Weekly Readings – 6th July 2019

Rising U.S. Inequality: How We Got Here, Where We’re Going

How Costco gained a cult following — by breaking every rule of retail. Costco is Charlie Munger’s pick as Amazon’s biggest threat. He may have a point here.

Student Loans Are Not A National Crisis. I am a bit reluctant to add this story to the post as I don’t really like the headline. However, his points are valid. So why not? In the summary, I agree with him that wiping out college debt does nothing to address the root issue. It’s about the system that leads to the current debt situation and the lack of personal finance knowledge.

The rise and rise of a Vietnamese corporate empire. FT pulled the curtains on one of the biggest corporations in Vietnam. Both the good and the bad.

Amazon in-sourcing nearly half of its parcel transportation needs. A look at Amazon’s transportation capabilities

Understanding Financial Statements. A very good primer on the fundamentals of financial statements.

Global App Revenue Reached $39 Billion in the First Half of 2019, Up 15% Year-Over-Year. A great study on app revenue and downloads in the first half of 2019 from Sensor Tower.

Global Entertainment & Media Outlook 2019–2023. An interesting and informative report on global entertainment and media by PwC.

Making 5G pay. A look at how 5G can be monetized, how much consumers are willing to pay (an estimate) and how different 5G packages can be introduced for different needs.

All about Direct Listings. A great overview of direct listings by a16z

Are we going to have 5G in the US soon?

First of all, what is 5G? 5G is generally seen as the fifth generation cellular network technology that provides broadband access (Wikipedia). The technology, in theory, allows for support for many more devices in the same area and much faster speed than the current 4G technology. It has been touted as one of the core components in our future society and received a lot of hype in the past few years. Here is what Loup Ventures has to say about when 5G is going to be commonly available:

On June 28th, T-Mobile will be the 4th US carrier to “launch” 5G in the US with 6 initial cities. While encouraging, we’re still in the buildup phase, likely two years away from the average consumer using 5G. To put this into perspective, we believe, by the end of 2022, about 75% of the US population will have access to 5G, essentially 2 years behind AT&T’s recent estimate of roughly 66% by the end of 2020. 

Loup Ventures Newsletter 29th June 2019 Issue

But are we though?

Wired has a great article on the different approach the US chose for 5G adoption, compared to other countries. Here is a quote that summarizes well such a difference (a bit long)

“…The traditional sweet spot for wireless service has been in what we call low-band or mid-band spectrum. This is between 600 MHz and 3 GHz. For a long time, these airwaves were considered beachfront property because they send signals far. In other words, they cover wide areas but require little power to do so. This makes them especially attractive for service in rural areas, where technology that can reach more people with less infrastructure makes greater economic sense.

For 5G, however, the United States has focused on making high-band spectrum the core of its early 5G approach. These airwaves, known as “millimeter wave,” are way, way up there—above 24 GHz. They have never been used in cellular networks before, and for good reason—they don’t send signals very far and are easily blocked by walls. That means they are very expensive to build out. On the flip side, these airwaves offer a lot more capacity, which translates into ultrafast speeds.

The United States is alone in this mission to make millimeter wave the core of its domestic 5G networks. The rest of the world is taking a different approach. Other nations vying for wireless leadership are not putting high-band airwaves front and center now. Instead, they are focusing on building 5G networks with mid-band spectrum, because it will support faster, cheaper, and more ubiquitous 5G deployment. Take China, which allocated large swaths of mid-band spectrum for its carriers last year, clearing the way for deployment in a country that is also home to Huawei, the largest telecommunications equipment supplier worldwide. South Korea and Australia wrapped up an auction of key mid-band spectrum last year. At roughly the same time, Spain and Italy held their own auctions for mid-band airwaves. Austria did the same earlier this year. Switzerland, Germany, and Japan also auctioned a range of mid-band spectrum just a few months ago. The United States, however, has made zero mid-band spectrum available at auction for the 5G economy. Moreover, it has zero mid-band auctions scheduled.” –

Wired – Choosing the wrong lane to race to 5G

In short, to access the very high-speed 5G in the US, you need to live close to the towers. The farther you live from them, the worse the connection will be. All would be OK if it were easy and cheap to build those towers everywhere. But it’s not.

Per Wall Streets Journal:

This is the paradox of 5G, the collection of technologies behind next-generation wireless networks: They require a gargantuan quantity of wires. This is because 5G requires many more small towers, all of which must be wired to the internet. The consequences of this unavoidable reality are myriad. The 5G build-out, which could take more than a decade, could disrupt our commutes, festoon nearly every city block with antennas, limit what cities can charge for renting spots on their infrastructure to carriers on which to place their antennas, and result in an unequal distribution of access to high-speed wireless, at least at first.

In a 2017 report, Deloitte Consulting LLP principal Dan Littmann estimated that it will take combined carrier spending of between $130 billion and $150 billion in order for most Americans—including those in rural areas—to have a choice of providers of high-speed broadband and 5G wireless. Marachel Knight, the senior vice president in charge of rolling out 5G at AT&T, says her company estimates it will take a decade to completely build out its 5G network.

The driving force behind this enormous build-out is that 5G networks don’t work like previous wireless cellular networks. Where 2G, 3G and even 4G rely on large towers with powerful antennas that can cover many square miles, the shorter-range, higher-frequency radio waves used by 5G networks—essential to their ability to deliver the 10- to 100-times faster speeds they promise—mean that 5G networks must have small cells placed much closer together.

Typically these small cells must be placed about 800 to 1,000 feet apart, says AT&T’s Ms. Knight. Small-cell antennas are typically the size of a pizza box, but can be much larger, and require both a fiber-optic connection to the internet and access to power. They go wherever there’s space: on buildings, new 5G-ready telephone poles and, often, retrofitted lampposts. In 2018, the U.S. had 349,344 cell sites, according to CTIA, a wireless industry trade organization. The organization estimates that—to achieve full 5G coverage—carriers will have to roll out an additional 769,000 small cells by 2026.

In a nutshell, I don’t think we are going to have 5G for the majority of Americans soon. There may be a portion of the population who fortunately will have access to the technology. The rest will have to wait till the infrastructure is amply built.

When it comes to hyped technology, I think it’s always a good idea to be vigilant, avoid the hype, go into more details and take a more conservative stance. We don’t lack examples of techs that have been hyped for years but are nowhere near to being common: AI, autonomous vehicles, 5G…

Heck, a lot of Americans don’t have access to Internet

Weekly readings – 31st May 2019

The Future Of Fashion: From Design To Merchandising, How Tech Is Reshaping The Industry. How technology is affecting the fashion and retail industry.

Investing in the Podcast Ecosystem in 2019. A lot of great findings on the podcast ecosystem

Want a great deal on a house? Find one where someone was murdered.

Grab vs. Go-Jek: Inside Asia’s Battle of the ‘Super Apps’. An interesting story about the heavyweights in Southeast Asia in a race to become the dominant Super App

Hollywood Studios Say They’re Quitting Netflix, But the Truth Is More Complicated. Though it’s true that most of Netflix’s popular shows are titles owned by others, Netflix already has the titled tied up to its platform for a foreseeable future.

Sprint’s 5G network is here, and it’s completely different from what Verizon and AT&T are doing. Top speed/spotty coverage vs reasonably fast speed/better coverage. It’s an important point to know about the 5G battle between AT&T, Sprint and Verizon.

Apple’s Billion Users. A very interesting analysis into Apple’s subscription base and its importance to Apple’s future.