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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Telcom Fund and the Internet of Things

HP Enteprise (HPE) article on the trends in Telecom. I like FSTCX and PRMTX to own exposure to these trends.

The six major disruptions that will drive the most change in Telecommunications by 2020 are:

Integration
Thingification
Mobility
Saturation
Security
Ascension

Let's visit each of these in turn, and take a look at the world of Telecommunications five years into the future.
https://hpematter.com/issue-no-4-spring-2015/content-barons-smart-dust-skynet-6-telecommunications-disruptions-2020

Comments

  • Personally, I think the logistics of data is a compelling theme going forward, including data centers (Equinix being a compelling one), cell towers (Crown Castle, American Tower), "last mile broadband" (Comcast, Liberty Global, Google w/Fiber, etc) and more are compelling sectors. With increased demand for data and IOT, there will only be increased demand on communications infrastructure across the board.
  • I had to go to the article just so I could learn what 'Thingification" was. I believe that Security will remain a big player.
  • edited December 2015
    @scott- With respect to entities like American Tower, there are some "yes, buts". I'm speaking here from my experiences as a retired radio technician. It's important to understand the differences between "high level" and "low level" towers: the "level" indicates the altitude with respect to the surrounding terrain, and of course in that context high and low has the obvious meaning.

    American Tower owned a number of the high-level transmission towers (and associated radio equipment facilities) that San Francisco uses for Public Safety communications, and I did acquire a bit of information regarding those sites. High-level sites are typically located on mountaintops and on very tall buildings, and are used for two purposes: broadcast (think AM or FM broadcast radio and TV), and microwave relay for almost any sort of communication you can imagine. The height advantage, combined with high-powered transmitters, allow broadcasts from these sites to cover a large geographical area. The microwave is very narrow point-to-point, typically between tower locations.

    While it's certainly true that cellular and data communications are proliferating like crazy, virtually all of that expansion is located at low-level sites. There are several reasons for this. First, the frequencies available for this type of RF communication are limited- there is a much greater demand for radio-frequency (RF) channels than there is available radio spectrum. Second, this type of radio use does NOT benefit from either a high-level site nor from high-powered transmission.

    The two issues are related: to maximize the usage of the limited RF spectrum, low powered transmission is used from low-level sites- the opposite of radio broadcasting. Because the sites are low-powered and low-level, they cover a tightly defined small geographical area, commonly called a "cell". This allows maximal reuse of the RF spectrum, as the same frequencies can be reused in nearby cells. Which brings us back to American Tower.

    The small cell size means that the transmission sites for this type of equipment can be located on low-level buildings, and even on what we would think of as "tall telephone poles". Church steeples are a favorite choice. Look around as you travel, and you will see huge numbers of these installations, characterized by clusters of special antennas that sort of resemble thick police shields. Those transmission sites are typically leased from the owners of the individual properties, and not a large entity such as American Tower.

    From what I've heard American Tower is doing OK lately, which is a definite change from some years ago. But be aware of what their limitations are with respect to cellular voice and data transmission.

  • Old_Joe said:

    @scott- With respect to entities like American Tower, there are some "yes, buts". I'm speaking here from my experiences as a retired radio technician. It's important to understand the differences between "high level" and "low level" towers: the "level" indicates the altitude with respect to the surrounding terrain, and of course in that context high and low has the obvious meaning.

    Fantastic post, and really useful. Thanks for the information. I don't own AMT, but I do own Crown Castle, which has ramped up its small cell projects (http://www.crowncastle.com/projects/communities_central-park.aspx, http://www.crowncastle.com/communities/small-cell-solutions.aspx) and has 15,000+ miles of fiber in major cities. Thanks again for your post, really informative and gives me a lot to think about in terms of how to look at this sector further.

  • @ Old_Joe said; "Those transmission sites are typically leased from the owners of the individual properties."

    New England is full of abandon "smoking guns" (factory smoke stacks) and I recently noticed more and more are serving as an attachment point for cell transmission. Nice stream of income if you own one worthy of consideration as a cell tower.
  • image
    Typical antenna array of low-level cell-site

    These antennas are driven by low power transmitters typically located in a small shed-enclosure near the antenna pole- note the black cables leading from the antenna array. Sometimes these antenna sites accommodate equipment from competing carriers. Installations such as this are typically interconnected to the internet or a central communication facility by either microwave radio or fiber cable.

    image
    An alternative inconspicuous antenna of a very low-level cell-site (from scott's Crown Castle links, above)

    Antennas such as this are driven by very low power transmitters: note the small enclosure located on the light pole. This installation is interconnected to the internet or a central communication facility by fiber cable.
  • Sorry, but I stopped "Readification" at "Thingification" once I realized we were not joking.
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