Christmas Episode - A Spirited Discussion on Wireless Industry Economics with Peter Adderton and Ronan Dunne

Full Transcript

Don Kellogg 0m10s

Hello, welcome to the Christmas 2025 episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me as always is Roger Etner. Roger, Merry Christmas.

Roger Entner 0m24s

Merry Christmas. I'm excited.

Don Kellogg 0m27s

Yeah. So we've got a great episode today. We're changing up the format a little bit, and we have two of the leading voices in wireless to have a discussion with us. Peter Adderton is the original founder of Boost Mobile, Amp Mobile, Digital Turbine, now Mobile X, which is a Verizon MVNO. Peter, welcome to the podcast.

Guest Speaker 0m44s

Thank you, gentlemen, for having me.

Don Kellogg 0m46s

And we also have Ronan Dunn. Ronan is chairman of the board for Six Nations Rugby. Prior to that, he was the CEO of the consumer group at Verizon. And prior to that, he was the CEO of o two in Britain and happens to be the longest serving CEO in British telecom history. Ronan, welcome to the podcast.

Guest Speaker 1m1s

Thank you, Don and Roger, for the invitation.

Roger Entner 1m4s

Thank you.

Don Kellogg 1m4s

Absolutely. So, Roger, I think the idea for this started based on a conversation the three of you guys had on X. Do you wanna give us the background there?

Roger Entner 1m13s

Yeah. Sure. So the conversation started when we looked at how MVNOs and the brands of the host carriers are competing with each other. Peter, being his outspoken self, has his opinion on how they are competing against them and how are they making their life difficult. Ronan joined the conversation because he's the executive who set a lot of this up.

Roger Entner 1m40s

He's also the father of Visible here and launched this, or it got launched under his leadership. And so we said like, you know, why do we restrict ourselves to 140 characters or whatever it is on Twitter now? And why don't we have a really good conversation, you know, on on the podcast? And I'm delighted that all of you are here, and, you know, we can have that conversation.

Guest Speaker 2m3s

Well, again, thanks, Roger. I was gonna jump in because I think I started the the debate. And, again, Ronan, respectfully, he and I had a really good, I think, debate. And my point was more that, you know, I've obviously been in the MVNO business for a long, long time, started Boost in 02/2001. And when you go back and you look at the MVNO space back then, it was basically us going after customers that the big carriers didn't want.

Guest Speaker 2m27s

There was 49% market penetration, which means 51% of customers didn't have devices. So the big carriers were not that focused on the prepaid market. In fact, it was like you had leprosy that was trying to chase the postpaid customer. And, you know, there was a very big market for MVNOs. And my point was you fast forward to where we are today.

Guest Speaker 2m45s

Growth has stalled. Carriers are now trying to get every penny they can under the couch. They're now basically going after MVNOs customers. They're very customers. And so my point was that 95% of the MVNOs today are not no longer needed by the MNOs.

Guest Speaker 2m58s

And then this is kind of like a vanity project for the MNOs when they're talking to FCC and the DOJ. Their brands today are attacking MVNOs. I know that for a fact, Right? I mean, I you just look what happened on Black Friday. I actually promoted the fact that you come and get a number for us and go get one of these incredible deals that Visible and some of these other brands we're offering.

Guest Speaker 3m17s

You look at Mint Mobile. Right? Mint Mobile has got offers in the market today that when they were an independent MVNO, they were never getting. I look at what happened when I saw Boost in Australia. Telstra's just now giving Boost Australia deals that I were begged for that I never got.

Guest Speaker 3m30s

And so my point was more around the fact that the MNOs are undercutting their MVNOs. They aren't helping them. Right? And I think that that's the bottom line. And and as I said, that's fine.

Guest Speaker 3m42s

If you're gonna be in the wholesale business and set your wholesalers up to be successful, but don't set them up to be organ donors for your brands. Because at the end of the day, we'll never be able to spend what they can spend on their value brands, both at retail and will never be able to offer the deals that they offer. And they are killing the MVNOs. And if you look at it, the market you know, I think when I was in that, we had 25% market share. It's down to that 2% if you take out the cable guys.

Guest Speaker 4m6s

The cable guys basically give away free lines anyways. They don't really count. And so my point was the industry has changed. The landscape has changed. And to think that the MVNO still have the same role is, in my opinion, wrong because they don't.

Guest Speaker 4m19s

You can't change a landscape in an industry and one little sliver of it doesn't change. And so that was really the point that I was trying to push and trying to get regulators to say, listen, MVNOs will die and dry out, which is fine if that's what you want. You're going to need to put protections in place similar to what they have in Europe and some of the other markets. So I think that's what's kind of started the debate. I think, you know, Ronan had some good points.

Guest Speaker 4m39s

I guess I'll throw it back to him now to

Guest Speaker 4m41s

thank you, Peter. And look, in a way, it's not necessarily that I disagree with any of the substantive points in there, but I think there's a context set that's really important. Now when I arrived in The United States, basically, Verizon didn't have a wholesale strategy, Plain and simple. Okay? They also didn't have a value segment and prepaid strategy other than a relationship with TracPhone and sales through predominantly the Walmart channel.

