Work from Home Forever?

A reasonable number of observers--maybe even most--seem comfortable with the notion that huge numbers of workers, kept home because of the Covid-19 pandemic, will “never” return to former work arrangements. Some of us are pretty sure the underlying trends in place before the pandemic will reassert themselves over a couple years, perhaps taking as long as five years to do so in all cases. 

source: eMarketer

To be sure, 44 percent of workers say they do not wish to work from home, ever. About 12 percent say they would rather do so essentially all the time. Another 18 percent would prefer to work from home three to four days a week (roughly half to 80 percent of the time). More than a quarter of all surveyed workers would prefer to work from home 20 percent to 40 percent of the time.

What remains unclear is what percentage of actual jobs, and what percentage of firms, actually believe that can be done with no downside.

Often No Difference Between Unlimited and Metered Usage Plans

Comcast, in reinstituting its monthly usage cap, which had been waived in response to the stay-at-home orders caused by the Covid-19 pandemic. Where the usage cap had been set at 1 terabyte, now Xfinity internet metered plans have a limit of 1.2 terabytes. As often is the case, the practical difference between an “unlimited” usage plan and a plan with a high usage allowance is nonexistent. 

In other words, if typical monthly usage ranges between 250 gigabytes to 350 GB per month, a usage cap of 1.2 TB is effectively four to six times more than ever is required, so effectively “unlimited.”  

source: OpenVault

Many people argue that any pricing policy other than “unlimited” is somehow unfair. Perhaps this is an expectation created by the ways people come to experience use of the internet, with many free to use apps supported by advertising revenue models, with subsidized usage at schools and public Wi-Fi hotspots. 

Most products, though, are priced based on usage or volume: clothing, shoes, water, trash collection, groceries, gasoline and other fuels, electricity, airline tickets, dental services, data storage or compute cycles. 

Many refer to internet access as a “utility.” There often seems to be an unstated implication that internet access therefore should be free, low cost or unlimited in terms of use. But no other utilities are priced that way. They all are usage based, and for good reasons. Price is a tool for encouraging people not to waste expensive or carbon-impactful resources.

5G Economic Impact?

It is a no-brainer that 5G economic impact will be somewhat substantial over the next decade, if only because communications is a significant portion of global economic activity all the time. In 2018, for example, mobility by itself represented nearly five percent of global gross domestic product, by some estimates.

Other estimates often peg all communications spending at about  three percent of GDP to 3.5 percent of GDP.

source: Researchgate

Most economic assessments attempt to include the related economic benefits, in addition to the direct benefits. The multiplier might be in the range of $5 in benefit from every $1 in telecom spending. 

Still, direct impact is substantial. If global GDP is $142 trillion, then 3.5 percent in direct telecom spending is $5 trillion. Mobility is not all of telecom spending, but likely represents 65 percent or so. In that case, 5G might be included in the $3.25 trillion, mobility generates. But, of course, not all spending is on 5G. So reduce 5G share to perhaps half and 5G might represent $1.6 trillion in revenue.

It is nothing to dismiss, but is a far cry from the $7.5 trillion some estimate. 

Despite Declining Demand, U.S. Local Phone Service Prices are Rising

As a rule, retail and wholesale prices of connectivity products tend to drop with time, much as prices for computing and storage also do. But the trend is not uniform. Prices for some products rise, even if the overall trend is for lower prices. 

In the U.S. consumer market, linear video subscription prices have increased almost yearly for decades. In U.S. business markets, private line prices climbed after deregulation but then began to fall about 2012 as demand shifted to ethernet access services. 

Consumers might have a sense that internet access prices have increased, but U.S. internet access prices fell between 2004 and 2020, according to the U.S. Bureau of Labor Statistics. Using 2004 prices as the benchmark, prices in 2020 were about 61.5 percent of 2004 levels, according to BLS data. 

source; BLS

That same trend also operates globally, as a rule, according to the Alliance for Affordable Internet, even when looking at mobile data, which generally is more expensive than fixed network data. 

By way of comparison, private line services purchased by businesses and other organizations have spiked since about 1995, but in 2020 remain just a percentage point above 1995 levels. That is likely because demand has largely shifted to ethernet-based access services.  

source: BLS

Traditional local phone service prices since deregulation have risen about 45 percent, which might be surprising. What happened is that business profits, which once subsidized consumer services, substantially decreased, forcing consumer prices to reflect more of the actual cost of providing those services. 

