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 thirty fourth 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 Antner. How are doing, Roger?

0m22s Speaker 1

I'm great. How are you?

0m24s Speaker 0

Good. So I think we're gonna talk about a topic that we disagree on today. What is it?

0m29s Speaker 1

Well, let's talk about two things. Right? Okay. One is the changes that are coming to beat and the other one is t priority.

0m37s Speaker 0

Fair enough.

0m38s Speaker 1

Which one do you wanna start with?

0m40s Speaker 0

Let's do t priority. I think we actually agree on this one. Tell us about t priority.

0m44s Speaker 1

So T Mobile very kindly invited me to the Tea Priority launch event or coming out party in New York City with the city of New York. Very impressive. The room was full of employees of the city of New York, plus first responders, meaning police, fire, EMS, really a lot of strong energy, and the CTO of the city of New York was giving a speech and talked about how excited they are about bringing network slicing with key priority to the City Of New York, where it gets really interesting that basically, he said, like, yeah, we're moving the entire city over to T Mobile, and the city will save $10,000,000 and we're extending the same discounts that the city gets to all the city employees. What was also very, very interesting is, right, we always talk about network slicing versus a dedicated core, and you know, I'm really excited. We will have Scott Agnew, who runs AT and T FirstNet, come on in the next couple of weeks.

1m59s Speaker 1

And I invited somebody from Frontline too, and I invited somebody from T Mobile, the first person, talk about it. But it was really interesting where they basically said, yeah, we have a network slice, but in the end, and if I understood it correctly, in the end, we will prioritize first responders on our network over everybody else. A first responder is five times the weight of everybody else. But if there's a true disaster, in the end our whole network would be a first responder network, which I'm like, woah, right? On one hand you're going all out for first responders.

2m36s Speaker 1

On the other hand, if it's a medium sized disaster, does that mean that consumers or businesses get kicked off? I don't know. Everybody says now that they have preemptions and that they have they have prioritization and they have preemption. Two different things, both of them are important. Prioritization means you're giving a first responder more resources than a normal person.

2m57s Speaker 1

Preemption means that, say, disaster happened, Don and I are talking, and the network is full, and the first responder needs to come on, then I get kicked off. Or both of us get kicked off to make room for the first responder and whoever they are calling. Very important. Right?

3m15s Speaker 0

Right. But the idea here is that they can re dynamically resize kind of the network as necessary, right, with the slice?

3m22s Speaker 1

Yes. With the slice, they can prioritize. One of the things that T Mobile said that they are doing is we're gonna give the first responders a speed floor. So we are gonna I don't wanna say guarantee because I don't remember if they said guarantee or not, but they basically said we've committed to a minimum speed, and so we will never go below that speed. I don't know if that's factually, actually possible that if you're on a coverage hole, can't guarantee speed, or if you're on a low coverage area, right?

3m54s Speaker 1

But they will do everything they can to give first responders a minimum speed so that certain activities will fly and will work.

4m5s Speaker 0

That's impressive. That's impressive.

4m7s Speaker 1

Yeah. The interesting stuff here is not only about first responders, but then how this then also get leverages for businesses. Because the logical argument will be that, look, if this network slicing works, and works when people's lives are on the line, this will also work in the case of a production line when the only difference is money. And so the first responder use case is like the acid test for network slicing. I still make the case that network slicing will win over private networks.

4m46s Speaker 1

And my logic is very simple. When businesses are outsourcing everything they do, They outsourced IT, they outsourced billing, they outsourced payroll, they outsourced you name it. They are not going to insource the most difficult part and do their own network. They might outsource it to a consulting company, but it should be a lot easier to do this via a slice where the business doesn't have to pay for the infrastructure or of all the infrastructure that is required.

5m24s Speaker 0

Well, right. I mean, I can make an even easier case for it. Right? And it's the software eats the world case, right, where it's so much easier to deploy a software solution where you're just changing something in the network and the infrastructure is consistent as opposed to completely duplicating infrastructure that in many cases already exists. Right?

5m42s Speaker 0

So I agree with you a 100%. I think this is really exciting because of the kind of new use cases that could potentially drive. We're constantly, you know, looking at all this amazing stuff happening with AI, but the reality is, you know, as we learned on the pod last week, AI takes huge amounts of capacity, both bandwidth and storage capacity. Right? And the wireless networks can help help deliver that.