Guest Speaker 5m7s

And in Europe, the model is much more sophisticated and there's always been a sell to sell through model. And therefore, people have always seen network as a platform as part of the overarching strategy and therefore active wholesale models. But also, as we think about five gs, things like with standalone five gs, private networks, other things like that. So there's always been a broader approach in the European market. So when I arrived, we had on the shelf the Comcast and Charter deals that had been done as a regulatory remedy for trades and spectrum some while past, but no real expectation of activating them.

Guest Speaker 5m43s

Then Comcast and Charter said they would. My reaction, which was truthfully inconsistent with perhaps the house reaction was, Yeah, let's build this out. Let's create that platform. Our network is kept below accessing segments that won't necessarily be the primary segments that the Verizon brand attracts. So the point I'm trying to make here in introducing this is this is a segmentation strategy for the marketplace.

Guest Speaker 6m9s

And the segmentation strategy should recognize that if there is genuine brand differentiation and proposition differentiation, not just pricing, then the truth is the market will segment and there will be space for MVNOs and there will be space for MNOs, but there will also be space for sub brands of the MNOs. The point that Peter makes, which I think is an entirely valid one, is we have to make sure that the underlying economic model, if the regulator is solving it, that's market failure as far as I'm concerned, plain and simple. So the underlying model has to allow MVNOs to exist and for them to thrive. But pricing and network access pricing is not the only thing. In Europe, have the idea of capacity models where people actually are entitled to a share of the capacity on the network.

Guest Speaker 6m55s

I did a joint venture with Tesco, one of the biggest retail distributors in The UK. And we didn't charge for the network and we didn't charge for the retail space and the people in the retail stores that sold those services. In that way, we created a fundamentally different model where we both contributed what was our core capability into a business. And as a result, the focus of that joint venture and that MVNO was delivering value add to the dedicated customers of Tesco's. And it was very successful and continues to be.

Guest Speaker 7m26s

So I think the framing, and then we can get into some of the specifics, is this is about choice for consumers based on real identifiable segmentation that is greater than just simply pricing and is actually about delivering to customers what they truly value.

Roger Entner 7m42s

Yeah. Ronan, I think a little bit more nuance and going deeper into the points would be very helpful. Even after you left, Verizon didn't have a value strategy. Right? Verizon prepaid has always been an afterthought, and the wholesale strategy is a complete the person who runs retail and the person who runs wholesale have traditionally not talked to each other for whatever reason.

Roger Entner 8m6s

I remember when I was still at Nielsen, so that was like prior to 2011. I was giving a presentation to Jack Plating, who you remember probably very well. He was then COO and Scott Laman, and I was talking about how straight talk was eating eating your your lower end lunch. And Jack and Mike were like, who are these guys? And I'm like, they're an MVNO on your network.

Roger Entner 8m35s

And they're like, what? Really? Yeah. And I'm like, yeah. They put a little red map on it and said, like, powered by Verizon.

Roger Entner 8m43s

Like, who did that? Well, it was John Stratton. And so apparently, as I as I found out, like, three months later, Jack, in full whim and bigger, ran over to John in his office and gave him his gave him his opinion. And then somehow the label disappeared, and FJ Polak, who at that time, you know, god bless him, was running track phone, told me the story partially afterwards of how he heard them back. Right?

Roger Entner 9m12s

So a lot of it is how carriers are actually pricing this, and I look at it a little bit for both the value segment and for MVNOs. It's a fallow capacity model, just like FWA. And now and then, you know, the MVNO is the one that gets run over.

Guest Speaker 9m30s

I think, Roger, your point is that there was always a church and state between wholesale and retail. That has changed now. The guys who run wholesale

Roger Entner 9m39s

I'm not sure it has changed.

Guest Speaker 9m40s

No. No. It has changed. Because the guys who run wholesale also run retail.

Roger Entner 9m43s

No. I know who you negotiate with at Verizon, and he he does not run value.

Guest Speaker 9m49s

Strategy reports into both retail and wholesale. And and by the way, it's across

Roger Entner 9m54s

I know the reporting structure.

Guest Speaker 9m55s

I've done this a thousand times, whether it's Telstra. I'm telling you that retail and wholesale, this concept of they don't work together. At the end of the day, for a carrier, retail is critical. It is the ownership of the customer. It is the value play that they play.

Guest Speaker 10m10s

And and my point is that before, when wholesale was basically in when Verizon didn't have the 18,000 brands they bought off track phone, they were happy to let their MVNOs go attack that marketplace. And, actually, I think that that was a smart move because at the end of day, the EBITDA margins on an MVNO model is way better for a carrier. I mean, I would hate to see the P and L margin that matters. I know, but I would hate to see the P and L

Roger Entner 10m33s

that matters. Right.

Guest Speaker 10m34s

But what I'm saying is, Roger, I couldn't run the P and L of Total or Visible or Mint today without the owner economics that a carrier has today. Classic example. There's 45,000,000 Americans who like these unlimited plans. You use 30 gig or more. We can't play in that space.

