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<\/figure>\n<\/div>\nGreetings from Nashville, Cedar Rapids, and Kansas City.\u00a0 It has been a whirlwind of activity since Memorial Day, and the summer promises to be filled with even more headlines.\u00a0 The opening picture is of our first (and definitely not the last)\u00a0Sunday Brief\u00a0Fiber Connect get together.\u00a0 Ten of us gathered for an active discussion on the industry as well as some rabbit trails (including the pluses\/ minuses of living in small but fibered towns like Sedalia, Missouri).\u00a0 Very fun time, and we will assurredly grow it to 20 in 2026 (Orlando).\u00a0<\/p>\n
This week, after a full market commentary, we will dive into earnings questions and the recent policy letter on BEAD from the Department of Commerce.\u00a0 Despite the deserved howls from states that had completed the process, the proposed changes actually make the proposition stronger and save taxpayers money.\u00a0 But they come with additional delays, which means that many underserved locations will not experience broadband speeds until 2028 or 2029.\u00a0 We will offer some thoughts based on our FTTH, ILEC, middle-mile and manufacturing experiences.\u00a0<\/p>\n
One additional administrative note \u2013 we will be publishing a\u00a0Brief\u00a0on June 22nd<\/sup>\u00a0and will be converting those of you who are non-Wordpress email subscribers to WordPress the week of July 6th<\/sup>\u00a0(no\u00a0Brief\u00a0on the Fouth of July weekend).\u00a0\u00a0\u00a0<\/p>\n Since the Memorial Day holiday, the Fab Five has gained $657 billion in value, and two of the group (Microsoft and Meta) are up double digits in 2025.\u00a0 Even with the threat of resumed tariffs, continued wars, and persistently higher-than-desired interest rates, the Fab Five continue to increase in value, having doubled in the last 30 months.\u00a0 The Telco Top Five have also performed well as a group (+$6 billion in the last two weeks, $80 billion in 2025), and four of the top five are up double-digit percentages in 2025.\u00a0 As we have documented in past\u00a0Briefs, AT&T is still worth $17 billion (9%) more than Verizon, and Big Red is still worth the same as Comcast and Charter\u00a0combined.\u00a0<\/p>\n The level of 2Q economic growth remained a mystery as of this publication, as shown by the following Atlanta Fed GDPNow chart:\u00a0<\/p>\n The jump in the GDPNow real GDP estimate was triggered by April\u2019s tariff-induced goods trade deficit figures which showed a 46% drop.\u00a0 These figures have been updated to now include services (here<\/a>).\u00a0 While it may not feel like we are growing at historically high levels, the US is importing less and exporting more.\u00a0 Whether these figures will change as import levels normalize is anyone\u2019s guess, but it clearly shows that the country was not approaching a recession in the first quarter.\u00a0\u00a0<\/p>\n In addition to the trade deficit, last week\u2019s May jobs figures showed a 139,000 increase in non-farm payrolls (which included 22,000 fewer federal government employees), a 4.2% unemployment rate (unchanged), and hourly earnings +3.9% on an annualized basis.\u00a0 Assuming inflation comes in at 2.5% or less (those figures are released\u00a0next week<\/a>), real wage growth should be consistent with pre-COVID levels.\u00a0<\/p>\n State-by-state data shows that economic recovery continues to be inconsistent.\u00a0 The West (California = 5.3% unemployment rate, Nevada = 5.6%, Oregon = 4.7%, Washington = 4.4% and Arizona = 4.1%) is contributing to the economic malaise, while the Southeast and Midwest are performing nicely (Missouri unemployment = 3.9%, Florida = 3.7%, Georgia = 3.6%, Wisconsin and Virginia both at 3.3%).\u00a0<\/p>\n The data indicate a steadily growing economy with a balance of trade-driven peaks and valleys.\u00a0 More people are returning to larger cities for work (see\u00a02024 Census data<\/a>\u00a0released last month).\u00a0 These statistics should benefit Charter and AT&T with five of the top six fastest growing cities (absolute, not percentage) in Charter territory and six of the top seven in AT&T legacy exchanges.\u00a0<\/p>\n The big event next week is Apple\u2019s Worldwide Developer Conference (WWDC 2025).\u00a0 There are many changes planned to the look and feel of iOS, and some speculation that the shape of icons could change from squares to circles.\u00a0 What\u00a0isn\u2019t\u00a0being announced, however, are meaningful improvements to Apple Intelligence.\u00a0 Improvements in language translation are important, as Google showed at their I\/O conference.\u00a0 Apple needs a differentiator \u2013 quickly.\u00a0 More here in\u00a0this excellent piece<\/a>\u00a0by Mark Gurman at Bloomberg.\u00a0<\/p>\n Fresh on the heels of the closing of their Lumos transaction in April (through a venture with EQT), T-Mobile announced refreshed broadband pricing (see nearby chart).\u00a0 Two interesting notes \u2013 1) customers either receive a free speed bump or a $15\/ mo. discount when they subscribe to T-Mobile wireless service, and 2) there is a Founders Club plan which does\u00a0not\u00a0require T-Mobile voice but includes 2 Gbps with a 10-year price lock for $70\/ mo.