CHTR - Charter Communications

[Happy]

Reading through the call, it appears that they didn't cut these video subs earlier because they recently did integration-related system changes where now the customer qualification and collection process conforms to their standard policy. It's understandable that they need to tackle issues like that one after another in such a big integration. It's unrealistic to expect them to do everything at once.

Winfrey also said "And non-pay disconnect and the associated bad debt should be back to normal rates by the end of Q2, which practically means the beginning of Q3."

So we might expect a similar impact on results in Q2 and then from Q3 on, they should be able to back up their talk with numbers. 

[BG2008]

Has anyone looked at how lumpy results were on a quarter to quarter basis a few years back when they integrated other acquisitions?

 

Also on the call, they mentioned that a lot of the call centers are outsourced to the Phillipines.  During the integration phase, they need to pay for the Phillipines staff while they ramp up hiring staff here in the US. They are also building out a building in the US (forgot what city) and training employees simultaneously.  It will take a year or two to get the US employees up to speed.  The philosophy is that a better customer service experience should result in lower customer interaction because problems actually get solved.  It's funny that this is also what Elliot Noss from Tucows says about customer service.  Now Tucows is very different.  Their whole corporate culture is built around excellent customer service.  It's part of their DNA.  The customer service is actually a part of their strategic planning process.  Elliot went into detail about how a simpler pricing model (rather than hundreds or thousands of sku depending on which promotion you have) can dramatically lower the cost of servicing clients. 

 

I think the focus is still on the big picture.  How hard would be for the newbies to try to encroach upon CHTR's footprint?  Gigabit speed is possible with Docsis 3.1.  At some point with AI and VR, you may need 10 GB speed.  Can cable still handle that kind of data demand?  How much of CHTR's footprint is actually fiber vs coaxial?  If anyone knows the answer to this, please share. 

[walkie518]

Has anyone looked at how lumpy results were on a quarter to quarter basis a few years back when they integrated other acquisitions?

 

Also on the call, they mentioned that a lot of the call centers are outsourced to the Phillipines.  During the integration phase, they need to pay for the Phillipines staff while they ramp up hiring staff here in the US. They are also building out a building in the US (forgot what city) and training employees simultaneously.  It will take a year or two to get the US employees up to speed.  The philosophy is that a better customer service experience should result in lower customer interaction because problems actually get solved.  It's funny that this is also what Elliot Noss from Tucows says about customer service.  Now Tucows is very different.  Their whole corporate culture is built around excellent customer service.  It's part of their DNA.  The customer service is actually a part of their strategic planning process.  Elliot went into detail about how a simpler pricing model (rather than hundreds or thousands of sku depending on which promotion you have) can dramatically lower the cost of servicing clients. 

 

I think the focus is still on the big picture.  How hard would be for the newbies to try to encroach upon CHTR's footprint?  Gigabit speed is possible with Docsis 3.1.  At some point with AI and VR, you may need 10 GB speed.  Can cable still handle that kind of data demand?  How much of CHTR's footprint is actually fiber vs coaxial?  If anyone knows the answer to this, please share.

 

[cmlber]

Efficient markets at work...  CABO has been saying video is profitless and shedding video customers for years, CHTR has been saying video can grow and is profitable.  Yet in the three trading days following CHTR's earnings which surprised with larger than expected video sub losses and included management commentary about how video is immaterial, CABO EV is down 6.5%, CHTR EV is down 3.1%. 

[scorpioncapital]

Ott is e-commerce and video is retail ?

Both are distribution models but one is better so maybe cable co should take a black and white approach and get out of retail !

Also what happens if broadband cable is disrupted, then this investment slowly grinds to zero.

I will wait until 2020 to see a mobile merger but If it underperforms I'll believe the market is making a better assessment of the future.

Ps. If you think it won't go much lower gliba puts at 30 for December traded at 1.2 for over 20 percent return on collateral with a reasonable margin of safety

[Shooter MacGavin]

  CABO has been saying video is profitless and shedding video customers for years, CHTR has been saying video can grow and is profitable. 