Guest Speaker 10m48s

We're not allowed to play in that space. We don't have pricing to play in that space. I complain every single day. You can ask the team at, uh, at Verizon that we want better pricing to be. We don't want to be the best pricing.

Guest Speaker 10m58s

We want to just be able to compete. And it's like, well, we don't do that, right? We don't offer that. And I'm like, well, that's just not fair because then I see a visible ad on Black Friday saying, pour it in for $16, unlimited, no caps, no throttling, and we'll give you QCI eight. We cannot compete with that.

Guest Speaker 11m14s

We just can't compete.

Roger Entner 11m16s

And then you hate it because you see somebody else in the market who is on a different carrier who can do, like, ridiculously good plans because they get enabled by these guys to do what they don't let you do.

Guest Speaker 11m28s

Exactly. Because everyone has their own difference. You know, I I remember that when Mint was independent, if T Mobile needed numbers, they just give Mint a deal and Mint would be able to push that deal out the door. The problem we have today is that the carriers have gone into the space, which was always kind of like where the MVNOs play. And my point is I get up every morning, invest millions of dollars into this MVNO to be only and I watch our port outs.

Guest Speaker 11m53s

Right? I see the amount of people. I actually commented on one the other day where a guy came in, grabbed the mobile x number, and poured it out because all the promotions that visible and total are doing and Mint are poured ins, read the number from us, and then poured it in back into Visible. We're organ donors for the MNOs, which is fine, but you gotta let us be successful. And the way to do that is to empower your wholesale people to say, retail, listen.

Guest Speaker 12m17s

If you're gonna offer those deals, I'm gonna go in and I'm gonna fight for my wholesale customers, and I'm gonna give them the same deal. They don't do that, Roger. They do not do that. They say, oh, that's what retail does. We can't argue for this.

Guest Speaker 12m30s

Peter and Roger, both of you are inferring that there is no differentiation and segmentation other than pricing left in the marketplace. And I'm happy to have that debate because there are some markets in the world where that may indeed be.

Roger Entner 12m45s

No, you're absolutely right. There is differentiation.

Guest Speaker 12m47s

But honestly, I still see consistent high quality differentiation in most of the markets I observe. When we built Visible originally, and again, to be transparent, Visible is what GifGafe is in The UK, which I built when I was the CEO of O2. Visible is to Verizon what GiftCaf is to O2. GiftCaf is a thriving, wholly owned MVNO, but it competes in the marketplace, not predominantly with its parent, but with others who are scrapping in that market for targeted differentiated where loyalty is rewarded, etc, etc. So I think the question here is, there's a lack of real choice in the marketplace in The United States, if everybody's just down to price and nothing else, the value of membership, the value of loyalty, other things like that.

Guest Speaker 13m38s

The logic of a Straight Talk twenty years ago was plain and simple. The cost of acquisition and the cost of retention as run through that particular channel was significantly lower to be served by an MVNO called Straight Talk than it was for Verizon to do it on its high cost base and its very standardized national offerings. In those circumstances, the contribution that Straight Talk made at a wholesale rate actually was a good return for Verizon and it was a good deal for the channel. But I think Peter, you're rightly saying is the squeeze now is that a lot of people are just clustering on a cost versus pricing model, which is squeezing out that sort of channel differentiation, added value to loyal customers of a Walmart channel or whatever the example might be. And I think that's fair, but I don't think it's good for the industry, not just MVNO versus MNO, but just don't think it's good for the industry if consumers have no genuine choice.

Guest Speaker 14m30s

I agree. And I look at this site and I say this to our customers all the time. You can pay $24.88 for a 30 gig cap plan on mobile X or you can pay $16 for an unlimited visible or total by Verizon plan. I mean, the price does matter. Like, if I'm sitting back there going, you know, I can get a $16, $18 unlimited twelve month plan on Verizon on their best network uncapped, or I go to MobileX, which is $24.88 with a 30 gig, then no one's coming to us.

Guest Speaker 14m59s

Right? And all I'm saying is

Roger Entner 15m1s

But, Peter, you're going back to exactly what Ronan said, pure price competition.

Guest Speaker 15m6s

Roger, let's be honest. 70,000,000 Americans

Roger Entner 15m8s

Ronan is absolutely right. The answer is differentiation. In all fair disclosure, I'm advising an upcoming MVNO that is completely going at it a different way, offering a differentiation that I don't think anybody else can offer. And Peter, you have a fantastic product with your AI optimization that nobody else can do, but you need to focus that awesome offer on the right people. You need to focus it on somebody like me.

Roger Entner 15m39s

I'm not using that much data.

Guest Speaker 15m41s

I wanna be frank, Roger. You know me. I wanna be frank. At everybody on this phone call, the only person who's put millions of dollars of their own money in an MVNO is me. I'm the only one who's done it.

Guest Speaker 15m50s

And I'm telling you. Right? And I do this every single day. I get up every single day and work with our team to deliver. I agree with you.

