T-Mobile’s Business Push, Technology Advantages, and 5G Slicing with Daryl Schoolar

Full Transcript

0m10s Speaker 0

Hello, and welcome to the two hundred and forty eighth 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 Antner. How are you doing, Roger?

0m23s Speaker 1

I'm great. How are you?

0m25s Speaker 0

I'm terrific. So, Roger, this week we have a great guest, Eyad Terazi, the CEO of Federated Wireless is with us. Eyad, welcome to the podcast.

0m33s Speaker 2

Thank you, Don. Thank you, Roger. I appreciate being on the show. I'm a fan. Looking forward to it.

0m39s Speaker 1

Thank you. And we know each other for, like, twenty five years, something like that. It's a small world.

0m46s Speaker 2

Yes. I was just thinking about what it was like when we were working. I was at Nextel, you were at LCC, and we were trying to figure out what wireless might one day look like. Can you imagine how far it's come?

0m58s Speaker 1

Yeah. Raj Singh likes to tell the story about him sitting next to a campfire with Craig McCon saying, you know, imagine if only 1% of Americans will use a cell phone. We'll be so rich, we'll be so rich. And god, he was wrong. Right?

1m15s Speaker 1

Well, he was right about being rich, but he was wrong about the 1%.

1m19s Speaker 2

It's true. They were good days.

1m21s Speaker 0

So, Ioan, to get us started, can you tell us a little bit about Federated Wireless, what you guys do?

1m26s Speaker 2

Sure. Federated Wireless is a software company. We are a cloud business, software as a service business, and we're very, very focused on one topic, spectrum management, spectrum sharing. That's where we make our money, and we've intentionally kept it quite contained around that. Our main business today is providing CBRS spectrum services for people who want to get access to CBRS as software as a service type product.

1m53s Speaker 2

We've also launched products for six gig. It's called an AFC. We've been also launching planning and prediction tools as well for customers. But that's basically our business. We've been around for ten years.

2m5s Speaker 2

When I started, we had half an engineer, and we started building. We're about 50 employees. And most of the people we hired are either software engineers or people with deep operator background like myself. And the good news is we're really right on the cusp of profitability after a long journey. We've invested quite a bit to make this technology work.

2m24s Speaker 2

So we're the leader in the space.

2m25s Speaker 1

Fantastic. So can you tell us a little bit about current use of CBRS, the adoption? Because there's not a lot of data around. So it's very hard to tell how many people are actually using this. We know the cable companies have We know Verizon has PALs.

2m44s Speaker 1

And then it's a sprinkling of businesses, of enterprises. But who is actually using it? You know, having a license doesn't mean you're using it. Who is actually using it?

2m55s Speaker 2

No. It's a good question. And, actually, I always feel that there are two parts of the CBRS story. There's the one you read in the news, and there's the one I see every day when I log on to see what's the dashboard is saying. So we have today is a system about 450,000 radios that are active and working.

3m13s Speaker 2

Roughly about a third of them are tower systems. So think that's the equivalent of a a small operator. You know, back when I was at Sprint, this would be equivalent to maybe about a third of a nationwide deployment for the spectrum. At any spectrum I've ever dealt with, I would have always viewed that as a success. The other two thirds or so, the vast majority of them are fixed wireless for various numbers of operators.

3m37s Speaker 2

Some people are as small as two engineers, and some of them are big with million plus aspirations for fixed wireless and deployments. And that deployment is just about in every county. I think I looked at the county distribution. About 95% of the counties in The US has some deployment of CBRS in them. Everybody loves GAA.

3m58s Speaker 2

As a matter fact, GAA was the general access part of the spectrum is more popular than PALS. It actually has higher quality. It's what I use to deploy for military applications and secure applications with high predictability. Everyone that has PALs that has deployed is also deploying GAAs, and they combine the two to get twice the spectrum for the same amount of money. And there's probably more use cases than I've ever encountered.

4m24s Speaker 2

Like, for example, it is the number one spectrum in the world outside of China for private wireless networks even though it's highly concentrated in The US primarily because it's very versatile. And we've also built a very robust ecosystem. So CBRS is now in over 90% of all smartphones that are in circulation in The US. The percent is higher for recent models, so that makes it very valuable spectrum. As you know, spectrum is value is the number of handsets that can use it.