 

I don't want to read too much into a quarter or a stock price reaction, but I think this is an important point.

 

Here is Rutledge in 2015

 

"In any event we think video remains a profitable business. It's a core part of our strategy, it's what we sell together with Internet and phone. And what we're selling is profitable and that's what really matters to us, as opposed to trying to divvy it up and decide who gets a certain amount of network operating costs. It's somewhat arbitrary and it's not what we sell. So we don't look at it that way."

 

 

And in the last earnings call, as video subs are falling off

 

"There's very little margin in the video business. So whether you're (inaudible) by 1 million customers is relatively immaterial to our plan. And while we think that we will make a great video product available to our customers and that, that great video product will continue to help us drive the overall connectivity business we have, if we're asked in our forecast for that, it's not significantly financially material to our growth prospects."

 

And quite frankly for me the CHTR thesis has always been based on internet, not video of course, but for the first time I'm questioning the credibility of management here.  And i'm also a bit worried about true 5G into the home without the need for a fixed connection.  I'm a spectrum customer but if I have ATT/VZ giving me high speed, unlimited cellular everywhere, I'll happily disconnect my spectrum package and lower my bill.  I understand that Charter/Comcast have great networks, but are they going to end up being just a backhaul provider to cellular companies in some small section of the country in their footprint, without retail customers in 5-7 years?  Is their attitude slightly laissez-faire  towards this threat, just like it was towards video?  I'm not sure.

 

[Guest longinvestor]

  CABO has been saying video is profitless and shedding video customers for years, CHTR has been saying video can grow and is profitable. 

 

I don't want to read too much into a quarter or a stock price reaction, but I think this is an important point.

 

Here is Rutledge in 2015

 

"In any event we think video remains a profitable business. It's a core part of our strategy, it's what we sell together with Internet and phone. And what we're selling is profitable and that's what really matters to us, as opposed to trying to divvy it up and decide who gets a certain amount of network operating costs. It's somewhat arbitrary and it's not what we sell. So we don't look at it that way."

 

 

And in the last earnings call, as video subs are falling off

 

"There's very little margin in the video business. So whether you're (inaudible) by 1 million customers is relatively immaterial to our plan. And while we think that we will make a great video product available to our customers and that, that great video product will continue to help us drive the overall connectivity business we have, if we're asked in our forecast for that, it's not significantly financially material to our growth prospects."

 

And quite frankly for me the CHTR thesis has always been based on internet, not video of course, but for the first time I'm questioning the credibility of management here.  And i'm also a bit worried about true 5G into the home without the need for a fixed connection.  I'm a spectrum customer but if I have ATT/VZ giving me high speed, unlimited cellular everywhere, I'll happily disconnect my spectrum package and lower my bill.  I understand that Charter/Comcast have great networks, but are they going to end up being just a backhaul provider to cellular companies in some small section of the country in their footprint, without retail customers in 5-7 years?  Is their attitude slightly laissez-faire  towards this threat, just like it was towards video?  I'm not sure.

+1, the disconnect "threat" is playing out as we speak. Viable Wireless last mile solutions, when it happens will bring on sudden death syndrome.

 

Now, getting into backhaul biz is something else. I happen to be invested in the largest backhaul player, CTL. (née LVLT). Those waters are filled with flesh eating fish. I love the thought of a 5G or some similar world in the future. There is a wonderful pun put out by Jeff Storey, CEO-CTL . “data is looking for wire less path as soon as it is generated”. The world where the pipe into my house is rendered obsolete is CTL’s world. Monetizing has been a slow struggle but 5G, yeah baby!

 

 

[cameronfen]

  CABO has been saying video is profitless and shedding video customers for years, CHTR has been saying video can grow and is profitable. 

 

I don't want to read too much into a quarter or a stock price reaction, but I think this is an important point.

 

Here is Rutledge in 2015

 

"In any event we think video remains a profitable business. It's a core part of our strategy, it's what we sell together with Internet and phone. And what we're selling is profitable and that's what really matters to us, as opposed to trying to divvy it up and decide who gets a certain amount of network operating costs. It's somewhat arbitrary and it's not what we sell. So we don't look at it that way."