\u00a0<\/p>\n Interestingly, T-Mobile does not include the pricing for T-Mobile\u2019s fixed wireless service in the same territory ($50\/mo. standalone, or $35\/mo. with a T-Mobile wireless plan).\u00a0 Given T-Mobile\u2019s planned cell site improvements in the Lumos operating area, it will be interesting to see how their overall pricing structure evolves (we assume, for example, that a customer who walks into a T-Mobile retail store in a Lumos fiber area could still purchase 5G Home Internet if available).\u00a0<\/p>\n If T-Mobile were to adopt the Lumos fiber price schedule for Metronet (transaction predicted to close this month or next), new customers would actually pay $30-35 more per month than currently shown on the Metronet home page on a comparable package.\u00a0 Here is an example of promotional pricing for Metronet in Lexington, KY:\u00a0<\/p>\n Based on this fairly large disparity (driven in large part by density and competition), we think it\u2019s most likely that T-Mobile will have different pricing for Metronet territories.\u00a0 The fiber offering will allow, however, the opportunity for T-Mobile to enhance the overall entertainment experience (e.g., including 4K Netflix for customers with T-Mobile Fiber Internet and wireless service).\u00a0\u00a0\u00a0<\/p>\n T-Mobile has additional bundling options for 55+, first responders, and military that we should see in the next year.\u00a0 Our expectation is that Founders Plan pricing will cease once certain market penetration figures are achieved and that the company will focus on bundled content offers featuring Netflix, Hulu and MLB.\u00a0 We also speculated on a\u00a0LinkedIn post<\/a>\u00a0that T-Mobile could take the bolder move of including a \u201cpro\u201d level AI engine (e.g., Gemini) in a future pricing or Founders plan.<\/p>\n Most of our time in the next\u00a0Brief\u00a0will be spent examining \u201cchinks in the armor\u201d for each of the Telco Top Five.\u00a0 However, in advance of this analysis, there are a few quotes that we believe are worth exploring.\u00a0<\/p>\n Quote #1 \u2013 Verizon:<\/strong>\u00a0\u201cCable port ratios have peaked.\u201d<\/strong>\u00a0 Here is the specific quote and context from Frank Boulben of Verizon at the TD Cowen Technology, Media & Telecom Conference (full transcript\u00a0here<\/a>):<\/p>\n \u201cIf I look at it with my retail hat, year on year, we see our port ratio with the cable companies improving. So I think they\u2019ve peaked, and now they\u2019re probably, even if they don\u2019t disclose it, starting to incur some churn. That\u2019s how we can explain the port ratio is starting to improve.\u201d<\/p>\n We find this quote particularly interesting, as it clearly implies that the port-in volumes from cable are increasing (our interpretation of Frank\u2019s comment is that port-out ratios\u00a0to\u00a0cable are flat, but port-in ratios\u00a0from\u00a0cable are improving).\u00a0 Frank also goes on later in his presentation to announce that Verizon 5G Home is mainly taking share from cable because their NPS scores are so low.\u00a0\u00a0<\/p>\n We think that cable has several more levers to pull, and that value-focused customers (particularly families) still like the predictability of the cable price point (which has been at $30\/mo. with taxes included for several years at Spectrum).\u00a0 Said differently, it\u2019s unlikely that the MVNO wireless experience is driving cable back to Verizon \u2013 it\u2019s likely the breaking apart of the cable bundle (e.g., a decision to move to streaming video or recently increased broadband prices).\u00a0<\/p>\n Overall, we found Frank\u2019s upbeat presentation to be\u00a0too\u00a0rosy \u2013 if true, however, Big red will have a big 2Q beat.\u00a0<\/p>\n Quote #2 \u2013 Comcast: \u201cA real \u2018What Just Happened?\u2019 moment.\u201d\u00a0<\/strong>Jason Armstrong, Comcast\u2019s CFO, was a terrific guest at May\u2019s MoffettNathanson Media, Internet and Communications Conference.\u00a0 The entire transcript is a must read for anyone wanting to understand Comcast\u2019s current and projected state.\u00a0 The quote below, while lengthy, can best be described as \u201cwhen the rubber meets the road\u201d:<\/p>\n \u201cI think our hand in convergence is incredibly strong\u2026. we\u2019ve been largest broadband company for a long period of time. We have really happy customers. But we\u2019ve seen \u2014 we just came off a quarter where we lost 199,000 broadband subscribers. And so that is a real what just happened a moment. There\u2019s a real sense of urgency across the company. And as we look at, okay, why did this happen, I mean, the obvious answer is there\u2019s just more competition in the market, right? There\u2019s three fixed wireless companies. That\u2019s not slowing, nor will it slow anytime soon, in my opinion. And there\u2019s fiber competition that continues to creep into the footprint, it\u2019s sort of 3%, 4%, 5% per year. That\u2019s been true for a long period of time, but it\u2019s just \u2014 it\u2019s not slowing. So the competitive aspects are there. But then if you really say what are they poking on? Why would someone leave us for either fixed wireless maybe at the lower end or fiber at the higher end, really interesting sort of what comes back. Because what comes back is not I\u2019m leaving you for network, that\u2019s not \u2014 actually not how the consumer thinks of it. They\u2019re not thinking fiber versus coax, that\u2019s not how a consumer thinks about that. They think about speed, reliability, pricing transparency. It\u2019s how you would think about it. It\u2019s how I think about it.