tag:blogger.com,1999:blog-4815867514277794362.post99118726580616816..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: Selling our Telecom positionJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-4815867514277794362.post-20868553755614402362017-06-09T04:28:29.208+10:002017-06-09T04:28:29.208+10:00My data plan provider just informed me that they a...My data plan provider just informed me that they are bumping me to 8gb/mo of data, gratis, from 5gb previously...Ben Snoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-73791621920611442002017-05-15T12:19:21.335+10:002017-05-15T12:19:21.335+10:00The spectrum rush reminds me to some extent of the...The spectrum rush reminds me to some extent of the fibre rush during the 2000s boom. <br /><br />In this case I think people are underestimating the gains to be made by cell division, in particular the deployment of small cells to high use areas (office buildings, sports complexes, university campuses), greatly relieving the need for spectrum elsewhere.<br /><br />https://www.thinksmallcell.com/images/articles/2016/Rethink_Research_Small_Cell_Forecast_Jan_2016.jpg<br /><br />I think select semiconductor companies could end up being winners here at the expense of the telecoms.Anonymoushttps://www.blogger.com/profile/15136956211907337094noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-87917715216943152252017-05-14T07:26:27.378+10:002017-05-14T07:26:27.378+10:00What about the MVNOs? I used to be a Verizon custo...What about the MVNOs? I used to be a Verizon customer but got tired of their price-gouging contract plans. I switch to Page Plus Cellular (the only (?) MVNO that piggybacks on Verizon's superior infrastructure) and have been very happy since 2013. 3ppmhttps://www.blogger.com/profile/10861300111561941627noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-67427596347304502212017-05-12T23:14:51.819+10:002017-05-12T23:14:51.819+10:00Today morning - Sprint, SoftBank Said in Informal ...Today morning - Sprint, SoftBank Said in Informal Deal Talks With T-Mobile<br />https://www.bloomberg.com/news/articles/2017-05-12/sprint-softbank-said-to-start-informal-deal-talks-with-t-mobileAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-26984945886022343432017-05-12T14:47:20.620+10:002017-05-12T14:47:20.620+10:00What do you make of the Straight Path bid frenzy? ...What do you make of the Straight Path bid frenzy? Does it change your thinking at all?Brianhttps://www.blogger.com/profile/17956046583768311736noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-36571887072060666542017-05-12T13:39:03.160+10:002017-05-12T13:39:03.160+10:00Just read about the bidding war that has broken ou...Just read about the bidding war that has broken out between T & VZ for the 5Ghz spectrum owned by Straightpath communications. Literally in 1 week T&VZ bid this formerly undesirable high frequency block up from $200 million to $3 billion as it may play a key role in future 5G networks. PErhaps this validates your original thesis?Cheesehedgehttps://www.blogger.com/profile/05542168551121843155noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-36854493556175558002017-05-12T08:33:37.387+10:002017-05-12T08:33:37.387+10:00Since at least a decade are the telcos paranoid ab...Since at least a decade are the telcos paranoid about becoming bit pipe providers with no pricing power. With number portability and calls between networks not a factor anymore most of the stickiness is now in the app/ecosystem layer (Apple and to a lesser extent Google). They are now forced to compete on utility level and pricing is limited.<br /><br />There are two video related capacity levers not yet mentioned:<br /><br />- time shifting. By storing the video on a mobile device when on a high capacity wifi link. Now possible both with Netflix and Amazon.<br />- variable bit rate. People do care about video quality but they tend to tolerate lower quality as long as the sound is ok.<br /><br />It is also very hard to measure network quality for the individual consumer. They have an idea but then their perception is also shaped a lot by marketing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-49973344577714476772017-05-12T06:40:22.229+10:002017-05-12T06:40:22.229+10:00"The world’s worst business is one with high ..."The world’s worst business is one with high fixed costs, low marginal costs, and lots of competition."<br /><br />Isn't that per definition the situation in many capital-intensive, strong cyclical industries? Does that mean all these industries are loss leader over a whole cycle?<br />I don't think so, but you should buy cyclical branches at an acyclical timeframe.