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daveburstein
daveburstein
11/30/2019 | 2:37:43 PM
Slumbering giants not needed
Whoever told you "Europe desperately needs telco giants" hasn't looked at the data. The three Koreans, a fraction of the size of Deutsche Telecom, are the world leaders in 5G. Little Switzerland is the European leader in 5G, with relatively small Sunrise already connecting 350 small towns and villages. In the US, the largest 5G offering as I write is from #4 Sprint, although the larger companies will soon come in.

In fiber, Orange and Telefonica Spain are far ahead of the US giants, Verizon and AT&T. The best fiber network in the US is being built in Northern California by Sonic, where a symmetrical gigabit sells for about $50/month.

In the fight for customers, #3 T-Mobile USA has been clobbering AT&T & Verizon for years. In Korean 5G, LG Uplus, the smallest, is gaining market share.

In finances, giant China Mobile is suffering, while relatively small Telstra is one of the most profitable.

Giant companies have some advantages, but they also are very, very resistant to change. Many build absurdly large bureaucracy. Ask anyone who has ever worked for a huge company. Smaller companies are often far more innovative.

Less competition usually does lead to higher profits but not usually increased investment. Canada, one of the least competitive and highest-priced markets, isn't turning on 5G until 2020. 

Actually, strong competition drives investment. Verizon built Fios, the biggest fiber network in early days, because little Cablevision was winning market share from DSL. Orange in France built one of Europe's largest fiber networks because Free was winning broadband customers.

Deutsche Telekom and British Telekom did no FTTH until others started building and scared them. Strong competition is the most effective way to inspire investment. But that's increasingly rare in telecom, because building redundant networks is very expensive. 1 network is cheaper than 2. 2 or 3 networks are much cheaper than the 4-7 usually needed for competition to work its magic. 

In 5G so far, strong government pushing has been most effective, starting with Korea and now in China. Hands-off government policy only works where competition is very strong, rare in telecom.  

5G will develop in most busy parts of networks in affluent countries because it is much cheaper per bit. DT's 70% cheaper may be a high estimate, but clearly productivity improves. 

Deutsche Telekom, like most companies, wants to grow bigger and more powerful. Large companies have remarkable ability to influence the common wisdom for the policies they want. 

Data, not opinion, should come first.


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