 

 

And in the last earnings call, as video subs are falling off

 

"There's very little margin in the video business. So whether you're (inaudible) by 1 million customers is relatively immaterial to our plan. And while we think that we will make a great video product available to our customers and that, that great video product will continue to help us drive the overall connectivity business we have, if we're asked in our forecast for that, it's not significantly financially material to our growth prospects."

 

And quite frankly for me the CHTR thesis has always been based on internet, not video of course, but for the first time I'm questioning the credibility of management here.  And i'm also a bit worried about true 5G into the home without the need for a fixed connection.  I'm a spectrum customer but if I have ATT/VZ giving me high speed, unlimited cellular everywhere, I'll happily disconnect my spectrum package and lower my bill.  I understand that Charter/Comcast have great networks, but are they going to end up being just a backhaul provider to cellular companies in some small section of the country in their footprint, without retail customers in 5-7 years?  Is their attitude slightly laissez-faire  towards this threat, just like it was towards video?  I'm not sure.

+1, the disconnect "threat" is playing out as we speak. Viable Wireless last mile solutions, when it happens will bring on sudden death syndrome.

 

Now, getting into backhaul biz is something else. I happen to be invested in the largest backhaul player, CTL. (née LVLT). Those waters are filled with flesh eating fish. I love the thought of a 5G or some similar world in the future. There is a wonderful pun put out by Jeff Storey, CEO-CTL . “data is looking for wire less path as soon as it is generated”. The world where the pipe into my house is rendered obsolete is CTL’s world. Monetizing has been a slow struggle but 5G, yeah baby!

 

Not to rain on your parade but, arguably the player that can benefit from 5G is America Movil with 230 million mobile subs and 75 million cable RGUs.  Carlos Slim chairman of Movil and a pretty good investor himself admitted in Movils earnings call that 5G is not going to be competitive with cable.  Now that doesnt mean there isnt a place for wireless broadband as esp in latin america a majority of homes arent connected to cable yet.  But wireless broadband could be seen as an alternative to satellite internet (maybe not confident on this but maybe reading into what Slim is saying?), but according to him not a huge substitute for cable.  See here around 20 min: aroundhttps://78449.choruscall.com/dataconf/productusers/amx/mediaframe/24091/indexr.html

 

PS It just occured to me he could be saying this so he doesn't have to upgrade infastructure.  So take with  grain of salt.  Again I dont know why Slim says this as the speed of 5G will, at least according to the internet, be faster that cable. 

[vince]

  CABO has been saying video is profitless and shedding video customers for years, CHTR has been saying video can grow and is profitable. 

 

I don't want to read too much into a quarter or a stock price reaction, but I think this is an important point.

 

Here is Rutledge in 2015

 

"In any event we think video remains a profitable business. It's a core part of our strategy, it's what we sell together with Internet and phone. And what we're selling is profitable and that's what really matters to us, as opposed to trying to divvy it up and decide who gets a certain amount of network operating costs. It's somewhat arbitrary and it's not what we sell. So we don't look at it that way."

 

 

And in the last earnings call, as video subs are falling off

 

"There's very little margin in the video business. So whether you're (inaudible) by 1 million customers is relatively immaterial to our plan. And while we think that we will make a great video product available to our customers and that, that great video product will continue to help us drive the overall connectivity business we have, if we're asked in our forecast for that, it's not significantly financially material to our growth prospects."

 

And quite frankly for me the CHTR thesis has always been based on internet, not video of course, but for the first time I'm questioning the credibility of management here.  And i'm also a bit worried about true 5G into the home without the need for a fixed connection.  I'm a spectrum customer but if I have ATT/VZ giving me high speed, unlimited cellular everywhere, I'll happily disconnect my spectrum package and lower my bill.  I understand that Charter/Comcast have great networks, but are they going to end up being just a backhaul provider to cellular companies in some small section of the country in their footprint, without retail customers in 5-7 years?  Is their attitude slightly laissez-faire  towards this threat, just like it was towards video?  I'm not sure.