4m55s Speaker 2

That's where the scale comes in. There is over six fifty models, devices, IoT devices, bridges, MiFis, all have CBRS in them. Again, bigger than any device ecosystem I've ever worked in before. It's the same level now as AWS and C band eventually will get to over 70 different equipment makers on the infrastructure side has CBRS equipment that are certified and ready. What we did when we created the system is we made an incentive where all the R and D is equipment manufacturer funded instead of when I was at Sprint, I'd have to commit millions, sometimes billions of dollars upfront before my Spectrum is available.

5m35s Speaker 2

We've inverted that model so that at the same time, being able to create it. So it is quite widely deployable. And maybe the one factor that nobody thinks about is over 90% of deployment is operator deployment. It is not cable. It's not private wireless.

5m50s Speaker 2

It's it's operators of versus various sizes. About 650 operators, almost 700 operators today in the system, and we're getting a lot of new ones. We activate brand new systems integrators or operators or small innovators at the rate of about 10 to 20 new operators a month in CBRS, which is just incredible. But it's still at the beginning. This is not the end of the journey, but certainly it's encouraging for me to see that we only started that about ten years ago, commercially only five years.

6m22s Speaker 1

So when I look at it, and you have a much better perspective than I have, is from an operator perspective, Verizon is the big, big user.

6m32s Speaker 2

Yes.

6m32s Speaker 1

The reason why it's in every cell phone is because Verizon said, I want it in every cell phone. And I know that when Verizon built out, they basically asked their engineers that they needed permission not to put CBRS on their tower, rather than a permission to put CBRS on the tower wherever they had licenses, because they didn't have enough other spectrum. And it is my understanding that the cable guys are building out and are using this. So if we take basically the big carriers out, if we take out Verizon, if we take out Comcast, Charter, and whoever else, how does that market look like?

7m14s Speaker 2

So that takes about a third of the numbers I gave you. That leaves 350,000 out of the 450,000 up and running. Majority of it is fixed wireless in various places. So the two big players are Verizon and fixed wireless. The private wireless are more, I would say, iconic than volume.

7m34s Speaker 2

Like, you hear about, you know, John Deere or big electric companies or automation at big logistics companies, and that's all true, by the way, and aluminum manufacturers and all of that. But they're small. I mean, they're not moving the needle in the sense that they can't really create a market. As a matter fact, at one point, we were almost in full speed into the private wireless business, and I pulled back because it's still very nascent and will probably be nascent for a very long time. What CBRS is doing in the private wireless business and the Neutral Post is that it's providing a cheaper way of doing DES solution.

8m7s Speaker 2

So I expect it to continue to be deployed and growing, but more as an economic tool than, oh my god, we have a million factories we need to automate. Let's roll out millions of devices.

8m18s Speaker 1

I'm always joking that there are more analyst reports about private wireless than there are private wireless deployment.

8m25s Speaker 2

Very true, I'm sure.

8m26s Speaker 1

I don't think I'm that far away from the truth. No. Right? It is what it is. Yep.

8m31s Speaker 1

And so when we look at this overall, you're seeing for you the market growing. At the same time, we're seeing the number of SaaS providers, which are your direct competitors for registering the spectrum, are leaving the market. That is usually not a sign of a healthy market. When where did we start? At five or seven?

8m53s Speaker 2

Yeah. Well, we started with 13 at one point.

8m56s Speaker 1

Oh, 13. Okay.

8m57s Speaker 2

Yes. We're down to four, but I would say four out of when only two really operationally viable. Yeah. Google and ourselves. So it's only two, really.

9m6s Speaker 2

We're roughly today about 65 of the market, and we continue to grab market share. A year ago this time, we were 37% market share, just to give you an idea how quickly this is consolidating. You've got a point there, Roger, and I can explain a little bit what I think is happening.

9m23s Speaker 1

Yeah. And by the way, I see Google leaving. From what I hear, I don't think Google is a long term player. So this could very well end up you having the monopoly of the market, which I would be very happy for you.

9m36s Speaker 2

I think what distinguishes us is that we're a pure player in this market. We focused on it a 100%. And then the market is really maturing in the end of the day. So, you know, it's becoming a fewer players. We took an approach to be very focused on operations and very focused on performance primarily because of the carrier background.

9m56s Speaker 2

Right? And that's playing out since it's becoming more and more of an operator spectrum, which is a good thing. And then we can talk a little bit about how do we even make it more of an operator spectrum, which I think is the right thing to do. But a big part of the reason it's consolidating is performance. My observation is in all my career, I've always thought five nines availability.

