Wrote the below in response to an article on the class mailing list. I’m so happy to be talking telecoms for work and school these days!
Though doing further research, I see AT&T and Verizon have double the market cap in the US. Wireless probably has more growth left in it but it also has to go over a wire at some point. So maybe in the US telecoms could take over cablecos but wired access will still matter.
I have BCE’s 2011 annual report [PDF] handy because of a school assignment, and Wireline revenue is 10.6B versus Wireless at 5.2B. Rogers, Canada’s largest provider by subscriber, had revenues of 3.8B in Cable while Wireless delivered 7.1B in 2011. I just looked. TELUS already has IPTV, Quebecor is vertically integrated; Shaw’s looking into wireless through hotspots. This could work even perhaps on a wholesale level, though it didn’t really work for Clearwire.
Enough business of telecoms, time for homework on cultural impacts of mobile networks. #comcult
Henry can be a little bit overboard with his hype (see his permanent ban from securities after being charged with fraud in 2003 by the S.E.C. for his “enthusiasm” during the dot-com boom).
LTE (and LTE-Advanced, when it starts being commercially deployed, probably in 2014) will continue to put pressure on cablecos for people who are already cord-cutters or cord-shavers but the economics suggest Henry’s vision is unlikely. Rural areas without an existing cable infrastructure may see some benefits — though I’d argue that it may be more likely to come from municipal/coop-owned TVWS devices — but in urban areas any video service will tend to be additive rather than a replacement. Even Henry’s focus on Warner Brothers Cable — probably the worst of the big, regional US cablecos — is misleading. Google Fiber in Kansas is what’s pushing Warner’s to upgrade their network, not LTE.
Comcast caps start around 300GB of data, AT&T around 5GB for LTE phones; in Canada those numbers tend to be about 160GB and 2GB respectively from major service providers. Also in Canada, any company that provides LTE connectivity also has wireline TV (whether fiber, cable, or upgraded twisted copper). None of the new entrants have it and probably still won’t after the 700MHz auction, except maybe Quebecor.
The amount of infrastructure, spectrum and new business models needed to have wireless widely replace wireline is just not feasible with the current economic and regulatory model. To stream a 2hr HD movie takes about 3.5GB, to stream a 30 minute TV show in SD takes about 400MB. If the average user watches 155h46m of TV per month (Nielsen Cross-Platform-q1-2012), that’s about 122GB of data in standard definition or 170GB if 1/3 of viewing time is in HD.
Even with the declining cost of delivering data (wirelessly *and* wired), what order of magnitude of buildout would be required to move from 2GB wireless caps to 200GB+ (remember that 170GB is viewing, no emailing/websurfing/video chat/skype/social media/etc)?
Sorry, Henry, I’m just not buying what you’re selling.