I am heavily invested in Chtr and Cabo and yet this has been the best post on this subject by far, at least for the last couple months.  Excellent

[vince]

It really does show that maybe mgmt has been overconfident based on results with legacy Charter and it is the first sign that I have seen that mgmt is conceding that the future is going to be at least a little harder than originally thought.  The growth rates I use are already conservative and the prices right now are highly likely to be way low, however Toms contradiction makes u wonder.  I also came across a 2014 transcript where Maffei said something like "we are just trying to lock up as many customers before the inevitable fiber overbuild by everyone else".

[jgyetzer]

Did something change in the past six months where telecoms have developed technology that allows transmission of the higher frequency signals through common building materials?  Can anyone comment on what has caused the drastic change in confidence that 5G will work for in-home broadband?  How does the signal actually get into the building? 

 

I am trying to puzzle this out as well as why so many of these entities were approaching Charter for acquisition just a short time ago because of the value of the infrastructure and now the assumption seems to be that it’s no longer so valuable.  Have I missed important developments in the technology or is this just moody Mr. Market?

[Jurgis]

Did something change in the past six months where telecoms have developed technology that allows transmission of the higher frequency signals through common building materials?  Can anyone comment on what has caused the drastic change in confidence that 5G will work for in-home broadband?  How does the signal actually get into the building? 

 

I am trying to puzzle this out as well as why so many of these entities were approaching Charter for acquisition just a short time ago because of the value of the infrastructure and now the assumption seems to be that it’s no longer so valuable.  Have I missed important developments in the technology or is this just moody Mr. Market?

 

Regarding 5G, it's mostly moody Mr.s CoBFs.  8)

[Liberty]

Did something change in the past six months where telecoms have developed technology that allows transmission of the higher frequency signals through common building materials?  Can anyone comment on what has caused the drastic change in confidence that 5G will work for in-home broadband?  How does the signal actually get into the building? 

 

I am trying to puzzle this out as well as why so many of these entities were approaching Charter for acquisition just a short time ago because of the value of the infrastructure and now the assumption seems to be that it’s no longer so valuable.  Have I missed important developments in the technology or is this just moody Mr. Market?

 

Mr. Market has the memory of a goldfish on acid.

[Rasputin]

I collected these historical residential psu video numbers from CHTR past 10Q and 10K.  Tom Rutledge joined Charter in Q1 2012

Q1 2012 4164

Q2 2012 4098

Q3 2012 4025 (4322 with Bresnan)

Q4 2012 3989 (4286 with Bresnan)

Q1 2013 3965 (4261 with Bresnan)

Q2 2013 3917 (4206 with Bresnan)

Q3 2013 4179 compared with 4322 Q3 2012 (Charter acquired Bresnan in Q3 2013)

Q4 2013 4177 compared with 4286 Q4 2013

Q1 2014 4195

Q2 2014 4166

Q3 2014 4157

Q4 2014 4160 (residential multi dwelling adjusted 4324)

Q1 2015 4153

Q2 2015 4120

Q3 2015 4132

Q4 2015 4322 (compared to 4324 Q4 2014, residential multiple dwelling counting change in Q4 2015)

Q1 2016 4332 (17086 with TWC + Bright House)

Q2 2016 16934

Q3 2016 16887

Q4 2016 16836

Q1 2017 16736

Q2 2017 16646

Q3 2017 16542

Q4 2017 16544

Q1 2018 16422

 

Video sub only started stabilizing in Q4 2015 and grew slightly in Q1 2016.  TWC+Bright House transactions in Q2 2016 and video subs decline again...

 

Decline rate y/y for Q1

2013 4.8%

2014 1.5%

2015 1.0%

2016 GREW 0.5%

2017 2.1%

2018 1.9%

 

 

 

[Munger_Disciple]

Elementary physics teaches us that radio Wavelength = c/f, where c is the speed of light and f is the frequency of propagation. Very wide bandwidth needed to enable 5G wireless high speed data transmission is only available at millimeter wave frequencies (for example 28GHz). But these frequencies are terrible for radio propagation and can only reach very short distances unless there is a directional antenna with line of sight. This is why I do not think 5G fixed wireless will be a threat to cable.