Guest Speaker 15m56s

What we've got is differentiation, app focused, AI driven. The problem is when I use the AI to recommend a customer hey, by the way, these are the mid to low price plans. I can save you 80% of your bill, which is what we do. When my AI tells me I need to put that customer on somebody who's using more than 30 gigabytes, I have to pass them off to somebody else. All I'm saying is just make it fair.

Guest Speaker 16m18s

Right? Give everybody the same pricing and let them go out there and fight in the marketplace. But to think for a second that consumers aren't choosing because of price and price is their main reason. 70,000,000 Americans, as you know, Roger, they change their plans, especially in the prepaid space every year. Price is the number one reason they change.

Guest Speaker 16m34s

Network is second. It's not differentiation. It's not a coupon. It's not getting someone to play a concert for you. People don't care about that.

Guest Speaker 16m43s

Right? When you're living in America and you're in the prepaid space, you're in the low income cash preferred, you're trying to survive. And if you can save $510 on a plan, you will.

Roger Entner 16m54s

Well, I can now put data at you because we now survey, what, seven and a half thousand people every single week in wireless. And we asked them, you know, why are leaving? Why are you choosing? And we asked them to rank it. What's really, really interesting is when you ask everybody, price is the number one reason for 37 percent of the people.

Roger Entner 17m17s

When you ask people who are planning to leave in the next three months, that actually goes down to like 24% because somebody pissed them off and they want out and price becomes less important to them. So, price is very important. No kidding. Right? But there's more to it.

Don Kellogg 17m38s

To add to that, mean, some of the most highest scoring providers that we have, you know, consumer cellular. Right? Definitely a niche play. Right? But geared towards older subscribers, onshore customer support.

Don Kellogg 17m49s

Right? Like, good deals, not focused on data usage. Right?

Roger Entner 17m53s

Yeah. Also, not growing.

Don Kellogg 17m55s

I think there's more opportunity for segmentation there. I think the net of you know, if you're targeting optimizers, they're gonna optimize on price.

Guest Speaker 18m3s

Don, just to be clear on consumer cellular, they go after a very segmented market. Right? The older people who don't complain as much, who don't switch as much. If they actually went into the market, the main prepaid market, they would have the exact same response that most MVNOs would have or MNOs. Right, which is people are switching, people are unhappy.

Guest Speaker 18m22s

So it's a very different if you brought them down into the world of a truly nationwide MVNO targeting everybody, they're not gonna have the same metrics and the same NPS scores that they have today. Simply not gonna happen.

Roger Entner 18m32s

Well, but maybe they would be growing.

Guest Speaker 18m33s

No. No. Older people don't complain as much when it comes to their wireless service as people who are trying to move themselves around and get better value. It's just a fact.

Guest Speaker 18m41s

Guys, let's put two elephants squarely on the table here. First thing is, Peter, I acknowledge that you're the person who's putting millions in. When I ran Verizon Wireless and Consumer, in a five year period, I invested $150,000,000,000 So let's be clear, MNOs put capital in, MVNOs put customer acquisition costs in. So let's not forget that. Second thing is, if every single customer that allegedly is being stolen by Visible at sixteen bucks or whatever else is, If the reality is that Verizon reprices its book to $16 the reason why there won't be MVNO is because there won't be any network at Verizon because where does the $150,000,000,000 every five years come from?

Guest Speaker 19m28s

It doesn't come from anywhere if the pricing at 16. So the thing that we haven't called out, and let's be really transparent about it, is there is no scenario in which Verizon's back book, AT&T's back book gets repriced to the pricing that is current offer proposition that's in the marketplace. So we're not talking about the fact that MVNOs can't compete. We're talking about the fact that we have a competitive landscape where Verizon has bled customers for a period of time and as a result, it's using some momentum in the value segment, which it's underrepresented in, to try and grow some base. But it's not looking at putting the 90 odd million consumers who pay the normal Verizon price.

Guest Speaker 20m12s

And let's be honest, those prices have gone up every year for the last three years, making it easier for other people to compete. So let's make sure that we don't think the whole market is one scenario. We have a piece of the market that's hot and it's driven by the competitive reality that one or two of the big MNOs find themselves in. But they still are investing, give or take, dollars 20,000,000,000 a year in capital to deliver capacity that's available, yes to them, but also to their MVNO. So like for like, it's a different story.

Guest Speaker 20m44s

You make a great point. But the one thing I want to point out is that when an MNO takes over MVNO like TracFone, they apply the MNO mentality, as you said, of spending a $150,000,000,000 and let's just make this thing work without actually truly understanding the consequences. Now I watched an ad the other day, a Visible ad, which was basically saying that Visible is a Verizon hack. It's a way to get Verizon's network cheap. I would never have ever thought one that Verizon would ever allow that to be said or they would ever fund a TV ad.

Guest Speaker 21m16s

They have lost the plot. Right? They have absolutely lost the plot. Now the reason is is that every time you have an investor call or an analyst call or every time that there's an earnings call, the first thing that the analysts and investors do and that the carriers do is they wanna let you know how many subscribers they got. This is a business that is driven quarter by quarter by quarter driven on subscriber growth.

