Modular Pricing, Network Strain, and California's Copper Standoff

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and ninety seventh episode of the week with Roger, 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, how are doing?

Roger Entner 0m23s

I'm great. How are you? I'm good.

Don Kellogg 0m25s

We were both on the road this week, actually in Orlando at different events.

Roger Entner 0m29s

Yeah. We were both in Orlando, but we didn't see each other.

Don Kellogg 0m32s

Yeah. We were too busy to see each other. But you were at Fiber Connect. Yep. And so I thought we could talk a little bit about how that went.

Don Kellogg 0m38s

And then there's a couple other things in the news I thought we could cover around plans and some legal action.

Roger Entner 0m44s

Yeah. So Fiber Connect was hopping. It was a really busy show, even though people told me last year was even busier. Also, I did two panels. At ConnectX, I did three.

Roger Entner 0m57s

But really, really interesting, it expanded my mind that I probably underestimated no, that I definitely underestimated how transformative AI is changing the networks. I knew that it was doing a massive amount of change on the data center side, but it's also adjusting how carriers are building the networks on the consumer side and on the business side. The data center demand is buying up literally everything. They're buying everything in sight. So there is set asides for BEAT markets and for BEAT stuff.

Roger Entner 1m38s

But with all the demand going to data centers where they are doing 400, 600, 800 g connections, like standard. Right? Like massive amounts of compute. There are shortages on fiber because Corning buys up all the glass. Or put it this way, it's even upstream.

Roger Entner 2m0s

There are shortages on glass because Corning buys it all up to build fiber. Right? And we are seeing shortages there. The price of resin because of the closure of the street of Hormuz, is going up significantly, because resin comes from the heavy parts of oil, which comes predominantly from The Middle East. Our oil in Texas is a lot lighter, which gives you a lot more gasoline, but it gives you a lot less of the heavy parts of crude oil.

Roger Entner 2m30s

Interesting part. Which is all the things we are doing, by the way, for our recession planning for our clients that we're working on. And so, yeah, it's a boom industry, but the marginal cases are being held up because the prices are going up because of the massive demands there. And this will continue for the next several years. It's the repercussion in here, and data demands will become higher Because more and more people are, like, sending little videos, or sending videos and are sending pictures to the AI to interpret it.

Roger Entner 3m6s

And so that's part of that more symmetric traffic. And when I think through it, when I tried to troubleshoot some of my stuff in my PC, I used AI to help me through it, and I took like pictures, and I ran video and said like, here's a video of my computer booting up and then dying. How can I fix this? And AI does a fantastic job with this. And that's the symmetric traffic example that I think will get stronger and stronger.

Roger Entner 3m39s

Right.

Don Kellogg 3m39s

I mean, that's even before we get to applications like live computer vision or, like, sharing your screen with I mean, I guess, some of the headless browsing type stuff works like that. But Yeah. Yeah. I I agree. It's only only gonna get more intense in terms of the upstream data traffic, and Fiverr is uniquely positioned to deal with that.

Don Kellogg 3m55s

Right?

Roger Entner 3m56s

Well, DOCSIS four o as well, and with the cable guys with the high split, also takes care of that. Right now, I don't know. In 2025, about 7% of the traffic was upstream, 93% downstream.

Don Kellogg 4m11s

And my point is it's a lot easier to find fiber than it is DOCSIS four in most places.

Roger Entner 4m15s

Oh, yeah. No. But it's coming. It's coming because they all see the same thing. The interesting thing, as I mentioned, we can't detect yet, probably because there's not enough yet if DOCSIS four point o makes a difference in the numbers.

Roger Entner 4m28s

But then cable companies are building fiber where they're greenfield. Don't look at what they say, do it what they do. Yeah. So it was really, really interesting. Learned a lot, which was cool.

Roger Entner 4m40s

Always like to learn. And then we come to to a new price plan. Right? AT&T came out with Build A Plan, which is a really, really nifty way of attacking the lower end price point. You know, you and I have been railing against that the one line pricing in The United States for postpaid is out of whack.

Roger Entner 5m1s

And then nobody in their right mind gets a postpaid price plan On a single line. On a single line.

Don Kellogg 5m7s

It just doesn't make sense from a pricing perspective. Right?

Roger Entner 5m10s

Yeah. And so AT&T has attacked that. You know, in full disclosure, we worked with AT&T about this over the last three years. And so I'm incredibly proud of it. So take my whatever I say here in analysis with fatherly pride also.

Roger Entner 5m26s

So it's like $15 for unlimited talk text and a gig of data. And then you can add to it if you want to five gig for $5, 15 for 10, and then you can have unlimited data, either standard or HD for 20 or 35. Hotspot, you can pick none, five for five, twenty five for fifteen, fifty for 20. So you can pick and choose exactly what you want. And the other thing that's really, really awesome is you can change this every month.

Roger Entner 6m0s

And so it really grows and shrinks and adjusts to exactly what you need. It doesn't have device financing, all of these things, because it's a straightforward, clear, transparent plan. You buy, you pay for what you want, you don't pay for what you don't want. And there are more than enough people who don't want to have a new phone every year, every two year, even three year. So why should they implicitly pay for it?

Roger Entner 6m28s

And so this is a plan that makes it really, really transparent of what you pay, what you get, and you can pick and choose of what you want.

Don Kellogg 6m36s

Right. So, I mean, I think it's really interesting and competitive at the price floor. Right? So Yes. Mint, for example, previously has or still does have the cheapest plan you can get for $15 a month type thing, if it's a reasonable plan.

Don Kellogg 6m50s

And this matches that in some respects. So Yeah. It's intriguing around there kind of the concept of breakage and not having to deal with that. If you know what you need and you know what you want, this is a way for folks to really optimize against their wireless bill.