<br /><br />Think about offshore oil producers or sipping companies - cyclical industries that are actually unpopular for their hugh losses. If they survive, there shares may explode...Rogernoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-2764124517074355332017-05-12T05:40:01.772+10:002017-05-12T05:40:01.772+10:00At the global level, the telecom industry has neve...At the global level, the telecom industry has never ever recovered wacc. Not once.<br />Sure you can find exceptional markets (eg Middle East, Switzerland) and exceptional players (illiad), but it's like saying airline is terrific cos SouthWest. <br />So to go long Verizon you need to argue Why the end of history.<br /><br />See PwC research on Telco Capex for the data (yes I was the author). Garyhttps://www.blogger.com/profile/17513533353441619963noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-65795656477759670042017-05-12T00:45:11.985+10:002017-05-12T00:45:11.985+10:00just curious if you think the original thesis migh...just curious if you think the original thesis might have been abandoned prematurely in light of the price paid for STRP (as well as the fine print limitations on "unlimited" plans).Anonymoushttps://www.blogger.com/profile/07396656842304557778noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-89098462645595407642017-05-11T16:51:35.713+10:002017-05-11T16:51:35.713+10:00Engineer here... grey haired in electronics & ...Engineer here... grey haired in electronics & communication.<br /><br />There *are* limits to the amount of signal you can shove into a given amount of spectrum, and off the top of my head I don't remember them or even if the current systems are close.<br /><br />Trouble with shoving more down the same amount of spectrum (or in the jargon, how much data bandwidth you can get into a given amount of RF bandwidth) is that you need to change to new coding schemes. The coding scheme is used to turn the data into something that goes over the air, and recover it at reception. Coding schemes can get horribly complex, need lots of compute power, etc etc. In general though, new coding schemes require new physical hardware - that is new equipment in the cell towers. That's also why your 3G phone won't work in 4g mode with your local 4g base station: old hardware can't do new stuff.<br /><br />Some of the newer software defined radios *might* allow software-based upgrades, but that's still limited by cost and the skill of the designer and their ability to foresee the future.<br /><br />So, TECHNICALLY, it might all go further, it might not. And if it does, there is expected to be a significant capital cost to update the cell towers, yet again. And possibly the back-haul, and so on.<br /><br />What's not been considered is that perhaps the bundles, pricing, etc, are not technically driven decisions. It's quite possible that this is a commercial "grab market share" decision, where the installed technology and assets are pushed and pushed until there are customer complaints about lousy performance. (Remember Vodafone in Australia? Once upon a time their network and service was very good.... then the wheels fell off.) <br /><br />Telcos need not be run by engineers - these days the techs are usually the unloved and unseen guys who come along after the clever commercial people to patch up or sweep up the mess. Maybe that's happening here.<br /><br />Even if thats the case, the time for it to turn bad enough to need a big patch up could be considerable, possibly years. Selling out seems rational, and the performance of the technology may well be a secondary consideration.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-76585587744550657592017-05-11T14:57:33.639+10:002017-05-11T14:57:33.639+10:00John, As a telecommunications enthusiast, I feel c...John, As a telecommunications enthusiast, I feel compelled to share some research that may be of further interest to your community. Verizon has recently embarked on deployment of artificial intelligence technology to monitor and manage the risks to negative customer experience around the network. More here in this youtube video (https://www.youtube.com/watch?v=PlBWd3E3uTQ ). More information on the technology available from forums on the web. Furthermore I know of at least one expert who has fine tuned a large Global mobile telecommunications network (HQ in the UK) for optimisation of investment to ensure video of mobile network throughput. They have recently moved to the US to focus on US mobile telecommunications. The I.P. on how to solve this problem was developed by research labs in Europe and with support from a closed proprietary and global expert community. I am not bullish on Verizon or any company associated with it. I am not certain if I have an open position on Verizon ( I entrust my fund managers decide that for me on my behalf!). Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-18106477615551260462017-05-11T06:44:23.739+10:002017-05-11T06:44:23.739+10:00I think the first warning sign should have been wh...I think the first warning sign should have been when T-Mobile started successfully acquiring 700Mhz band 12 spectrum in the private market at reasonable prices. This happened before the 600Mhz auctions.<br /><br />I think you also didn't account for how much improving technology would not just improve bandwidth, but would also improve coverage. If you follow Sprint they have laid out that as the handsets advance they plan to use their limtied low frequency spectrum for upload and 2.5Ghz for download. The range of spectrum is at a particular power, so a high power cell tower 2.5Ghz has just as good of range as 700Mhz from a low power phone. Today the cell phone has to send and receive at pairs of frequency blocks in the same range, but as that changes with discontinuous band carrier aggregation you stop needing low bandwidth frequency for download. Other technologies like increase levels of MMIO increase effective range of phones as well.<br /><br />I also think people under-estimated that the congestion would only occur in high population areas and thus infill with smaller cells makes economic sense supported by increased paying subscribers in these areas. <br /><br />In support of your original thesis Verizon's "Unlimited" plan is capped at 22GB. So it isn't really unlimited. Same with T-mobile. It's just a metered data plan with a larger base amount of data under a different name. We also have seen Verizon's average speeds drop since they started offering these plans, indicating that the network is getting congested.<br /><br />As for AT&Ts purchase of Dish, I saw this as a bet against net neutrality being enforced. If they can zero rate Dish video it's essentially a pay to play contract within the company. You can see it as Dish paying AT&T for access or AT&T charging Dish for access, only less explicit than if they had made that deal with an external company and come under scrutiny for doing so. You can see Verizon trying to do the same thing by acquiring content providers like Yahoo. <br /><br />To me the industry is far from easy to analyze. If the players can monetize access to content players, either by charging them directly or acquiring them and favoring acquired companies, that could be quite profitable. I don't think the spectrum scarcity or even the low frequency spectrum scarcity scenarios are turning out to be true, but it's still worth monitoring. <br />Joelhttps://www.blogger.com/profile/14419333291404794441noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-61371163347438336482017-05-11T04:36:01.215+10:002017-05-11T04:36:01.215+10:00John,
If we're heading to a future of autonom...John,<br /><br />If we're heading to a future of autonomous driving or even semi-autonomous, won't our cars need to have a mobile subscription to enable the telematics necessary to function? If so, and considering how data intensive the needs of these cars would be, could this represent a meaningful source of new revenue for those able to provide the low frequency high propagation signal that our cars will need? I know we're many years from this becoming a reality, but maybe it starts to build into the factors we consider when valuing spectrum.<br /><br />Best,<br />AdamAdam Sharaffnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-1845893335835850352017-05-11T04:15:33.903+10:002017-05-11T04:15:33.903+10:00Any thoughts on DISH US and value of its spectrum?...Any thoughts on DISH US and value of its spectrum?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-62097785422559772812017-05-11T03:30:06.363+10:002017-05-11T03:30:06.363+10:00Wait until T-Mobile and Sprint merge, things will ...Wait until T-Mobile and Sprint merge, things will get better for all. Just look at the Japanese wireless business once it consolidated down to 3 players.Benhttps://www.blogger.com/profile/17565336056962586657noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-47578801840635855492017-05-11T01:27:30.027+10:002017-05-11T01:27:30.027+10:00If I'm a sinister mustache twirling super exec...If I'm a sinister mustache twirling super exec and I own the most valuable spectrum, and scarcity is what gives it it's value wouldn't I want to force my competition and users to use as much of it as possible in the short term? I just don't see how that behavior is inconsistent with the original thesis.