Guest Speaker 21m38s

The reason why Verizon's going through is because they've lost subscriber growth. You know, their revenue seems to be okay, and everything on their margins seem to be okay. They seem to be making a lot of money. And so what happens is they're on the the subscriber drip. T Mobile highlights the fact that they've got, you know, 1,500,000 subscribers every time that they get up on the earnings call.

Guest Speaker 21m56s

You know, they didn't matter whether they're free lines or whether they're dog collars. They just wanna let everybody know. Look how many people we connected. And so the carriers are on this drip. It's a drug, and they're now using their value brands to go after it.

Guest Speaker 22m9s

And I'll tell you, I don't think that if I was running Verizon right now, that I would be allowing my value brands to be on television promoting the fact that I'm a Verizon hack. Know, You when MVNIs, we didn't have the money. We don't have the money to go spend hundreds of millions of dollars on television to let people know. They do not know. What they are doing and what they are creating is Verizon is leading a price discount in this marketplace, which I never thought I'd say in the life of me being in this business, they are leading it in the desperate search to get the subscriber acquisition costs up.

Guest Speaker 22m42s

The four for 100, right, which they got $25 a line, you get an iPhone 17, which was just announced. Right? Sam Path was on LinkedIn basically saying, yeah. We don't expect anyone to take it up. We plan to upsell them.

Guest Speaker 22m53s

They are going after a segment. They are lowering the price just like T Mobile did. We're in a spiral, and they're gonna need to stop it. The problem is that the byproduct of the or the effect of that is the MVNOs. That's just the reality.

Guest Speaker 23m7s

I deal with it every single day. When I had an unlimited plan that Verizon gave us special promotion for, we were doing gangbusters. When they stopped their pricing, said, Pete, you don't have it anymore. Our unlimited fell off a cliff. That's just the reality of what happens in the marketplace.

Roger Entner 23m22s

Well, first of all, Hans lost his job because increasing revenue while losing customers is not a sustainable game. Right? That's why Hans got fired. And thank you for pointing out that Visible puts out that ad calling itself Verizon hack so much for the argument that these guys are talking internally to each other. They don't.

Roger Entner 23m44s

Right? That's the sad reality. They all have their own different goals. Each department has their own different goals, and they execute against the goals, against they get incentivized for. And that's not always having people pull at the same rope.

Roger Entner 23m59s

And, yes, are they overreacting right now on pricing horizon? Yes. Absolutely. But it's not business that you don't do

Guest Speaker 24m7s

all that. But you know who's not allowed to overreact? It's the MVNOs, Roger. We're not allowed to overreact cause we're told Yeah.

Roger Entner 24m13s

But here's the thing. They don't care. You're an afterthought, to be honest.

Guest Speaker 24m17s

I agree, Roger. That's my point. I'm an afterthought.

Roger Entner 24m20s

I know you care. I know you care.

Guest Speaker 24m22s

But Peter and and Roger, two things I would say to you is, and I go back to logic, and forgive me, neither Verizon or AT&T nor T Mobile is going to write its business at $16 a line for all its lines. So the good news is MVNOs will survive. Is there a very good debate that says, Peter, you should save your money for a quarter or two while the madness is happening? That's what MVNOs do all the time. They allow the carriers to be crazy for a period of time and they just don't waste money marketing at a period of time when the MNOs are making so much noise that it's impossible to go through.

Guest Speaker 24m55s

So I've seen it before. What I would say, Peter, as you called it, in all of the time I ran O2 and we built GIFCAF, they ran two national advertising campaigns solely to create brand awareness. And they never called out that they were on a particular network. However, they were allowed to be anti the big guys. So they did run campaigns which basically had a pop at the big brother attitude of the MNOs.

Guest Speaker 25m25s

And my only condition to them was if you're going to have a go at us, you have to have a go at all the MNOs. You can't just pick your parent out and have a go. So they had a free rein in that regard. I do think that, and again, I don't want to personalize it here is I had a very clear strategy for TracFone. It took a year to get a straightforward deal cleared, 70 something percent of the traffic was already on my network.

Guest Speaker 25m49s

And I think it's probably fair to say that the strategy that was executed after my departure wasn't necessarily the strategy that I would have executed because my experience was that Verizon didn't have value segment expertise in the business. And I had come from a market where we had had significant experience of operating in the value segment as well as in the higher value postpaid segment. And I would have had a very differentiated strategy for that business. I can't comment on what people are doing now, but it's not the strategy I would have executed.

Roger Entner 26m20s

My running joke is that Verizon can do everything premium, even prepaid premium. Right? And with predictable results. But one of the other things that, like, really, really interesting is we do also fundamental analysis. And when you look at the Bureau of Labor Statistics, you can calculate ARPU by income segment.

