the power on your Wifi router. I tested it: bought an external amplifier and jacked up the power output of my Wifi router antenna and it made almost no difference to the Wifi range.

 

Isn't this because the device you were using with the wifi wasn't specced to also be higher power?

[vince]

This clip is from April 24/2018 summary of Verizons 1st qtr results. 

 

It’s an obvious strategy for a company whose wireless segment is thriving in part because it is delivering more and more video on its wireless networks, but often overlooked is that wireless networks have never been entirely wireless. There is an absolute necessity for any wireless network to eventually connect to a wireline network. Wireless companies need to either expand their wireline networks to support the expansion of their wireless networks (a need that will become ever more acute with the evolution to 5G), or turn to erstwhile competitors for wireline network connectivity. Furthermore, “erstwhile” competitors are still competitors.

 

These considerations are beginning to be overt sources of concern.

 

A research note from New Street Research read, “We remain cautious on VZ given the company’s significant capacity gap relative to peers, and the ongoing threat of cable entry into wireless. We suspect that the company’s recent push into 5G fixed wireless broadband (FWB) is driven by a need to densify for the core wireless LTE business. A fiber deployment to support just a FWB business case would cost $35BN in capex; adding mobile wireless equipment to the deployment would push the cost higher. More importantly, CMCSA will start taking share at a much faster pace later this year; we expect them to double net adds by fourth-quarter 2018; and Charter will follow close on their heels.”

[Shooter MacGavin]

Bandwidth latency...

 

Seems like there is a lot of confusion, where people are equating bandwidth to speed.

 

Think of this like a highway.  The "mbps" or "gbps" is how wide the highway is, that is how many simultaneous cars can be packed onto the road at once.

 

Latency is how fast those cars are moving.  A narrower highway at a high speed can move more information compared to a wide slow speed highway.

 

Netflix will work perfectly fine over 15Mbps, according to Netflix you can have 10 simultaneous streams open at this speed at normal speed, or 3x streams at HD quality.

 

There are other variables at play as well, the transport medium (copper or fiber), and distance.  Cable uses copper and has a natural speed ceiling.  This is because as the bandwidth increases the power requirement to move that data.  Compare the power per port for a 10GBase-T connection vs a 10Gbe using SPF+.  10Gbase-T (10Gbps using traditional Ethernet cable) is mostly a DOA product in the enterprise because the power requirements don't make it cost effective.

 

When you're forcing a ton of power onto a copper line it increases cross-talk, that means two wires next to each other can interrupt and cause data errors.  Ethernet handles these errors by re-sending packets, but if you are re-sending a lot of packets it lowers your speed.

 

Fiber doesn't have these problems, fiber is cabling made of small glass strands that move data at the speed of light.  Fiber cables are limited by the transceivers at each end of the cable, and the switches used.  For example if you lay a 10km fiber cable and have a 1Gbps switch with 1Gbps transceivers and in 10 years you want to move to 25Gbps all you need to do is upgrade the switches and endpoints, the cable is fine.  A single fiber maxes out at 1 Petabit per second, which is 1,000 terabits per second, or 10,000 Gbps.

 

The reason people are going higher and higher at home is because providers underprovision the network.  That is they might have a 10Gbps pipe that they resell to 100 or more customers at 1Gbps.  The ISP will then apply QoS and shaping to traffic flows so it 'seems' fast enough.  The idea is not everyone is saturating their connection at the same time.  While one person might be using 1Gbps, another might be surfing Facebook and pulling 2Mbps.  Sometimes the division is even more extreme.

 

If you ever work with enterprise connections you'll be shocked at how fast a small amount of bandwidth works, and that's because it isn't divided up like that.  We have a co-location with 100Mbps of dedicated bandwidth.  There is a 100Mbps block that's 100% reserved for us.  We're next to Zayo's switches, so there's little latency, but EVERYTHING is blazing fast there, we have no competition.

 

The second item on speed is distance.  The further you are from the switch the slower your connection.  Both copper and fiber employ repeaters to boost the signal.

 

What you see in the residential market is a lot of people sharing the same uplink connection, and in most cases it works out fine.  And to compensate for the increased latency providers increase the pipe size to squeeze more data through at the same time with higher latency.

 

For reference you can buy a 10Gbps fiber drop for ~$5,000/mo.  The colo we're at has three fiber termination points and each fiber run is 300Gbps, so slightly less than 1Tbps.

 

Oh, the other factor in speed is device speed.  This is where providers have an enormous advantage.  You're limited on how much data you can consume by your bandwidth, and also your disk speed.  A consumer computer with a spinning disk (which is probably 60% of computers) is going to get 150MB/s in a sequential read, maybe 120MB/s in a sequential write.  That's about 1Gbps.  If you're uploading a giant file you can potentially saturate a 1Gbps connetion.  But if you're doing a random read or write you're down in the 5-10MB/s range, which is in the 80Mbps range.  Remember there are eight bits to a byte.

 

Most web pages are a few megabytes, they require little bandwidth.  Streaming HD to a giant screen is probably the largest consumer of bandwidth.  But there are compression algos that help with that.  Also video is naturally limited, you can only consume what your mind can comprehend at once.  I.e. humans can see about 1,000 fps, but static scenes you need 30fps, it makes no sense to send 300fps, there'd be no discernable difference.

 

I just ran a speed test, we pay for 50/50, I pulled 56/42 with 45ms of latency.  For comparison I ran a speed test from one of our servers, latency between 3ms and 10ms and right around 100/100 on a 100/100 connection.

 

awesome post oddball ..thank you for putting it in English.  What's your takeaway on the feasibility and cost of Telco's being able to provide high speed all you can consume cellular? 

[LongTermView]

Fwiw here’s some data on global broadband speeds and costs.

http://www.websiteoptimization.com/bw/0711/

I like these charts from 2007. Do we have any from more recent years? Is Japan still way ahead with the average advertised broadband download speed?