\u201d<\/p>\n The reality of being a residential broadband\u00a0service\u00a0provider seems to be sinking in at Comcast.\u00a0 How the executive team thinks about current fiber providers needs to change.\u00a0 Yesterday\u2019s cash-strapped, triple-play wanna bees are quickly being replaced by 1) a combination of consistent, value-focused single-play providers and 2) AT&T.\u00a0 That Comcast would treat the Texas threat of AT&T like they treated the threat of Grande Fiber decades ago is comical.\u00a0 It is very interesting that Comcast is coming to the conclusion that new\u00a0technologies\u00a0are not the threat, but new value\u00a0propositions.\u00a0 Couple that with the fact that a Metronet or AT&T are delivering exceptional service (see the recent ACSI for fiber vs. non-fiber providers here) which reduces the likelihood that customers will return to Comcast, especially when they move, and the growth equation begins to be more limited.\u00a0<\/p>\n We have maintained that the metric each analyst should ask is \u201cWhat percentage of your broadband gross adds resulted from customers returning to Comcast (or Charter)?\u201d\u00a0 The answer will be sobering, especially beyond the value-focused segment.\u00a0 We applaud Jason for saying the quiet parts out loud (particularly \u201csense of urgency\u201d), but the hard work of building a wireless moat will take years of continuous commitment to build.\u00a0 Spectrum\u2019s moat is larger and deeper, and Comcast would do well to mimic and surpass their MVNO partner if they want to regain the $50 billion of market capitalization they have lost in the last 18 months.\u00a0<\/p>\n Friday\u2019s BEAD Restructuring Policy Notice delivered what many of the Fiber Connect participants expected \u2013 additional delays.\u00a0 The administration\u2019s hoped for end of year awards (a year late) will likely be mid-2026 thanks to inevitable court challenges.\u00a0 Unserved and underserved customers in rural America are the losers in the end.\u00a0<\/p>\n Here are the realities:<\/p>\n 3. When additional program awards were issued (e.g., the October 2023 Enhanced ACAM additional $18 billion in funding from the FCC\u00a0here<\/a>), the\u00a0amount allocated to each state did not change (and should have).\u00a0\u00a0\u00a0Nearby is the Missouri Broadband map \u2013 the chartreuse green represents the areas that were underserved but now will be met by E-ACAM funding.\u00a0 By the time the funding levels were announced, the BEAD levels had already been established.\u00a0 The NTIA left hand did not know (or care) what the FCC right hand (E-ACAM) was doing.\u00a0\u00a0\u00a0<\/p>\n We fail to understand why a Republican administration seeks to control the vast majority of broadband decisions at the federal level.\u00a0 Yet the BEAD funding levels, especially with E-ACAM, were extremely rich, causing states to seek out ways to spend budgets.\u00a0 Those who waited will win, yet tens of thousands will wait for affordable broadband due to subpar cellular coverage (eliminating fixed wireless as an option) and recertification timelines.\u00a0<\/p>\n Consistently available broadband is a critical part of restoring opportunities in rural America.\u00a0 Follow the roads and bridges model \u2013 keep decisions local \u2013 and the mission will be accomplished on time and on budget.\u00a0\u00a0\u00a0<\/p>\n That\u2019s it for this week.\u00a0 Additional second quarter insights will be the topic of the next\u00a0Brief.\u00a0 Until then, if you have friends who would like to be on the email distribution, please have them sign up directly through the\u00a0website<\/a>.<\/p>\n Finally \u2013\u00a0Go Royals<\/a>\u00a0and\u00a0Sporting KC<\/a>!<\/p>\n Important disclosure:\u00a0The opinions expressed in\u00a0<\/em>The Sunday Brief<\/em>\u00a0are those of Jim Patterson and Patterson Advisory Group, LLC, and do not reflect those of CellSite Solutions, LLC, or Fort Point Capital.<\/em>\u00a0<\/p>\n Greetings from Nashville, Cedar Rapids, and Kansas City.\u00a0 It has been a whirlwind of activity since Memorial Day, and the summer promises to be filled with even more headlines.\u00a0 The opening picture is of our first (and definitely not the last)\u00a0Sunday Brief\u00a0Fiber Connect get together.\u00a0 Ten of us gathered for an active discussion on the […]<\/p>\n","protected":false},"author":1,"featured_media":283734,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12020],"tags":[2748,1781,19479,5080],"dealstore":[],"offerexpiration":[],"class_list":["post-283733","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-5g-technology","tag-bead","tag-delay","tag-disappointing","tag-sunday"],"yoast_head":"\nThe fortnight that was<\/h2>\n
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2Q earnings preview (Part 1)<\/h2>\n
Another disappointing BEAD delay<\/h2>\n
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