5G fixed wireless is a niche, but an important niche for Verizon and T-Mobile as well as wireless internet service providers. In fact, analysts at New Street Research expect more fixed wireless accounts will be added in 2022 than fiber to home accounts.
source: NSR Data
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
As somebody who has spent lots of time following 5G, I also get the feeling I have seen this before, and I do not mean I have watched 3G and 4G arrive. No, it is something else.
It is ancient history for many, but I can also recall expectations about the Telecommunications Act of 1996, the biggest change in telecom regulation since 1934 or the breakup of the AT&T monopoly in 1984.
The Telecom Act essentially focused on opening up voice switch and access lines to competition. But it happened just as the internet was about to become the driving force of just about everything. Note the inflection point in internet usage in North America around 1994.
The point is that use of internet apps and services is loosely coupled to the facilities that allow the access. Once access is available--it does not matter who “owns” the access facilities--all lawful apps can be used.
That separation into layers means the impact of internet apps and services is essentially decoupled from the ownership of access facilities. Under monopoly or competitive access provider regimes, the internet grows irrespective of the regime.
The old adage about generals always preparing to fight the last war seems germane here. Policymakers focused on concrete measures to introduce competition by forcing wholesale access to voice services and access loops, expecting that facilities-based competition, lower prices and more service innovation would follow.
Well, that did happen, though not the way most expected. Even disregarding the internet, telecom services moved to mobility. That is the way most people prefer to use voice services. It is the platform for messaging, social media, coordination, navigation, commerce and content.
The Telecom Act was largely focused on fixed network change.
We can argue that the Telecom Act actually did lead to investment in access facilities that make broadband internet apps possible. But we also can argue that widespread mobility adoption and the unregulated competition in that segment of the business has mattered more in terms of innovation, lower prices and greater competition.
That is the sense I get from 5G. It is better than 4G in terms of performance, to be sure. And its full impact is not yet apparent because we are still early in adoption.
But I also suspect it will not matter as much as some hope. With Web 3.0; metaverse; blockchain; crypto; artificial and virtual reality coming, it seems to me 5G will not be as important.
Just as the Telecom Act might not have produced as much innovation and change as mobility and the internet, so too might 5G be--relatively speaking--less important.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
To a signficiant extent, all tier-one connectivity service providers are in the same box: trapped in a highly-competitive business with slow to no growth; with declining profit margins and a "return on investment" problem and lacking the capital resources to make fundamental changes.
AT&T’s forays into media continue to be roundly assailed, but illustrate the problem.
The recent acquisitions and divestitures of DirecTV and WarnerMedia bring to mind earlier “grow the company” efforts that were focused on the core connectivity function, and also cratered, for arguably the same reason: AT&T’s debt burden was too high.
The strategy might even have been correct, but AT&T could not survive the debt-fueled strategy. And keep in mind "AT&T" has failed in two incarnations: first as a long distance company trying to create local loop facilities; the second time as an integrated provider trying to move beyond a reliance on connectivity revenues.
In the late 1990s, AT&T made a big move into cable TV, partly to fuel its move into local access services, partly to capitalize on the robust cash flow cable TV was then generating.
Given the success cable operators have had with broadband access and support for voice services (the networks of the early 1980s were one-way) show the strategy was not wildly off the mark.
On June 24, 1998, AT&T acquired Tele-Communications Inc. for $48 billion, marking a reentry by AT&T into the local access business it had been barred from since 1984.
When AT&T bought Tele-Communications, the objective was to use those assets to create a national broadband access capability which AT&T did not at that time possess. Recall that the 1983 divestiture of monopoly AT&T created seven local access companies--the “Baby Bells”--while restricting AT&T to long distance.
When, in 1996 the Telecommunications Act opened all telco markets to competition, AT&T was faced with the challenge of creating a facilities-based local access network capability. That it failed to do so successfully is not too surprising, given the cost of creating an almost-nationwide broadband infrastructure. Think of the continuing cost of creating fiber to home networks nationally.
Having concluded it had neither the time nor the money to create access networks nationwide, AT&T gambled on upgrading TCI’s cable networks. But the strategy was not the issue, the debt was.
AT&T also bought Teleport Communications Group, a $500-million-a-year local business phone company, for $13.3 billion; MetroNet, a Canadian phone system, for $7 billion; and the IBM Global Network, which carries data traffic, for $5 billion, as parts of a move into local access.
But the debt burden was too high and AT&T reversed course in 2004 and sold most of those assets. AT&T Broadband (the former TCI and US West Broadband assets) were sold to Comcast, making that firm the biggest U.S. cable TV company.
The point is that AT&T could not figure out a way to quickly create a massive facilities-based local access network capability to compete with the Baby Bells and all the other newcomers, after passage of the 1996 Telecom Act.
As a related issue, AT&T was not able to replicate the success later shown by Comcast in diversifying its product lines beyond the legacy. Comcast now earns significant revenue from content ownership, subscription video, home broadband, business services and voice, where it once relied exclusively on cable TV subscriptions.