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-77730114734177181562017-05-11T00:39:21.503+10:002017-05-11T00:39:21.503+10:00Consolidation would change the math a bit wouldn&#...Consolidation would change the math a bit wouldn't it?<br /><br />It sounds like owning DISH or another spectrum asset could still be profitable if you can stomach the volatility?Forresthttps://www.blogger.com/profile/09102260605312281771noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-91529032797636190702017-05-11T00:31:39.163+10:002017-05-11T00:31:39.163+10:00"The world’s worst business is one with high ..."The world’s worst business is one with high fixed costs, low marginal costs, and lots of competition. In that case the competitive forces will drive prices down to the low marginal costs – and it will be impossible to recover fixed costs."<br /><br />Does this not describe the oil majors- ExxonMobil, Chevron, BP, Shell etc. - in the shale era? I suspect those may prove more promising shorts in the long run than T or VZ. The telecom market does not need Sprint however. I do think Sprint eventually goes bankrupt, with significant repercussions for the high yield bond landscape.<br />Cheesehedgehttps://www.blogger.com/profile/05542168551121843155noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-6286143770068517802017-05-11T00:09:26.701+10:002017-05-11T00:09:26.701+10:00Read The Master Switch by Tim Wu.Read The Master Switch by Tim Wu.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-30934518176770555562017-05-10T20:45:18.560+10:002017-05-10T20:45:18.560+10:00John, like your work.
Respectfully submit that tec...John, like your work.<br />Respectfully submit that technology in generally is fraught and not a suitable place for the contrarian tribe.<br />The only time I will invest is when I know physical limits have been hit, i.e I know oil cost more than $60 U.S per barrel to make as 100 years of draining it has found the cheapest first.<br />As to the value of wireless spectrum, perhaps we are better served to admit we have NFI how smart people can get in terms of transmitting data.<br />Fantastic engineering = terrible investing.<br />In fact investment returns are generally inversely proportional to social utility.<br />GLTA<br />Anonymoushttps://www.blogger.com/profile/08674057714806498805noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-42807974917095981762017-05-10T20:01:28.984+10:002017-05-10T20:01:28.984+10:00I may be completely wrong, but one thought which c...I may be completely wrong, but one thought which comes to mind with regard to bandwidth to users is that there's a lot of capacity here for people to be *clever*. Invent a new technique, some new hardware, modulate data in yet another way, cut a signal down from 10 MHz to 5 MHz, etc, etc... ...it's a bit like Moore's Law. You can keep improving. Maybe there's a law like that for bandwidth over radio.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-6828409038345132092017-05-10T19:04:18.190+10:002017-05-10T19:04:18.190+10:00We got much more with the download. Firstly it was...We got much more with the download. Firstly it was in a spreadsheet...John Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-45543205775995769322017-05-10T18:06:40.042+10:002017-05-10T18:06:40.042+10:00The lack of beachfront spectrum is not a big disad...The lack of beachfront spectrum is not a big disadvantage anymore, as people move from voice to text as the primary mode of communication. If I have one bar, it may mean a poor quality call, but WhatsApp still works fine.<br /><br />Also, with almost all technology, cost and convenience win over quality. CDs sounded better than MP3s, which sounded better than streaming. <br /><br />Nice printed photos looked better than jpegs on your phone.<br /><br />Landlines still sound better than mobile most of the time.<br /><br />There are probably thousands of more examples of this. <br /><br />If you want to see a case of spectrum limitations in action, look at the case of India, which had an insane system for allocating spectrum (maybe still does). Prices fell and fell and the operators lost boatloads of money buying spectrum (look up Vodafone India).Anonymous jackasshttps://www.blogger.com/profile/03388315255647500550noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-56498849273149416562017-05-10T17:14:46.584+10:002017-05-10T17:14:46.584+10:00"We went so far as to download from the Feder..."We went so far as to download from the Federal Communications Commission a list of spectrum ownership by county in the US and match that with the population data from the census." <br /><br />You should have just taken a look at the chart.Anonymousnoreply@blogger.com