 

If you want to have some fun, just take your Wifi router well outside your home with thick walls (still connected to cable modem via a long ethernet cable on the WAN side). Then go inside the home far away from the Wifi router and measure the data rate on your smartphone connected to the router. You will find a significant degradation relative to the cable modem download speed. And Wifi frequencies are 2.4 Ghz/5 GHz which are a lot better for radio propagation than the 5G millimeter waves.

 

So at best 5G nodes will look like Wifi access points (with less range than Wifi) tethered to a high speed coax/fiber. If anything, 5G will help cable in my judgment.

 

[Liberty]

So at best 5G nodes will look like Wifi access points (with less range than Wifi) tethered to a high speed coax/fiber. If anything, 5G will help cable in my judgment.

 

Couldn't range on 5G still be better than wifi because the transmission power will be higher? Though I agree about the problems caused by the physics of using these frequencies. The economics sound very different from large cells currently used for LTE.

[JRM]

Here's a Forbes interview which takes the position that 5G will replace broadband.  They even claim that peak broadband was "3 years ago", and the article was written in 2017: https://www.forbes.com/sites/washingtonbytes/2017/09/22/the-dawn-of-5g-will-wireless-kill-the-broadband-star/#2d2e8b5efd7f

[Munger_Disciple]

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.

[vince]

Did something change in the past six months where telecoms have developed technology that allows transmission of the higher frequency signals through common building materials?  Can anyone comment on what has caused the drastic change in confidence that 5G will work for in-home broadband?  How does the signal actually get into the building? 

 

I am trying to puzzle this out as well as why so many of these entities were approaching Charter for acquisition just a short time ago because of the value of the infrastructure and now the assumption seems to be that it’s no longer so valuable.  Have I missed important developments in the technology or is this just moody Mr. Market?

 

Well even Rutledge has alluded to "different competitive environment than originally expected" and thats one reason why they have upped their speeds quicker than they expected too (which has caused capex to be pulled forward and higher than market was expecting).  And wireless initiative has been pulled forward as well, which in addition to, probably makes lots of sense because of relationship to comcast and where they are in terms of wireless.  But I guarantee there is an urgency with wireless as a competitive response to AT&T.  I dont know exactly what AT&T is doing but I believe they are being aggressive with improving their copper and also laying more fiber than expected.

[vince]

Anyone have a better idea of AT&T competitive actions with regards to broadband within last 18 months?  I know all the operators were calling Charter the biggest disrupter a couple years ago and this probably jolted AT&T into action, whether rational or not. 

[vince]

And can anyone please explain in some detail what exactly happened with these "non paying subscriber" losses the last qtr and why that was unusual and does anyone know what kind of hit it was in financial terms???  Please and Thanks.

[Spekulatius]

Anyone have a better idea of AT&T competitive actions with regards to broadband within last 18 months?  I know all the operators were calling Charter the biggest disrupter a couple years ago and this probably jolted AT&T into action, whether rational or not.

 

ATT is contractually obligated to expand their FTTP footprint to 12.5M customers as a condition for the Direct TV merger. They yt themselves a huge anchor around their leg with that Direct TV acquistion, IMO.  ATT off and on has been building their FTTP network, they put $ into Uverse a while ago, but then stopped doing it. I think Verizon on the east coast is much better build out and can compete with cable.

[Munger_Disciple]

Here's a Forbes interview which takes the position that 5G will replace broadband.  They even claim that peak broadband was "3 years ago", and the article was written in 2017: https://www.forbes.com/sites/washingtonbytes/2017/09/22/the-dawn-of-5g-will-wireless-kill-the-broadband-star/#2d2e8b5efd7f

 

The guy who said peak broadband was "3 years ago" is completely wrong in terms of how much the speeds have improved in the last 3 years. And customers love higher speeds. 