Roger Entner 26m41s

And what's absolutely fascinating, going back to like 20, what, 15 or so to the most recent data, which is like 23. And so, yeah, you can shoot me that there's no 24 data. But what's really, really interesting is the income segment under $50,000, their monthly spend went from like $23 to $40. So the industry has been really, really successful in upselling people who don't have money to a better product by moving them from by the minute plans to unlimited plans. At the same time, where it gets, like, really shocking is people making more than $100,000 monthly spent stayed the same at $60 per line.

Roger Entner 27m26s

So the industry has been incredibly successful in moving people at the lower income segments up in pricing and incredibly incompetent getting more money from people who have it in spades.

Guest Speaker 27m39s

But, Roger, that kinda goes against the fact that we're seeing a decline in ARPU and an increase in churn across all three carriers.

Roger Entner 27m45s

No. It doesn't. It doesn't.

Guest Speaker 27m47s

I mean, they they bolt on. Mean, in that ARPU number, you got insurance. You've got a bunch of other things that they bolt into that ARPU number that to me is kinda like, okay. But, Roger, you know, I'll ask you this question. The cable guys, they were struggling.

Guest Speaker 28m1s

Right? That was spending I think I worked it out. It was almost when they first started. It was like $2,000 as subscribers they were paying. And suddenly they started offering free lines.

Guest Speaker 28m9s

Right? And they offered free lines, and then they started to grow their business. And in the second year, people were like, well, hell, it's only $18 or $15.20. I'll just stay on it because people are lazy. Their whole business model is about free lines.

Guest Speaker 28m21s

It's about giving away something for free, right, which I'm not sure it upsets the carriers. It is a price driven business. Now my point is I'm okay with it being a price driven business, and I think ARPUs are gonna fall down significantly. I think if you look over the last twenty years, the price per gigabyte and the overall rate plans from when I started in 2020, the nights and weekends where you were basically getting free nights and weekends, but you were capped on your minutes and messaging to where we are today with unlimited everything. It's coming down, and it's gonna continue to come down.

Guest Speaker 28m51s

To Ronan's point, how do the network sustain that? Well, the craziness that's going on in the marketplace today, Total started a 25 unlimited all you can eat promo in December oh, sorry, October.

Roger Entner 29m4s

Market.

Guest Speaker 29m5s

It was supposed to end at the December. I'm sorry.

Roger Entner 29m8s

Total Total sucks. Okay?

Guest Speaker 29m10s

It does, but it's got a pretty good price, and they're opening up a lot of stores.

Roger Entner 29m14s

Yeah. But it doesn't matter. It doesn't matter.

Guest Speaker 29m17s

Well, it does if you're trying to compete against them, Roger.

Roger Entner 29m19s

Yeah. Yeah. Of course. But I'm looking at the market overall, and then overall, total doesn't matter. You know, it's like a tree fell over in a forest.

Roger Entner 29m28s

Sorry. No disrespect to the people who run Total right now. Do a better job.

Guest Speaker 29m32s

What do you recommend spend a year to not matter, Roger? What do you reckon Verizon spends on Total with opening up 2,000 stores, hundreds of millions of dollars on television, the UFC deal, which is probably close to $8,000,000 a year? They're spending probably a billion plus dollars on not mattering?

Roger Entner 29m47s

Yeah. People make mistakes. There's poor execution left and right. You know? There's a reason why senior like carrier executives are losing their jobs.

Guest Speaker 29m56s

If you were running

Roger Entner 29m56s

Verizon Peter, don't be like my mother who looked at me with big eyes and said like, oh, these senior executives make mistakes. I'm like, yeah. Then they get paid so much. I'm like, doesn't matter. And I wouldn't have a business if they wouldn't make mistakes.

Guest Speaker 30m10s

I know. But let's ask Ronan the question. If you if you're spending a billion dollars on a brand like Total, and Roger's saying it doesn't matter, is there any accountability inside these organizations?

Guest Speaker 30m20s

Peter, I don't pull my punches, but I didn't write the strategy that's being executed at the moment. And it's fair to say I wrote a different strategy. I genuinely am not close to the detail of how much they're spending on promoting that brand. What I would acknowledge without question is the only reason that you invest money in a brand is to demonstrate that that brand has specific appeal in a clearly segmented approach to the marketplace and that what you're investing in confirms the value hypothesis to the customer you're targeting. In those circumstances, if you're doing that, you're doing it effectively.

Guest Speaker 30m56s

Whether that's being associated with the NFL for the principal Verizon brand, whether it's somebody like O2 being on the rugby shirts, there's a reason you should do it. What I'm not going to do is critique whether I think where they're spending their money is right or wrong. But more broadly, what I would say to you is the value proposition is more than simply pricing. And I don't think, and forgive me, Roger, but your comment about the fact that ARPUs are going up at the bottom end and they're flat at the top end is the reason why we have price controls on things like bread. It's a classic economic model.

Guest Speaker 31m29s

Nobody spends more money. You know, ABC ones cap out at a certain level of spend on things like telecoms and other utilities and it never goes up, plain and simple. Whereas people in the lower socioeconomic categories grow as their disposable income capability grows or as they swap out between different categories. And as Peter pointed out, there's a lot of stuff that's in those ARPU numbers now that's got nothing to do with selling minutes, bits, bites on the network. I think where the point is, is I think it's a difficult time for MVNOs at the moment, but I don't think this craziness is sustainable.