10m16s Speaker 2

This is 99.99% is like the holy grail. You get there. You have a really good network. I learned the hard way in this business, not good enough. We needed to get to like six nines or seven nines for the spectrum, for turning point.

10m29s Speaker 2

So last year was the first year we hit 100% availability. We're, like, triple redundant. When the power grid went down in Puerto Rico because of the hurricane, our system was up and running even though there was no network to give Spectrum to, but we had Spectrum available because we were triple redundant and had batteries and solar backup and all sorts of things. We had a 100% availability of the platform. We also had 100% interference free for all users on our system.

10m59s Speaker 2

We've also had five years of zero interference for the military, but last year was the first year we had zero interference for the commercial sector. It's the first year we've taken the spectrum performance out of the equation. And now it becomes policy cost. So we've solved the ecosystem. The cost has always been more manageable here than other systems.

11m19s Speaker 2

And now we've solved the performance issue. And now the question is, where do we go from here?

11m24s Speaker 1

Well, I think you will interfere with the military less and less because they're leaving the band. Right? Because most of the interference and why we have these exclusion bands around the coast is all of the 27 aircraft carriers that The United States has, have a radar system called the Spin 41, which was exactly in the GAA band. Now the military bought new radars and is installing the radars called the Spin 50. And with that, the interference is going away.

11m56s Speaker 2

So we have actually been able to reduce the zones where we have to protect the military without actually interfering with them, even on the existing older systems. Yes. They have newer systems that are capable of doing more bans than CBRS. But to be honest with you, they don't actually have to move. We don't have to go spend the 10,000,000,000 or whatever they're asking for to actually help them move faster and take these replacements of these radars of ten, twenty year cycles.

12m22s Speaker 2

We don't have to do any of that. What we really need to do is make this more operator friendly. And I think that there are three things that would make this more operator friendly. This is where I need your thoughts, Roger, given historically how much you've done that. I think the first piece is we need real full power.

12m38s Speaker 2

This system was built to be DOD first. And then whatever power you have left, you know, let the MNOs have it. And we keep going every year to ask for more permission. We have to invert the model to say, we now know how to protect the military, not just in this band, but in any band. We know how to do it flawlessly at high power.

12m56s Speaker 2

What we need now and what we've been lobbying for and working on is invert the model, give operators in the band full power, and protect who's there. But at the same time, you know, the military, we now know what they need, then we can just make sure that they would not have interference with them. The technology exists now because we proved it out, and we spent about 200,000,000 building it. I think the second piece is this. There has to be some level of commercial exclusivity.

13m21s Speaker 2

A big part of what's annoying about this for some operators is that I have to share the same channel with somebody else in GAA and somebody in PAL, and and maybe even PAL is not a 100% exclusive. Somebody else could come in in it. I think there's a way for us to at least take a portion of the band and create more exclusivity. So you have higher power. You have exclusivity.

13m41s Speaker 2

And then if you want to monetize it, you can re auction some of them with these and generate some money. But at the end of the day, we also have to figure out how to integrate the technology inside the carrier infrastructure, in the RAN, not just completely outside so they have control. And I do think that's where the solution is going because sharing has been with us forever. AWS had some sharing. Andbit has some sharing.

14m3s Speaker 2

PCS in the old days had sharing, and six gig had sharing. Seven is gonna have sharing. Four is gonna have some it's a matter of do you do it manually? Do you do it automated? Do you do it under carrier control?

14m14s Speaker 2

Do you do it in another system? So it's a hodgepodge, but I do think that the solution will be more carrier control and more power because we can take all that investment and turn it into something positive.

14m24s Speaker 1

Yeah. Well, the military in general has a lot of experience with network sharing. When they invade a country, usually they're sharing the spectrum. And they're sharing the spectrum involuntarily with the host, but they know how to share spectrum if they want to. Fundamentally, I agree with you.

14m41s Speaker 1

There is the proposal out there to move the CBRS environment to a lower band, give it more spectrum, and reimburse and give the incumbents enough time to move, that they get reimbursed for all the costs. And I think with the military leaving that band, that makes a lot of sense. What upsets me always with spectrum in The United States and the FCC is, I call it like spectrum alchemy, where they are buying spectrum that's like lead, and then they're changing the rules, and then it turns like gold, right?

15m19s Speaker 2

Yes, yes.

