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

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and thirty seventh 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 Entner. How are doing, Roger?

Roger Entner 0m23s

I'm great.

Don Kellogg 0m24s

So Roger, this week we have Herman Frank, CEO at Giggs with us. Herman, welcome to the podcast.

Guest Speaker 0m30s

Thank you so much. Thanks for having me.

Roger Entner 0m32s

I'm really excited to have a fellow German finally on the podcast. You know, it only took, like, 200 and something episodes for that. Herman, I think you are doing pretty exciting stuff on the MVNO, NVMe side. Why don't you tell our audience about what you do and how you view the world?

Guest Speaker 0m53s

Yeah. Absolutely. So GICS makes telecom accessible to technology platforms would be kind of a high level statement. What that means is that most consumers and businesses are using software or app based services to go about their daily lives these days, and a very different world from twenty, thirty years ago. But so far, telecom has not evolved into a native citizen of this platform economy, of the Internet economy.

Guest Speaker 1m21s

Most services are still very much done by telecom for telecom or for the rest of the world. We come from software companies such as Stripe, Shopify, Airbnb. We wanna do the same transformation in the telecommunications industry that these companies have done in their respective industries and apply all the learnings that came with it to building a product that technology companies can consume and become telecommunications providers themselves.

Roger Entner 1m54s

So how do you actually do that? Right? So I I get it on a conceptual level, but how do you actually do that? What does this mean?

Guest Speaker 2m1s

So traditionally, if you wanted to start an MVNO, you need to go to an operator. You need to negotiate a wholesale contract To get anything meaningful, right, with pricing that really matters in the market and that allows it to have a margin, you require very large commitments. It's a very long process to negotiate with MNOs. And in many cases, they'll just not entertain you at all. Once you kind of have done that, you've posted probably a commitment in the two digit, three digit million amount.

Guest Speaker 2m32s

You need to wait for integration slots. Right? So now you've kind of spent a year, nothing happened. And you need to look for an OSS, BSS, MVNE, payments provider, a tax engine. Right?

Guest Speaker 2m44s

The US has 16,000 tax jurisdictions for telecom. You need to combine a bunch of services, typically six to seven. And then you need to develop your consumer proposition. Right? So the app, the web app, whatever the vessel is that you're serving your customer through.

Guest Speaker 3m0s

So you've now spent hundreds of thousands or millions on doing all of that. You have not sold a single subscription. That world does not work in tech. In tech, if it takes more than a few weeks, maximum two months of integration time, end to end, project starts first line life, and it takes more than three to five people to execute, you'll just never get a slot. Right?

Guest Speaker 3m24s

Like, you'll never become a product. So therefore, the telecom world and the tech world have been really incompatible, and we abstract all of that away into one end to end operating system. So we have the wholesale agreements, we have an OSS BSS, we have the MVNE functionality, we have the tax engine payments, the dashboards, the customer support, all kinds of automations built into one vertical platform that solves everything that a technology platform could need to run the service. And that is the difference to kind of how things have been done before where you had to go through all those steps. You can get started in, technically, in a matter of minutes practically.

Guest Speaker 4m7s

Right? Like, we take a couple of weeks for our customers to go design the service. But it's a substantial improvement from the status quo by an order of magnitude or tours of magnitude in time and cost savings that you require to launch your own branded phone plan.

Roger Entner 4m24s

And you've had quite an impressive list of investors already.

Guest Speaker 4m27s

Yes. So Kix has been working quite well. We've seen strong product market fit. We have some of the world's largest technology companies building services on top of the platform or launching services with us. And obviously, that has paid off in terms of investor interest and growth for the company.

Roger Entner 4m46s

So can you tell us about some of your success stories?

Guest Speaker 4m50s

Sure. I mean, from the public ones, at NewBank would be a great example. It's a mobile bank out of Latin America. They have a 115,000,000 customers. They have launched a mobile service with us where we are natively embedded.

Guest Speaker 5m4s

That's kind of one of the key innovations that I think will define the space. They have natively embedded a service into their app so that the user can, when they open new bank's app, see, okay, now you have a eSIM available here. You can activate it. No KYC, no payments needed because a new bank already has all of that information. So you really can, in one or two clicks, go from awareness of the product to actually going live.

