It’s that time of year when I look forward at what the next year might bring to the industry. I see the following as the biggest telecom trends for 2019:
5G Will Not Save the World (or the Industry). This will be the year when we will finally stop seeing headlines about how 5G will transform society. There will be almost no actual introduction of 5G in networks, but we’ll still see numerous press releases by the big ISPs crowing about fictional 5G achievements.
CAF II Buildout Nearly Complete, but Few Notice. The CAF II upgrades will not have the impact hoped for by the FCC. Many areas that should have gotten speed increases to at least 10/1 Mbps will get something less, but nobody will officially monitor or note it. Households that buy the upgrades to 10/1 will still feel massively underserved since those speeds are already seriously obsolete.
People Will Wonder Why They Bought 5G Cellphones and 802.11ax Routers. The wireless carriers will begin charging premium prices for 5G-capable cellular phone yet there will be no 5G cell sites deployed. Households will upgrade to 802.11ax WiFi routers without realizing that there are no compatible devices in the home. Both sets of customers will feel cheated since there will be zero improvement in performance. Yet we’ll still see a few articles raving about the performance of each technology.
FCC Will Continue to Work Themselves out of the Regulatory Business. The current FCC will continue on the path to deregulate the large carriers to the fullest extent possible. They will continue to slant every decision in the direction of the big ISPs while claiming that every decision helps rural broadband.
Rural America Will Realize that Nobody is Coming to Help. I predict that hundreds of rural communities will finally realize that nobody is bringing them broadband. I expect many more communities to begin offering money for public/private partnerships as they try desperately to not fall on the wrong side of the broadband divide.
Broadband Prices Start to Climb. 2019 will be the first year that the world will notice the big ISP strategy to significantly increase broadband prices. We saw the first indication in November when Charter increased bundled broadband prices by $5 per month – the biggest broadband price increase in my memory. All the big ISPs are hoping to have broadband prices to $90 within 5 – 7 years.
Corporate Lobbyists Will Drive Policy. In 2018 there were numerous FCC decisions that came straight from the pens of telecom lobbyists. In 2019 those lobbyists will drive state and federal telecom legislation and FCC decisions.
Comcast and Charter Continue to Eat into Cellular Market. These two cable companies will quietly, yet significantly begin eating into the cellular markets in urban areas. I still don’t expect a major reaction by the cellar companies, but by 2020 we should start seeing cellular prices take another tumble.
Household Bandwidth Usage Will Continue to Grow. There will be no slowdown in the growth of household broadband as homes add many more bandwidth-capable devices to their homes. Another few million customers will cut the cable TV cord and ratchet up bandwidth usage. Online programming will routinely first offer 4K video and we’ll see the first commercial 8K video online.
We’ll See First Significant Launches of LEO Satellites. There will be little public notice since the early market entries will not be selling rural broadband but will be supporting corporate WANs, cellular transport and the development of outer space networks between satellites.
25 New Online Programmers Emerge. There will be a flood of new online programming options as numerous companies jump into the market. We won’t see many, and possibly no failures this year, but within a few years the market reality will drive out companies that can’t gain enough market share.
Transport Price Pressure Tightens. Anybody selling transport to cellular companies will see big pressure to lower prices. Those who ignore the pressure will find out that the carriers are willing to build fiber to bypass high costs.
Big Companies Will Get Most New Spectrum. The biggest ISPs and cellular carriers will still gobble up the majority of new spectrum, meaning improved spectrum utilization for urban markets while rural America will see nearly zero benefits.
We don’t expect cable MVNOs to take off until BYOD is fully implemented. It is a huge deterrent to force a customer to buy a new device from Comcast or Charter for unproven service from a new entrant, even with Verizon powering their networks. When customers can activate cheap/older phones with both, these plans will fuel price changes in the prepaid and value plan segments at an entry level price of just $13-14 for unlimited text/voice and 1GB data. That is a good Lifeline-type service and perfect for older family members that use phones for emergencies. The only remaining hurdle — precondition you have to be a cable customer to qualify for this pricing.
5G is the most overhyped telecom issue since the cable industry claimed its networks were “fiber” too. Verizon’s wireless millimeter wave service would be the perfect solution for rural customers bypassed by DSL and cable, except small cell ROI demands mean this technology will only turn up in urban/suburban areas unless subsidies are doled out. Why choose this over wired alternatives? It will be years and years before this kind of 5G is widespread. 5G on macro cell towers is at best an incremental upgrade from 4G, and early adopters will end up with phones with incomplete support for the technology, limiting speed. Wait until 2020 before even considering a 5G device, which will still come with a ridiculous price premium.
CAF2 is a DSL subsidy program helping prop up telcos like Frontier that will end up in bankruptcy a few years later than originally thought. New York did better subsidizing Charter cable extensions, until “Charter be Charter” and tried to screw the state by counting any new passing as evidence of compliance of its merger approval agreement.
As for Charter’s broadband pricing, the company notoriously raised standalone prices about $5 a month just about every year for the last several. These hikes are cushioned for bundled customers and promo pricing, but it is part of meeting Wall Street’s push to get broadband bills to the $100/mo range to fully recoup video revenue losses and meet revenue growth expectations. Until significant competition is pervasive, pricing expectations are based on the duopoly market’s pricing power.
Pingback: Telecom Predictions for 2019 – Rural Economy Technology