Guest Speaker 32m4s

I genuinely don't because there's no way in the world that any of the three big carriers are going to see their book repriced after clearing price for current connections. I think the analyst community, and it's interesting, Roger, I'd love your review is, I never believed that net adds was the most significant KPI of performance for an MVNO CEO. But yet I was told that every single quarter by analysts that if I didn't pay attention to it, I was missing the point. I completely disagree with it as a fundamental KPI. And that's proven by the point of if revenues go up and your customer base goes down, it's unsustainable.

Guest Speaker 32m41s

But if your customer base goes up and your revenues go down, that's equally unsustainable. So I just think we need to have a better narrative also in the investor and analyst community. The industry has lost what? Since I left The US industry, it's lost give or take $250,000,000,000 of market value. And that includes an increase in T Mobile's value, but the rest is the fall in AT&T and Verizon's value at that time.

Guest Speaker 33m7s

That's a big shift that somebody has to be accountable for. And ultimately, I suppose in part, that's why Hans is no longer running Verizon.

Guest Speaker 33m16s

I gotta tell you, Ronan, that to me may have been the most intelligent thing that I've heard on this podcast. What you just summarized is a 100% true, and it won't be sustainable. And the question is, who pulls the break? Is it T Mobile? Is it AT&T, or is it Verizon?

Guest Speaker 33m31s

They're all looking at each other, and I'm not sure who's gonna be the first one to pull that trigger.

Roger Entner 33m36s

So coming back to Ronan, I think what's important, right, when we look in history, why we focused on net ads, why we focused on ARPU, is because this is an industry where it lost billions and billions of dollars in the beginning, and the only thing that was growing was ARPU and net adds. Yes. Is it an antiquated metric? Yes. Nobody asks Kellogg's how many boxes of cereals they sell, right, as a measure of their success.

Roger Entner 34m6s

At the same time, when I look at it, and we're not financial analysts and therefore spreadsheet shop, I look at it as a business, right? And it needs a balanced scorecard. You can't run a sustainable business on fewer customers, but you need a balanced scorecard where you have customer, ideally growth, you increase your profitability, and you keep your churn under control. And doing all three at the same time in the right direction is incredibly hard. Usually, you can only do two out of three.

Guest Speaker 34m40s

But Roger, in the long run, if you have highly satisfied customers, your churn is lower than your peers. The delta in ARPU among MNOs is not a meaningful value differentiator over the long term. It's a bit like, you know, what does share price come from? And I'm not going to do an economics lecture. But honestly, your cost of acquisition, your cost of retention are driven by customer satisfaction primarily and good market segmentation and brand proposition.

Guest Speaker 35m10s

If you get that right, the answer is your churn falls. My churn was less than 0.6% per month when I was running the Verizon Wireless business and the consumer business. And guess what? My cost of acquisition fell as a result. And that had more effect on my business than whether I added an extra 100,000 customers in a quarter or 200,000 customers in a quarter.

Guest Speaker 35m31s

So there are clear metrics out there that make for a long term sustainable. Being customer centric, believe it or not, actually bloody well works. There's a high correlation between satisfied customers and highly sustainable, successful, profitable carriers. We're a subscription business. That's what we are.

Guest Speaker 35m48s

And the sooner people realize that, the better. And what I would say is, and this is not a pop at my former employer's far from it, great brands have ambition on behalf of their customers. People buy into the fact that the brand promise is that in advance of the reality of what they're seeing, but they aspire to being with the brand who has that ambition to go further. At the moment, I see no aspiration in any of the M and O brands on behalf of their customers. Why would you bother?

Roger Entner 36m18s

You're absolutely right. There are people who do this better and who are doing it worse. And after you left, it certainly got worse at Verizon. At this time, the guys who are growing the fastest are the cable guys and T Mobile, and they're doing things right. Cable is doing things right on price.

Roger Entner 36m38s

By the way, I'm about to publish a report that looks at it why and how they can do this. The other one is T Mobile, and T Mobile is doing a better job at this. And they're growing, and I told it to them personally. Was like, you know, don't let your success go to your head. A lot of your success is also based that the other guys are doing a much worse job than you are doing.

Roger Entner 36m59s

It's not like you're doing the least bad job. But I have this running joke with Don that with some of the carriers I go like, and how about I do a project for you? What would happen if you would do the right thing? Literally, I have no takers.

Don Kellogg 37m14s

But, like, T Mobile is growing right now, and they're also raising prices. Right? So, you know, it can't all be just about price. Right?

Roger Entner 37m21s

Yeah. And you're quite doing a good job.

Guest Speaker 37m23s

But, Peter, you and I have built a brand and reputation in this industry by doing the right thing for customers. I can't believe that it's credible to say that that's no longer a core element of strategy, and I'm just not seeing it being adopted by people.