AT&T hoped to replicate that feat. Yes, the strategy failed, twice.
Few--if any--observers note that AT&T has twice been the largest linear video provider in the U.S. market. The first foray in the 1990s made AT&T the largest cable TV company in the U.S. market.
The second foray was the purchase of DirecTV, which again made AT&T the largest supplier of linear video subscription services in the U.S. market.
At the same time, few can recommend any strategy for AT&T--or the other big connectivity providers--that lifts revenue growth beyond a few percent a year. Connectivity is a slow-growth business. If higher growth rates are desirable, that growth almost by definition has to come from outside the traditional connectivity role.
No firm in the global telco-legacy connectivity industry has really succeeded wildly in that regard.
By 2005 AT&T itself was acquired by SBC Communications, which promptly rebranded itself AT&T. Yes, AT&T has twice failed to innovate itself out of a box. But it is a box that has imprisoned virtually all global connectivity providers.
From time to time a segment of the industry, in some regions, is able to grow--for a time--at fast rates. Quite often that growth only compensates for losses in other parts of the business. Mobility growth balancing declining voice revenues is the best example.
The internet has made matters worse, further limiting the value and revenues connectivity providers can reap while driving value “up the stack” to third party providers.
Those who castigate AT&T for its strategic failures are too harsh. Debt has been the issue, as the firm never could afford to spend enough, fast enough, to solve its local access problem, or its revenue source problem.
If any of us were asked whether AT&T could afford to build a national FTTH network--within 10 years--we would rightly doubt it was possible. Even if it had the money, it did not have the time.
No single firm could afford to spend $300 billion over 10 years to connect even 100 million homes, which is the scale of the problem AT&T faced.
The first failure was experienced by AT&T the long distance company. The second failure was that of the former SBC Communications, rebranded as AT&T. It always was an unsolvable problem.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Web 3.0 often is said to be “decentralized,” featuring applications based on open-source, trustless, and permissionless blockchain networks. If that sounds much like the direction of the present web, that is correct.
We now routinely use open source. The whole internet operates on a "trustless" and "permissionless access basis. But all that will be extended.
Web 3.0 is said to rely on:
Blockchain
Crypto assets
Low code or “no code” app development
Artificial intelligence
Metaverse or extended or virtual reality
Users able to monetize their data
Semantic capabilities (machine-readable data)
It also is reasonable to argue that if Web 3.0 develops, it will build on edge computing as well, simply because the sheer amount of data updates--in real time-- for any immersive experience will require high-performance computing very close to the end user.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
“The metaverse may be the next generation of the internet,” say researchers at Citi. “Use cases may include everything we use the internet for today with gaming, commerce, art, media, advertising, smart manufacturing, health care, virtual communities, and social collaboration, including for enterprise and education.”
But the digital infrastructure is not yet ready to support metaverse platforms, looking only at application latency performance. Today’s cloud-based gaming, for example, sports end-to-end latency of between 75 milliseconds and 150 milliseconds.
But metaverse persistent and immersive environments will require end-to-end latency more on the order of 12 ms or less.
And though we often think of metaverse as something a user accesses using virtual reality goggles, there is good reason to believe metaverse use cases are more likely to happen using smartphones. The point is that value is not based strictly on three-dimensional graphics but “immersion” more generally.
“You can think about the Metaverse as an embodied internet, where instead of just viewing content, you are in it,” Mark Zuckerberg, Meta CEO, has said. “And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage.”
So think of “immersion” more than 3D, “realism” more than “avatar.”
For digital infrastructure providers (narrowly defined), metaverse means investments in latency performance and bandwidth, above all. And that means edge computing, faster broadband and the ability to support untethered devices indoors and outdoors. Wi-Fi will play a part, but so will mobile networks.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
A survey by Analysys Mason of 1149 of small and mid-sized businesses in Germany, Singapore, the UK and the United States almost predictably suggests those firms will rely more on information technology going forward. In some part, that is because firms expect continued work from home deployments that arguably increase IT support.
Respondents expect roughly 40 percent of employees will work from home for at least some of the time once the Covid-19 crisis is over. This will drive demand for personal computers and mobile devices as well as cloud-based solutions to support remote workers and applications.
It is probably worth noting that although many use the term “digital infrastructure” to mean connectivity networks, data centers and towers, in the SMB space it is devices and apps that are “digital infrastructure” in a practical sense, as is the case in consumer markets.
Consumers and SMBs--no less than enterprises--use apps, services and devices. Their “digital infrastructure” is apps and devices. Only on the producer side of the value chain is there a distinction made between devices, apps and “networks and data centers.”
From an SMB perspective, IT goals will be to support remote workers and protect apps and devices from hackers or data breaches.
Small firms are defined as having one to 99 employees while mid-sized firms have 100 to 999 employees.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
