As we enter Mobile World Congress 2019, arguably the mobile event of the year, 5G network and device launch details are coming into greater focus. Verizon is taking the early lead in the US staking out 5G to 30 cities in the US by the end of 2019. Of course, 30 cities is hardly national coverage, which means a continued deployment for this aspect of our Digital Infrastructure investing theme well into 2020 at least for the US if not into 2021. Factor in the competitive response from AT&T and the soon to be combined T-Mobile USA and Sprint, and it means the likely tipping point for 5G is looking increasingly like the second half of 2020. From an iPhone perspective, even though Samsung and Motorola have announced they will have devices ready by mid-2019, this 5G network timetable means we should not be expecting any 5G news from Apple this year, but rather its annual iPhone event in September-October of 2020.
Verizon on Thursday said it’s working on deploying 5G to some extent in 30 U.S. cities by the end of 2019, another hint that the technology won’t appear in iPhones until 2020.
AT&T and T-Mobile are also working on 5G deployments. Neither carrier is expected to get very far by the end of 2019 however, owing to partly to lags in equipment. There are also relatively few 5G-ready devices on the market, offering little incentive to speed up.
Multiple reports have pointed to Apple waiting until 2020 to ship 5G-capable iPhones. The company’s preferred modem maker, Intel, is unlikely to have a 5G chip ready until that timeframe.
New technologies have the potential to either upend the existing playing field or bring about new value propositions that render past business models passe. One of those that is expected to usher in a wider array of connectivity with speeds that match existing cable broadband speeds is 5G. Often times, these new technologies take time, usually more time than expected, to be commercialized. Yet, there are many signposts that confirm their move from concept to beta to pre-market launch to commercialization. With mobile technologies, this means have the proper infrastructure in place, capable chipsets and devices available and sufficient radio airwaves (also known as spectrum). Of the three, available spectrum is the most scarce, and it has been known to foster certain M&A activity like the marriage of Sprint and Nextel and AT&T’s $1.6 billion purchase of Straight Path last year as well as its more recent comments that it will “continue to invest significant capital in obtaining additional spectrum to meet its long-term needs.”
One potential risk is the lack of available spectrum inhibits the expected rollout and new business models expected by 5G that would be a boon for economic growth as well as revenue and profits. For that reason, the FCC is examining spectrum alternatives and regulatory reforms that it could boost the spectrum supply as well as improve future mobile network capacity. In other words, allow for the creative destruction tailwind that 5G will bring as part of our Disruptive Innovators investing theme.
The Federal Communications Commission is trying to pave a smoother road to our 5G future. The government agency plans to consider freeing up more radio airwaves for use in 5G networks in its next monthly meeting, FCC Chairman Ajit Pai said in a statement. The commission will look to the 3.5 gigahertz spectrum band as a potential source of radio airwaves. While not the super high-frequency spectrum commonly talked about when looking at 5G networks, 3.5 Ghz has the potential to carry more capacity and speed than lower frequency spectrum used in many of today’s networks. T
he agency will also look at freeing up the use of 6 Ghz band of unlicensed spectrum for use to bolster Wi-Fi coverage. Wi-Fi runs on two existing frequecies, 2.4 Ghz and 5 Ghz, and adding a new band could alleviate congestion. Pai said the agency would also look at removing regulations on rural carriers, which he said would let them invest in their networks.
The dust has barely settled on the legal ruling that is paving the way for AT&T (T) to combine with Time Warner (TWX), and we are alread hearing of new products and services to stem from this combination. No surprise as we are seeing a blurring between mobile networks and devices, social media and content companies as Apple (AAPL), Facebook (FB), Google (GOOGL) and now AT&T join the hunt for original content alongside Netflix (NFLX), Amazon (AMZN), and Hulu, which soon may be controlled by Disney if it successfully fends of Comcast to win 21st Century Fox.
While we as consumers have become used to having the content I want, when I want it with Tivo and then the content I want, when I want it on the device I want it on with streaming services, it looks now like it will be “the content I want, when I want it, on the device I want on the platform I choose.” All part of the overlapping to be had with our Connected Society and Content is King investing themes that we are reformulating into Digital Lifestyle – more on that soon.
In short, a content arms race is in the offing, and it will likely ripple through broadcast TV as well as advertising. Think of it as a sequel to what we saw with newspaper, magazine and book publishing as new business models for streaming content come to market… the looming question in my mind is how much will today’s consumer have to spend on all of these offerings before it becomes too pricey?
And what about Sprint (S) and T-Mobile USA (TMUS)…
Taking advantage of the recent approval of its merger with Time Warner, AT&T on Thursday announced WatchTV, a new live TV service premiering next week — and initially tied to two new unlimited wireless data plans.
WatchTV incorporates over 30 channels, among them several under the wing of Time Warner such as CNN, Cartoon Network, TBS, and Turner Classic Movies. Sometime after launch AT&T will grow the lineup to include Comedy Central, Nicktoons, and several other channels.
People will be able to watch on “virtually every current smartphone, tablet, or Web browser,” as well as “certain streaming devices.” The company didn’t immediately specify compatible Apple platforms, but these will presumably include at least the iPhone and iPad, given their popularity and AT&T’s long-standing relationship with Apple.
The first data plan is “AT&T Unlimited &More”, which will also include $15 in monthly credit towards DirecTV Now. People who pay extra for “&More Premium” will get higher-quality video, 15 gigabytes of tethered data, and the option to add one of several “premium” services at no charge — initial examples include TV channels like HBO or Showtime, and music platforms like Pandora Premium or Amazon Music Unlimited.
&More Premium customers can also choose to apply their $15 credit towards DirecTV or U-verse TV, instead of just DirecTV Now.
WatchTV will at some point be available as a $15-per-month standalone service, but no timeline is available.
As we discussed on the latest edition of Cocktail Investing, we’re not really shocked that RadioShack is once again filing for bankruptcy. Between the move to digital commerce that has weighted on foot traffic into RadioShack stores and the near disposable nature of many consume electronics today, it’s not been an easy road for the company. Leveraging its future to smartphones likely provided an inital boost, but selling the same smartphones as Best Buy and mobile operator stores like those from AT&T, Sprint and Verizon means your offering is more or less a commodity. We know we saw it coming, but we have to wonder if RadioShack management saw the Connected Society headwind it was dealing with?
For the second time in 25 months, electronics retailer RadioShack has filed for bankruptcy protection. The first time around, The Shack closed just over half of its stores, partnering with Sprint to keep the rest open and preserve thousands of jobs. This week, the company formed to keep the brand going sought permission from the bank to close between one-third and all of its stores.
By the way, if you have any gift cards for RadioShack around, including cards for the original version of the company before the bankruptcy, you have until April 7, 2017 to cash them in