15m20s Speaker 1

That I think is not right for the American people. By the way, we've seen this over and over again, like 700 megahertz A and B band, one needed filters, the other one did not. And some people make a nice windfall on it. Here, I want everybody to pay their fair share, right? And at the same time, we don't want to screw like the small rural ISPs that are using CBRS.

15m45s Speaker 1

What do you think? If you give them enough time and enough money, why not give them more spectrum? I know change is hard. Right?

15m53s Speaker 2

No. Understood. I think there's going to be more spectrum for these kind of models anyway. There is some six gig now at 36 dBm. I think seven gig will open up a portion of it as you saw from the spectrum pipeline.

16m7s Speaker 2

That could also be available for that. And by the way, the operator use case right now is heavily on on fixed wireless anyway, so they have the same issues. As they want a lot more spectrum at a lot lower cost. So I do think we need to have some of this model that keeps the spectrum cost low, but allows these operators to have some more. I just think that trying to find the billions of dollars to be able to incent everybody to move versus restructure the band within so that you can take out of the 150, take pieces of it, make it more exclusive, more high power, make it more operator friendly, and in a way we can actually support the people in the band without moving them and at the same time give operators a lot more of it in a predictable model.

16m47s Speaker 2

The biggest issue here is that when we started, this was experimental, and we all accepted the fact that DOD sets the rule and everybody else will take what they take. That has to change. One way or another, we have to be able to make it operator first in whichever configuration so that it's predictable. We're not debating power level. We're saying, operator, what do you need?

17m9s Speaker 2

DOD will make sure we protect you. We have to change it.

17m12s Speaker 1

Because the military leaving the band, which required sharing, completely changed the rules of the game. And by the way, you're much nicer to the carriers than I am, because I don't think they should get this for free. I think they want to have this for exclusive use, they should pay for it, and they should pay the American people, and they should pay the people who are vacating. I don't have a qualm with that at all. You know, have an auction.

17m38s Speaker 1

They paid an arm and a leg for C band and for 3.45. And the way Capitol Hill is spending money, they need that left and right, right? Yes. The current administration came in of like, oh, we need to spend less money. The last time I checked the budget, they're spending more money.

17m56s Speaker 1

Yes. And our deficit is bigger. So I think if the wireless carriers can do their share of limiting in the impact, they should.

18m5s Speaker 2

I think that there would be some more re auctioning from here. No question. I do believe that that is what will happen a 100%. I do think that this is gonna be a story that's gonna keep evolving. It's too hard to predict today, but some of what you said is gonna happen.

18m19s Speaker 2

I also think, by the way, that that lower three gig is still gonna have some sharing in it over time.

18m25s Speaker 1

Oh, yes.

18m26s Speaker 2

I still believe that. I don't think it's gonna lock. I so No.

18m29s Speaker 1

It will be the gift that keeps on giving for you because you're the expert in making sharing work. And that is really, really hard. In a way, if there's no sharing required, your business case and your expertise becomes less valuable, right?

18m44s Speaker 2

It's very true.

18m45s Speaker 1

The moment this is a challenging environment, the more your expertise and your capabilities really shine.

18m52s Speaker 2

Yeah. Well, I appreciate that, and I agree with that. And so I think of the spectrum sharing business the same way I think of the tower business. I still remember when I was at Nextel and we were debating how can an operator not own a 100% of their tower for an exclusive use. Right?

19m8s Speaker 2

And then over time, as the tower business became predictable and sharing in that same tower among operators became profitable, and we found a way to make it where it doesn't really hinder anybody's operation, you know, CFOs started saying, why don't we spend less? I think that there is a good portion of the spectrum in The US, and even globally over time, will end up being in that model. Like, for example, six gig, 30 of the spectrum is eaten up by a 100,000 microwave links. There is no way that you're gonna say, let's wait to move them. Or four gig has FAA in it, and we need to protect around airports.

19m44s Speaker 2

And all of that is much doable with software. So the future is gonna be malleable, but it will also change and evolve. The rule number one is change is inevitable. And I think the other rule that we need to be very conscious of now is that now that we've solved a lot of the military issues quite well, quite successfully, we have to begin to change the share model to make it more operator friendly and more budget friendly for the treasury. 100%.

20m9s Speaker 1

I agree with you. Awesome.

20m11s Speaker 2

Very good.

20m12s Speaker 1

Iyad, thank you for coming on the show. This was awesome. Really appreciate it.

20m17s Speaker 2

Thank you. Till next time, Roger.

20m19s Speaker 0

Alright. Thanks, gentlemen.