Memorial Day greetings to all. We are deeply grateful for those who have sacrificed to deliver and maintain the marvelous freedoms we enjoy.
As we have done with other holiday weekends, this week’s Brief is a mix of commentary and analysis. We will focus our attention on three recent long-form videos that we think will shape the future of the telecommunications and technology industries.
The Fortnight That Was
Over the last two weeks, the Fab Five marked time (-$28 billion), while the Telco Top Five are as flat as a pancake (+$1 billion). Expectations continue to grow for Apple (re: WWDC starts in two weeks) and Verizon (+19% YTD). As we noted last week, the difference in market capitalization is a mere $5 billion between Verizon and T-Mobile.
The big news in telecom this week was the joint venture formed by AT&T, Verizon, and T-Mobile to eliminate dead zones across the United States through the development of satellite-based connectivity standard services (full article here). It’s rare to have a joint announcement from three of the world’s largest telecommunications providers. We interpreted the announcement as a shot across the bow to both Amazon (Kupier) and SpaceX (Starlink).
We find it interesting that this announcement comes in the middle of the SpaceX IPO process (latest news here). As long-time friend of the Brief Roger Entner noted (LinkedIn post here):
“The wireless industry learned from the electric vehicle market. Tesla established the charging standard because they built the largest installed base. This joint venture prevents Starlink from dictating the connectivity layer for mobile networks.”
We think that AT&T and Verizon will come to terms on a standard interconnection/ handoff that will enable terrestrial-to-satellite connectivity. Not sure where T-Mobile will come out after all of the negotiations are complete due to their relationship with SpaceX/ Starlink. Meanwhile, Charlie Ergen at Dish sits back and smiles (nearly all of Dish’s current equity market value is ascribed to their 2-3% ownership of SpaceX).
Separately, we wanted to call attention to the latest Atlanta Fed estimates for 2Q real GDP growth. Nearby is their latest chart (full news release is here). As we noted in previous interim and full Briefs, the growth estimates may not reflect the full impact of energy exports that have been occurring since late March. That would add an additional 0.2-0.3% to these figures.
Energy prices are very high, and the longer they continue, the greater opportunity for broader inflation. Higher energy rates impact businesses and consumers alike. We are not geopolitically savvy enough to predict the end of the current conflict, but do not think it will end immediately. We do think, however, that there are months prior to any return to operational stability.
Three Worth Watching
We have seen many great interviews over the last quarter, but think that there are three that are worth a deeper look:
- CNBC’s interview with Jeff Bezos (here). Not only does he present a cogent counterargument to many of the Artificial Intelligence naysayers, he also expounds on tax policy (it’s a novel concept and we completely agree with his diagnosis that spending, not tax generation, is the issue). Jeff says a lot about entrepreneurship as well in this interview.
- Nvidia CEO Jensen Huang’s recent interview at the Milken Institute (here). CNBC’s Becky Quick spends 45 minutes leading a conversation on the history of Artificial Intelligence and computing with one of the greatest conversationalists on the topic. Regardless of your depth of knowledge, this is a terrific interview for strategists, marketers and investors.
- Google DeepMind CEO Demis Hassabis’ Y Combinator Interview (here). Gary Tan, co-founder of one of the most important technology incubator firms, speaks with Demis on the future of AI and scientific discovery. We would quickly follow up that interview with his more recent Google IO interview here.
That’s it for this week. We will go back to our standard format on June 7th with our look at fiber to the home. In the meantime, if you have friends who are interested in being notified each time we publish a Brief, please have them sign up at www.sundaybrief.com.
Go Royals and Sporting KC!
Important disclosure: The opinions expressed in The Sunday Brief are those of Jim Patterson and Patterson Advisory Group, LLC, and do not reflect those of CellSite Solutions, LLC, or Fort Point Capital.