 

I find the following part interesting:

 

Rysavy: The number of cells is central to capacity. First, mmWave only works over shorter distances, so cells are inherently small. Second, to get the capacity gains, you only want a small number of users in each cell.

[vince]

 

Washington Bytes We discuss the top technology policy issues in the Nation’s Capital 

Opinions expressed by Forbes Contributors are their own.

Washington Bytes Washington Bytes , Contributor

Graphic by Daniel Kleinman, Forbes Staff MANDEL NGAN/AFP/Getty Images

Graphic by Daniel Kleinman, Forbes Staff

 

On this edition of the Bytes Chat, we explore the state of U.S. broadband competition and the likely impact of the fifth-generation (“5G”) wireless technologies. Should cable companies be scared, and if so, how long will it take 5G to upset the competitive balance? Our special guest was Peter Rysavy, president of Rysavy Research, a consultancy on wireless technologies. Before founding Rysavy Research, Peter served as vice-president of engineering and technology at Traveling Software (later renamed LapLink), and as the executive director of the Wireless Technology Association. We were joined by network engineer Richard Bennett, co-inventor of Wi-Fi, international policy consultant, and founder of High Tech Forum; and Jodi Beggs, a consulting economist for Akamai Technologies and founder of Economists Do It With Models. The chat was moderated by Washington Bytes editor Hal Singer. The transcript has been edited lightly for readability.

 

Hal Singer: Let’s begin with the state of broadband competition. Seems like we can’t describe competition until we measure it. In January 2015, the FCC redefined broadband upward to 25 Mbps. Richard, you’ve described the FCC’s reasoning on the redefinition as being “thin.” Why so harsh?

 

Richard Bennett: The FCC has failed to offer a substantial reason for raising the threshold. The agency’s Measuring Broadband America reports have consistently shown that web pages don’t load any faster at broadband speeds above 15 Mbps, and we don’t need more than 15 for 4K Netflix streams. Many VDSL packages top out at 24 Mbps, so the UK defines ultra-broadband at 24. The 25 Mbps “Wheeler Standard” looks like cooking the books. There aren’t any common apps that require 25 Mbps. It’s nice to have fast file downloads, but we don’t do much of that anymore.

 

 

Peter Rysavy: I don’t think many mainstream apps today can take advantage of 25 Mbps. But in the future, virtual reality can consume massive bandwidth. When I analyze demand for wireless broadband, I look at both Internet and TV cord replacement. TV content delivered to households can drive values much higher.

 

Jodi Beggs: Do these findings—that 15 Mbps is sufficient—still hold when there are a bunch of devices hooked up to the same household router? Is there a benefit of 25 Mbps if a household has, say, 10 devices using the connection, even though no single app/device can use the full throughput?

 

Recommended by Forbes

Bennett: Multiple people surfing the web on the same broadband pipe don’t have much effect on each other because there’s a lot of idle time. Multiple Netflix streams can impair each other, however. But 15 Mbps is enough for two HD streams plus web. Internet-of-Things type devices don’t consume a lot of bandwidth unless they’re always-on cameras. Netflix is the main high bandwidth app of concern, and it uses about 4 Mbps per HD stream. Netflix Ultra HD requires 8 to 12 Mbps.

 

Rysavy: The biggest driver of bandwidth today is video, so the more devices consuming video at the same time, and the higher the resolution (HD vs. ultra HD for example), the greater the demands. Today, HD requires 4 or so Mbps. Sports with rapid motion can use up to 30 Mbps in UHD. But you'd probably need a 70-inch television to see the difference. Goes back to whether you're trying to also cut the cord to TV.

 

Beggs: So bandwidth requirements expand to fill the space sort of like processor requirements do with software?

 

Rysavy: Yes, people will consume any bandwidth you give them.

 

Bennett: The trend that I see is networks getting 35% faster year after year because Moore’s Law. I only see about a 5% growth in application demand.

 

Singer: Shifting gears slightly, in terms of average download speeds, how much faster is the current generation of U.S. wireline connections than the current generation of U.S. wireless connections?