Guest Speaker 37m40s

You're a 100% right. I get up every day, and I've started Mobile X and I started Boost to serve the underserved. Right? I am a consumer champion. If you knew how much I put in and how little I take out, you would understand that that's what I care about.

Guest Speaker 37m53s

But what I do care about is when I hear customers say, hey, Peter. I love the brand. I love what you're doing. But, man, if you could just get us a plan that allowed us the unlimited, that visible, and that total, and that Mint has, we'd be with you in a second because your customer care cares. You care.

Guest Speaker 38m7s

You're on x. You're talking to us. I do customer care calls at 09:00 at night on a Saturday at dinner trying to fix people's services up. No other CEO even bothers to respond. Right?

Guest Speaker 38m18s

So I generally care about it. But when your hands are tied behind your back and you can't offer what they want and give them the price. And I agree. If it came down to everybody had the same price and let's face it, everybody's got the same network. Everybody has the same price.

Guest Speaker 38m32s

And it came down to those that cared, that had a passion for the business, that understood what their needs were. We would win nine times out of 10. The problem I've got is that we can't compete. And so the carriers use their owner economics, right, to go out there and to beat us on price. And all I'm saying is just make it fair.

Guest Speaker 38m50s

I'm not asking to be cheaper than them. Give me the exact same price. Do a a retail minus model. Right? That's the retail of what and so when a wholesale whoever's running wholesale in any of these departments goes into the and fights for us.

Guest Speaker 39m4s

And right now, they're not fighting because their attitude is, well, what retail is doing, they need subscribers. Look at our stock price. If we don't get a subscriber count up, we get hammered. I agree with you a 100% that that's the wrong way to look at it. But the reality is that's how they look at it.

Guest Speaker 39m17s

And if Verizon added a million customers tomorrow and they were all on their value brands and they all cannibalize themselves over from Verizon, you can't tell me that's not happening. Right? That they left Verizon and went to Visible to get the exact same service, the $16 as opposed to paying 70. They would consider that a success. You know, you consider the analysts.

Guest Speaker 39m36s

Even though they were cannibalizing themselves, it would be like, look, we did a million subscribers this quarter, and T Mobile only did 800,000. But most of them came from you.

Guest Speaker 39m44s

And Peter, that's why we should be positive that this is not a circle of death. The reality is the logic will prevail. And all I would do is urge everyone in the marketplace to do like you do, Peter, is focus on giving customers what they truly value. And let's be clear, there's a tiny portion of the market that uses 30 gigs on their handset, and those guys aren't paying for a wireline product in their home. Actually, there's probably two twenty five million lines out there where you can happily have a deal that is capped at 30 gigs and you're still going to give the customer everything they want.

Guest Speaker 40m21s

So for me, it's all about segmentation, differentiation, delivering great exquisite customer experience. And if you do that, your cost of acquisition go down, your retention cost goes down, your churn ultimately is the thing that drives whether or not you got a sustainable business. And I think that works for MVNOs just as well as it works for MNOs. So I think we can both survive. But I would agree with you that we just have to get back to putting the customer first.

Guest Speaker 40m46s

And if we do that, I think, um, reasons to be cheerful.

Guest Speaker 40m49s

And I know we've been on this path for a while, I appreciate it. I know it's probably time for everyone to go do something else. But I will just say, Ronan, if someone used 30 gigabytes on mobile x on their 2488 plan, we would lose money. Yep. So just to be clear, we have an average pool that we need to meet like every other MVNO, and it ain't 30 gigs.

Guest Speaker 41m6s

I can tell you that. And that's my point.

Guest Speaker 41m8s

I get that. But they're a tiny portion of the market.

Guest Speaker 41m11s

No. No. No. I agree. But even if they use 15, we're still gonna lose money.

Guest Speaker 41m14s

So MVNOs aren't built for the niche case like that, and I get it. So the heavy users, send them back to the MNOs, and they'll pay for it in the long run.

Guest Speaker 41m22s

Yep. Well, hey, Roger. I'm sure we've bored you by now.

Roger Entner 41m26s

This was awesome. No. No. No. You're you're not boring me at all.

Roger Entner 41m29s

I I could go on forever, but I think other people have to go and and spend time with their family over the holidays. No. This delightful. This is exactly what I thought would happen. Couple of really smart people talking about telecom.

Roger Entner 41m43s

Fantastic. Thank you very much. Merry Christmas. Happy New Year.

Guest Speaker 41m47s

And, Roger, thank you for the invite. And I'm not just being polite, but I have to say more people like Peter in our industry is what we want. Every marketplace needs somebody who's a true customer champion to make sure that we keep ourselves honest every single day. So thank you, Peter, for what you do.

Guest Speaker 42m4s

And, Ronan, I will say this, you have sorely missed at Verizon. You're still my laugh. I will I will say that, can only imagine what would have happened had you been there. I think it'd be a much better company.

Guest Speaker 42m15s

Happy holidays, everybody.

Roger Entner 42m17s

Happy holidays. Happy holidays. Bye bye.