Guest Speaker 5m31s

And that is unprecedented, right, in terms of how frictionless an activation can be. And we're seeing that as being a very strong case because consumers, they trust and they love these services. They are very successful in acquiring consumers at scale and at low cost. I think new banks acquisition costs to the public are probably around 4 or $5. Mobile carriers acquisition costs for consumers are in the hundreds of dollars.

Guest Speaker 5m58s

Right?

Roger Entner 5m59s

A little bit higher. Yeah. Well, yeah, they include advertising and all of these things. So, I would say NewBank is pitching to the choir, and they're coming to church every day. That really helps.

Roger Entner 6m12s

In a way, when I look at you, it's a little bit like I look at Twilio. Twilio is like messaging connectivity for people who don't want to deal with carriers, because they're very often painful to work with. Right? And so you take the pain away.

Guest Speaker 6m27s

Yeah. We take the pain away and we take away the fact that so far every MVNO that has ever been launched in the world had to rebuild the same stack. So you don't have any compounding learning improvement. There's really nothing that you gain. And we think that by building the best stack in the world and continuing to improve it, all of our customers will benefit, right, in a compounding manner from a superior product than if they would build it themselves or then the carriers would provide it.

Roger Entner 6m57s

So here in The United States, most of our audience is in The US. You're integrated with all the the MNOs, or how does it how does it work?

Guest Speaker 7m7s

We provide connectivity through AT&T primarily. That's our main partner in The US, but also with T Mobile. The US doesn't have perfect geographic coverage on any network. It's getting better. Right?

Guest Speaker 7m20s

But there's still definitely the case to have at least two carriers.

Roger Entner 7m24s

Yeah. That that helps a great deal. It looks to me that The US is becoming much more aggressive on the MVNO side, and there are more MVNOs coming. We have our little sub series called Titans of Prepaid, and a lot of them are MVNOs. Just the other week, we had Robert Dandrea on, who was the number two guy at Tracfone, and he told us about how it was to start where they had to build everything themselves.

Roger Entner 7m55s

I think by going with you, instead of taking years or a year, to taking weeks and months is a significant accelerator. When you look at the marketplace, MVNOs of all sizes. What size makes sense from your perspective?

Guest Speaker 8m12s

We typically target customers that have a user base in the millions, a couple million, 10,000,000, 20. Again, our largest customer is over a 100. Because we think that that is a substantial enough base to go and start converting the existing user base and start converting some of the incoming user base. One thing we fundamentally don't believe is that if you have to pay for customers, like basically starting today, you will not survive because there is so many platforms and brands out there that have a loyal user base that are love brands, and they have zero customer acquisition costs. So you have a structural disadvantage if you have to start from scratch.

Guest Speaker 8m55s

You only exist as a standalone MVNO. So we see that being the future where customers over several million end users and upwards are gonna start converting those.

Roger Entner 9m6s

So from a US perspective, you know, if you're looking for a big affinity based thing, NFL, NHL, NBA would be an ideal case for an MVNO through somebody like you.

Guest Speaker 9m19s

Yeah, absolutely. And we're seeing cases like that globally emerge. I'm sure we'll see something in the market over the next year or two. Well, that's exciting.

Roger Entner 9m29s

By the way, you also won an award recently. Wanna tell us about that?

Guest Speaker 9m34s

Yeah, we were nominated as one of the world's most innovative companies by Fast Company. Very proud of that. It's our first major award as a very young company, hopefully first of many. Every year they pick, you know, the companies that move the needle the most in the world. Usually they're technology companies and in different industries.

Guest Speaker 9m54s

So we're super happy to bring telecom back to the tech innovation table.

Roger Entner 9m59s

Yeah, because previously it almost felt like that telecom was like having cooties and nobody wanted to touch them. All right, so thank you very much for coming on to the show and really appreciate your insights. Thank you, Harman.

Guest Speaker 10m12s

Thank you so much for having me.

Don Kellogg 10m13s

Thanks Roger, we'll talk next week.