Roger Entner 7m3s

Yeah. And for somebody like me, older white guy doesn't do video, I could get away with probably with the the base plan and five gigs of data. $20 a month.

Don Kellogg 7m16s

Yeah. It's a good deal.

Roger Entner 7m17s

On postpaid. And if I need 15, it would be $25. And then now and then I know, oh, I'm traveling, and I will need hotspot. And then for that month, I add five or 25 gigs. I'm good.

Roger Entner 7m31s

And then next month, I know I'm not traveling, so I take it off. Why pay for something that I will not need? Right? And so this is like really, really interesting.

Don Kellogg 7m39s

Yeah. It'll be interesting to see if they branch this out to multiline. You know, right now they're piloting. It's online only and it's single line. I I think it's a really interesting compelling value prop for those kind of segments of the market, but it'll be interesting to see what they do or if they do something with multiline with this.

Don Kellogg 7m55s

Because then I think it gets kinda scary for other folks in the industry. Right?

Roger Entner 7m58s

Yeah. Exactly. You can take this here's the thing. You can take this multiline. You can take it with convergence.

Roger Entner 8m5s

You can add a lot more things to this. These I I would view as the first building blocks, not as the last. Right? You can make this modular for everything. And then you have a plan.

Roger Entner 8m16s

You have your personalized plan. This is the Don plan or the Roger plan, and it does exactly what I want. And I don't pay for anything I don't want, and I pay only for what I want. Talking about pay for what you don't want, then pay for what you want, AT&T in its hopefully last chapter of sunsetting cable, uh, not cable. Well, that's also a plan, but I don't think they will achieve that.

Roger Entner 8m42s

But sunsetting DSL is suing the state of California, which is a bold move.

Don Kellogg 8m48s

Well, so take a step back here. Right? Okay. California said you can't sunset DSL. You've gotta keep it available.

Roger Entner 8m54s

Okay. Let's take even a step further. AT&T operates in 21 states and made petitions to every one of these states to sunset copper and not to be something called the provider of last resort, of this thing needs to work always, which comes from a time where we had only one provider. And they said to all of the states, hey, we want to shut down our copper. It's a 150 year old technology.

Roger Entner 9m23s

It's reaching the end of life. The number of people who are in it is very, very low. It's like in the hundreds of thousands, if even that, in these given states. We would like to shut this down, give the people a wireless solution. They have now choice between different wireless solutions, or they can have a fiber solution not from us or whatever is offered in that place.

Roger Entner 9m47s

But we would like to shut this down because this is a technological dinosaur. 20 of these 21 states said yes. California said no, or is dragging their feet, which is the same thing. And this is going on for years. And then we have federal law conflicting with state law.

Roger Entner 10m6s

And in telecom, there's preemption, federal preemption. And the FCC said already that, yes, the telecom providers can sunset copper. And California says, la la la, I can't hear you. AT&T asked the FCC again to make it amply clear that this is also applying for California, and they're suing California and saying California is not following the law. It's like requiring garage owners to keep barns attached to their gas station and stack it with barley and oats in case a horse comes by, because we had horse buggies, you know, a hundred years ago.

Don Kellogg 10m49s

Well, and to be clear, this isn't, like, affecting any e nine eleven stuff or anything like that. Right? Like, people still have the ability to call for help if they need it.

Roger Entner 10m56s

Oh, yeah. Absolutely.

Don Kellogg 10m57s

It's not a safety thing.

Roger Entner 10m58s

It's not a safety thing. Yeah. In addition, we have here satellite coming. You know, we're not even talking here about Starlink. Right?

Roger Entner 11m7s

But satellite capability is coming. The JV without name is setting things apart where satellite is or has already become a functional replacement. The mobile, to their great credit, when there were disasters, opened up Starlink to everybody free of charge, I think free of charge, in these disaster areas. So we have even better than copper calling of last resort through the satellite solution. Because if I may remind people, when we had Hurricane Sandy in New York, the water shorted out all the copper.

Roger Entner 11m47s

The people on Fire Island didn't have communications because the call of last resort got flooded by an unprecedented flood. So the technical solution here is literally wireless supplemented with satellite, which we have already, and the industry is working to its great credit when there is a disaster. I don't know anymore who is the carrier, who you're a customer of, I will take care of you, you're an American. Right? Which is the right attitude for the industry to have.

Roger Entner 12m17s

And that joint venture is also an expression of that. And so we'll look at this. We have a little bit of research in the pipeline where we'll talk about this. Stay tuned. But, yeah, it's interesting times, and I think, you know, we should not live in in the past.

Roger Entner 12m33s

We need to live in the future.

Don Kellogg 12m34s

Well, there's an irony there. Right? Like, I'm a native Californian, and I have been known to say, you know, as I'm a Californian, we live in the future. Right? This is not a forward looking

Roger Entner 12m43s

This is not a future at all.

Don Kellogg 12m44s

This is not a forward looking perspective, right, for the folks in California that are advocating for this. So I agree with you. There are comparable and better alternatives to 150 year old copper lines.

Roger Entner 12m55s

Yeah. Exactly.

Don Kellogg 12m56s

That already suck and are not that great.

Roger Entner 12m59s

Yeah. You know, a lot of my friends are buying electric cars not because of electric, but because they're sick and tired of oil changes. And they're like, I'm buying electric car because I no longer have to do oil changes. It's exactly the same thing. So we have to get with the future, and I hope California will join us.

Don Kellogg 13m16s

Alright. Well, we'll keep track of it, and we'll talk next week. Alright. Talk to you next week.