As discussed in Chapter One, U.S. carriers have had some success in deploying limited mmWave for small geographic areas, but these have limitations for future scalability. Even in optimized circumstances, it is clear that scaling mmWave to provide more coverage would be a time- and cost-intensive endeavor requiring a massive infrastructure build-out.
There is the risk that these carriers will not even be able to commit the necessary capex to scale those mmWave networks, given the large number of base stations required. At the end of 2018, Verizon held ~$120B in debt with ~4% dividend yields, while AT&T held ~$175B in debt with over 6% dividend yields.[1] T-Mobile holds ~$25B in debt, and Sprint holds ~$40B in debt.[2] These companies are at the forefront of the U.S. effort to develop 5G, but their balance sheets suggest that they may struggle with the cost of a full mmWave network roll-out and the infrastructure it would require.
In the last decade, significant shifts have occurred in the wireless vendor community as well. Chinese telecom equipment giant Huawei grew global revenues from approximately $28B in 2009 to $107B in 2018. Ericsson's revenue during the same period fell from $27.9B to $23.9B,[3] while Nokia’s revenue fell from $57.6B to $26.6B.[4] Chinese handset vendors like Huawei, ZTE, Xiaomi, Vivo, and Oppo have grown market share from less than approximately 6% in 2009 to over 30% share in 2018, and are still growing rapidly despite minimal sales in the U.S. market - for example, India represents a wireless market larger than that of the United States, and 59.7% of all handsets sold in India are Chinese.[5] Chinese internet application companies, led by Baidu, Alibaba, Tencent and new companies like TikTock are growing in influence and revenue. In 2009, all of the top 10 Internet companies by revenue were American. Today, four of the top 10 are Chinese.
These shifts have not just occurred because Chinese equipment is cheaper. In many cases, Chinese equipment is also superior to its Western rivals. Huawei and ZTE have been the leader in massive MIMO radio systems, with 64 transmit and receive elements. Many consider Huawei’s P series and Mate Android phones the most advanced phones in the world, and these devices are powered by Huawei’s own Hi-silicon division. Alibaba’s cloud services are fourth in the world, behind Amazon, Microsoft, and Google, and growing quickly.
- ↑ “Schedule of Outstanding Debt,” Verizon, accessed March 20, 2019, https://www.verizon.com/about/investors/schedule-outstanding-debt; “Debt Detail as of December 31, 2018,” AT&T, accessed March 20, 2019, https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/debt/2018/4q18/Debt_List_4Q18.pdf.
- ↑ “T-Mobile Outstanding Senior Notes And Credit Facilities – Ratings And Maturity Dates (By Year),” T-Mobile, accessed March 20, 2019, https://investor.t-mobile.com/financial-performance/fixed-income/default.aspx; “Q3 News Release,” Sprint, accessed March 20, 2019, https://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q3/01_Fiscal-3Q18-Earnings-Release-FINAL.pdf.
- ↑ “Ericsson Revenue,” Macrotrends, accessed May 31, 2019, https://www.macrotrends.net/stocks/charts/ERIC/ericsson/revenue.
- ↑ “Nokia Revenue,” Macrotrends, accessed May 31, 2019, https://www.macrotrends.net/stocks/charts/NOK/nokia/revenue.
- ↑ “Just 2 Companies Control 50% of India’s Smartphone Market,” The Economic Times, February 15, 2019, https://economictimes.indiatimes.com/tech/hardware/just-2-companies-control-50-of-indias-smartphone-market/articleshow/68007602.cms?from=mdr.
