Broadband Shorts – July 2017

Today I’m going to talk about a few topics that relate to broadband, but that are too short for a separate blog.

Popularity of Telehealth. The Health Industry Distributors Association conducted a follow-up survey of people who had met with a doctor via a broadband connection instead of a live office visit. The survey found that a majority of people were very satisfied with the telehealth visit and 54% said that they thought the experience was better than a live office visit.

Interestingly over half of the telehealth users were under 50 and they preferred telehealth because of the convenience. Many said that once they found their doctor would allow telehealth visits that they requested them whenever possible. Of course, many telehealth users live in rural areas where it can be a long drive to make a routine doctor office visit. The doctors involved in telehealth also like it for routine office visits. They do complain, however, that not enough insurance companies have caught up with the concept and that they often encounter reimbursement problems.

Explosion of Mobile Data Usage. Ericsson, the company that supplies a lot of electronics for the cellular industry, has warned cellular companies to prepare for an explosive growth in cellular data traffic over the next five years. They warn that within five years that the average cellphone user will grow from the average of today’s monthly usage of 5 gigabytes to a monthly usage of 26 gigabytes. They say the usage will be up to 6.9 gigabytes just by the end of this year – a 40% growth over last year.

They say that several factors will contribute to the strong growth. Obviously video usage drives a lot of the usage, but there is also huge annual growth from social media usage as those platforms incorporate more video. They also predict that by 2022, as we start to meld 5G cellular into the network, that users will feel more comfortable using data on their cellphones.

New Satellite Broadband. ViaSat just launched a new satellite that will allow for data speeds up to 200 Mbps. The satellite was recently launched and that has a throughput of 300 gigabits per second. The satellite is expected to be placed into service in early 2018 and will boost the company’s Excede broadband product.

The new satellite, dubbed ViaSat 2, will originally augment and eventually replace the company’s current ViaSat 1 satellite. The company currently serves 659,000 customers from the ViaSat 1 satellite plus a few it purchased from WildBlue in 2009. The new satellite will allow an expansion of the customer base.

The company expects that the majority of customers will continue to buy data products with speeds up to 25 Mbps, like those already offered by Excede. This tells me that the faster speeds, while available, are going to be expensive. This satellite will still be in a high earth orbit, which means the continued high latency that makes satellite service incompatible with any real-time applications. And there is no word if the larger capacity will allow the company to raise the stingy data caps that customers seem to universally hate.

Growth of Music Streaming. Nielsen released statistics that show that streaming audio is growing at an explosive rate and seems to have crossed the threshold to become the primary way that most people listen to music. Audio streams in 2017 are 62% higher than just a year ago. The industry has grown from an annual number of 113.5 billion steams to 184 billion in just one year.

Nielsen estimates that total listens to music from all media including albums and music downloads will be 235 billion this year, meaning that streaming video now accounts for 78% of all music listened to.

And this growth has made for some eye-popping numbers. For example, Drake’s release of More Life in March saw 385 million streams in the week after release. Those kinds of numbers swamp the number of people that would listen to a new artist under older media.

Technology and Telecom Jobs

PoleIn case you haven’t noticed, the big companies in the industry are cutting a lot of jobs – maybe the biggest job cuts ever in the industry. These cuts are due to a variety of reasons, but technology change is a big contributor.

There have been a number of announced staff cuts by the big telecom vendors. Cisco recently announced it would cut back as many as 5,500 jobs, or about 7% of its global workforce. Cisco’s job cuts are mostly due to the Open Compute Project where the big data center owners like Facebook, Amazon, Google, Microsoft and others have turned to a model of developing and directly manufacturing their own routers and switches and data center gear. Cloud data services are meanwhile wiping out the need for corporate data centers as companies are moving most of their computing processes to the much more efficient cloud. Even customers that are still buying Cisco boxes are cutting back since the technology now provides a huge increase of capacity over older technology and they need fewer routers and switches.

Ericsson has laid off around 3,000 employees due to falling business. The biggest culprit for them is SDNs (Software Defined Networks). Most of the layoffs are related to cell site electronics. The big cellular companies are actively converting their cell sites to centralized control with the brains in the core. This will enable these companies to make one change and have it instantly implemented in tens of thousands of cell sites. Today that process requires upgrading the brains at each cell site and also involves a horde of technicians to travel to and update each site.

Nokia plans to layoff at least 3,000 employees and maybe more. Part of these layoffs are due to final integration with the purchase of Alcatel-Lucent, but the layoffs also have to do with the technology changes that are affecting every vendor.

Cuts at operating carriers are likely to be a lot larger. A recent article published in the New York Times reported that internal projections from inside AT&T had the company planning to eliminate as many as 30% of their jobs over the next few years, which would be 80,000 people and the biggest telco layoff ever. The company has never officially mentioned a number but top AT&T officials have been warning all year that many of the job functions at the company are going to disappear and that only nimble employees willing to retrain have any hope of retaining a long-term job.

AT&T will be shedding jobs for several reasons. One is the big reduction is technicians needed to upgrade cell sites. But an even bigger reason is the company’s plans to decommission and walk away from huge amounts of its copper network. There is no way to know if the 80,000 number is valid, but even a reduction half that size would be gigantic.

And vendor and carrier cuts are only a small piece of the cuts that are going to be seen across the industry. Consider some of the following trends:

  • Corporate IT staffs are downsizing quickly from the move of computer functions to the cloud. There have been huge number of technicians with Cisco certifications, for example, that are finding themselves out of work as their companies eliminate the data centers at their companies.
  • On the flip side of that, huge data centers are being built to take over these same IT functions with only a tiny handful of technicians. I’ve seen reports where cities and counties gave big tax breaks to data centers because they expected them to bring jobs, but instead a lot of huge data centers are operating with fewer than ten employees.
  • In addition to employees there are fleets full of contractor technicians that do things like updating cell sites and these opportunities are going to dry up over the next few years. There will always be opportunities for technicians brave enough to climb cell towers, but that is not a giant work demand.

It looks like over the next few years that there are going to be a whole lot of unemployed technicians. Technology companies have always been cyclical and it’s never been unusual for engineers and technicians to have worked for a number of different vendors or carriers during a career, yet mostly in the past when there was a downsizing in one part of the industry the slack was picked up somewhere else. But we might be looking at a permanent downsizing this time. Once SDN networks are in place the jobs for those networks are not coming back. Once most IT functions are in the cloud those jobs aren’t coming back. And once the rural copper networks are replaced with 5G cellular those jobs aren’t coming back.