Also, a more-recent trend is that demand has steadily decreased since about 2000, so the costs of the network essentially are spread over a much-smaller base of customers. That tends to work against price decreases. 

source: BLS

5G Health Issues from Millimeter Wave "Very Low" to "Nonexistent"

Health issues caused by 5G mobile networks are “very low, if they exist at all,” concludes a  group of health experts who study environmental and health issues associated with electromagnetic exposures from across the non-ionizing spectrum. 

“The likelihood of yet unknown health hazards at exposure levels within current exposure limits is considered to be very low, if they exist at all,” they say. “We anticipate that in all cases, exposure levels will remain well below major international exposure limits and that network operators will be aware of their obligation to maintain their systems within compliant operating parameters. 

“When exposure levels are maintained below current exposure limits, neither health agencies nor guideline/standards setting organizations have identified hazards from exposure to millimeter waves or RF signals in lower frequency bands used in previous generation technologies,” the group says. 

“First, unlike lower frequency fields, MMW (millimeter wave signals) do not penetrate beyond the outer skin layers and thus do not expose inner tissues to MMW,” they point out.  “Second, current research indicates that overall levels of exposure to RF are unlikely to be significantly altered by 5G, and exposure will continue to originate mostly from the “uplink” signals from one’s own device (as they do now).”

“Third, exposure levels in publicly accessible spaces will remain well below exposure limits established by international guideline and standard setting organizations, including ICNIRP and IEEE,” they add. 

Traditionally, the concern with non-ionizing radiation of the type routinely used by mobile networks is tissue heating. But “whole-body heating is not a concern for millimeter wave exposure because the deposition of RF energy is confined to the outermost layers of the body.”

Will We Really See a Change in Growth Rate for Work from Home?

Most observers seem certain that work from home trends will get a permanent boost from Covid-19 experiences. The only real question is how big a change might occur, as WFH has slowly been growing for decades. As with other trends, the pandemic might accelerate an ongoing trend. The magnitude is the issue. 

Remote work is  distinct from “work from home full time,” has a few meanings. It can refer to those full-time employees of a company who telecommute, rather than work on site.  It includes organization employees who work from home at least some of the time, travel for work or bring work home. 

But it also includes home-based workers. Those are very different use cases. 

By some estimates, as much as 17 percent of workers  essentially are full time WFH. In other cases, including those who telecommute a few times a month, the percentage of workers doing WFH is as low as five to six percent. 

But if you count traveling employees who sometimes work outside the office, possibly 63 percent of all workers sometimes work from outside the office. 

source: SlideModel

But many jobs cannot be performed at home, and that might include as much as 63 percent of all U.S. jobs, for example. To that one might add work done by home-based businesses. 

“According to the 2018 American Time Use Survey, less than a quarter of all full-time workers work at all from home on an average day, and even those workers typically spend well less than half of their working hours at home,” say economists Jonathan Dingel and Brent Nieman. 

Doubtless all the types of remote work, telecommuting and work from home will get an extra boost after the pandemic. The issue is whether the growth curve changes enough to notice. Many suppliers who benefit from WFH hope so.

But lots of changes are fairly short lived, as business and consumer behavior might suggest after the internet bubble burst and Great Recession of 2008. Lasting impact can be hard to spot, as prior trends simply reasserted themselves.

Flat Growth for Asia Telcom in 2020; Return to Growth in 2021

Average revenue growth for the Asia-Pacific telecom business will be flat to low-digit to single-digit in 2020, compared to four percent in 2019, according to Fitch Ratings. Growth will return to pre-pandemic levels in 2021.

source: Fitch Ratings

Balance sheets will be maintained by cost cutting and capital investment reductions or dividend cuts, says Fitch. 

In most countries discretionary capex has been slowed to conserve cash, without skipping necessary capacity investment. But Korea, China and Singapore are pressing ahead with 5G plans. 

In part, that is a reflection of the importance of mobile broadband average revenue in some of those countries. South Korea mobile ARPU is higher than fixed network internet access, for example. In Singapore, mobile ARPU is equal to fixed network internet access ARPU. 

source: Fitch Ratings

The other noteworthy observation is that capex intensity is far lower in Singapore and South Korea than in India or the Philippines, for example. It is easier to sustain capex programs in adverse circumstances when capital investment is a lower percentage of revenue. 

source: Fitch Ratings