 

Bennett: The Speedtest Global Index says the average download speed for mobile is 23 Mbps in the US, and the average for wired is 73 Mbps. Akamai data is higher on wired and lower on mobile. But the ratio is roughly between 3:1 and 5:1.

 

Singer: Can a broadband user with a 10 Mbps wireless connection do the same things as a user with a 10 Mbps wireline connection? In other words, is there any measurable difference in quality between the two technologies holding download speeds equal?

 

Rysavy: For the most part, the two connections can do the same thing. A small cell connection will perform identically. Especially with 5G being designed for very low latency.

 

Beggs: Are there any performance differences between wireless and wireline in terms of latency (as opposed to throughput)?

 

Bennett: There are minor variations in latency on mobile networks, so wired tends to be more consistent…when it’s working. 5G may actually have less latency than cable, right Peter? A DOCSIS cable modem has a lot of synchronization overhead—that is, when a DOCSIS cable modem starts talking, it takes the listener a while to tune into the message.

 

Rysavy: Not sure about latency for cable vs. 5G. Probably depends more on backend architecture, not the access technology.

 

Singer: You guys just can't wait to talk 5G!! We’re not there in my outline!

 

Beggs: It's new and shiny!

 

Singer: Let’s accept the FCC's 25 Mbps standard—warts and all—and focus only on wireline connections. According to FCC census block data analyzed by CMA Strategy, as of June 2016 there were over 46 million homes with only one provider of wireline broadband speeds greater than 25 Mbps (the “underserved” homes), and there were roughly 11 million homes have no access to 25 Mbps fixed-line service (the “unserved” homes). That’s not a glowing report card, right?

 

Rysavy: Not if you use the 25 Mbps standard. But as discussed, most people don’t need that today.

 

Bennett: Well, both the share of census blocks unserved (relative to all homes) and the share of census blocks underserved (relative to all homes) dropped from late 2015 to mid 2016. Compare Figure 4 of the April 2017 report to Figure 4 of the November 2016 report. And bear in mind that the areas the FCC calls “served at 10 Mbps” are really getting as much as 24 Mbps.

 

Singer: That’s a good thing. And there appears to be even better news for broadband consumers on the horizon. Peter has a new report on the impact of the next generation of wireless technology or “5G” that might shake things up and make things better for folks living in underserved or unserved areas. Peter, can you explain to our readers what 5G is, and how it materially differs from the current, fourth-generation (“4G”) wireless technology?

 

Rysavy: The most important features of 5G are the ability to use a wide range of spectrum, radio channels of many different sizes, and the ability to address a wide range of use cases. For example, 5G will work in any band from 600 MHz to 100 GHz.

 

Beggs: How does this help from the average household's perspective?

 

Rysavy: 5G will have the capability to compete directly against wireline technologies such as DSL and cable. Also fiber in some cases. This will result in more broadband options for consumers.

 

Bennett: I expect the cable guys will build 5G networks, but that won’t increase competition. Households care about speeds, prices, and reliability.

 

Beggs: Why would a household care about the frequency range?

 

Rysavy: They don't care about frequencies. But I had to wait many months for Charter to bring coax under the street to my home. With 5G, the connection could have been installed much more easily.

 

Bennett: The discussion about “broadband” tends to be too focused on wired networks, but we’ve moved on. Wireless is now the primary network and wired is the accessory.

 

Beggs: Right. It seems like one of the main advantages of wireless in general is that it greatly lowers the fixed cost of onboarding a customer who doesn't have existing broadband infrastructure. Why is that?

 

Bennett: A great deal of the cost of building a network is the last 1,000 feet. FiOS costs Verizon about $700 to $1,000 per home, but small cells lowers that cost to $100 to $200 per home.

 

Rysavy: The cable guys are looking at 5G. Charter is doing some trials. But they will be at a competitive disadvantage compared to a cellular operator doing dense 5G deployments.

IMO this exchange shows that he is not well informed as to cables abilities.  Comcast is up and running with continuous coverage

Beggs: Why are cable guys at a competitive disadvantage?

 

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.

[vince]

sorry guys, was a mistake