6m7s Speaker 0

I think slicing is an important could be an important part of that as well.

6m10s Speaker 1

Yeah. And so the promise of slicing has been here for five years, so has been the promise of private networks. I still maintain that there are more analyst reports about private networks than there are private networks. But, hey, it's gonna be really interesting.

6m28s Speaker 0

Private networks have a role to play. I mean, there's all kinds of niche applications for this kind of thing, but I don't I don't think it'll ever be as big as the potential of what we have with slicing. Right? Because you can drop a slice anywhere. It's all software, and it works functionally in the same way.

6m43s Speaker 0

Right? Yeah. Exactly.

6m44s Speaker 1

It right. Don, you got it right. Software eats the world. Right. Alright.

6m48s Speaker 1

Let's talk about a fun topic. Bead.

6m51s Speaker 0

Yeah. So so Bead. Right? How would I say this? The landscape for who's gonna qualify for Bead versus not has changed quite a bit.

6m59s Speaker 0

Tell us about it.

7m0s Speaker 1

Well, it hasn't changed yet. So Commerce Secretary Lutnick said like, we have to make Bead network agnostic. And making Bead fiber centric doesn't make sense, because we have to look at the lowest cost solution. And the states have been slow, right? And part of the reason why the states and this everything has been slow is that BEAT has been given to the NTIA.

7m30s Speaker 1

And in all fairness, the job of the NTIA is federal spectrum allocation. I don't remember when the NTIA has run a large scale government spending program. The FCC is awesome for that. Even the Department of Agriculture is awesome for that. The NTIA, in all fairness, has never done this, and it shows, right?

7m54s Speaker 1

That's why nothing happens. The other thing is when you look at BEAT things, some of the locations that are being awarded, it's like $60,000 Per connection. Connection. A location, a household, and it has to be fiber, right? That's like $60,000 Hold on, let me do the math.

8m17s Speaker 1

Let me do the math. Dollars 60,000 divided by 12, divided by, what do we say, dollars 50 ARPU? $50 ARPU. Just on ARPU, takes a hundred years to break even on that installation.

8m31s Speaker 0

I would make the point that the federal government's job is not to break even, but go ahead.

8m35s Speaker 1

Well, my argument is the federal government's job is to spend the money half way wisely. Right? Correct. Correct. And when you can do the same job on a cheaper way, why not do that?

8m49s Speaker 1

Right? And I agree with secretary Latnick that if FWA can do the trick equally well, or if we go further out, if satellite can do the job equally well, why not? And by the way, $60,000 is not even the extremist case.

9m6s Speaker 0

I don't disagree with any of this. I think, know, the federal government shouldn't be in the business of buying $25,000 hammers. Right? Like, this is kind of the same same rubric here.

9m15s Speaker 1

Think Same thing.

9m16s Speaker 0

Where we had a little bit of disagreement is you're you're very bullish on Starlink. I'm less bullish on Starlink. For the pure reason that I think that FWA in many cases is a much better solution, the number of folks are gonna be, you know, where Starlink is the best option is lower than I think a lot of folks think it is.

9m33s Speaker 1

I think you're mischaracterizing me a little bit. I look at it for every technology, there is a space. Tomorrow, Tuesday, I think New Street Research is going to publish our NPS data on an aggregated basis. And later on this week, I will publish it in a little bit more granular on our home Internet NPS data. In a nutshell, when you look at the NPS data, the happiest home Internet customers are at FWA, followed by Starlink, followed by fiber, followed by cable, followed by DSL.

10m9s Speaker 1

There is a use case for every one of these solutions. I think Starlink is spectacular in very rural America. It is a disaster in Manhattan. It's not gonna work in Manhattan.

10m24s Speaker 0

Or where there are trees.

10m25s Speaker 1

Or where there are trees, a lot of things. But there are places where Starlink is spectacular, where the alternatives to Starlink are horrible, and the people are just giddy to have it. Right? When it works, it works really well.

10m41s Speaker 0

Yeah. I mean, news flash, the starving people love food. Right? I mean, it's the same thing.

10m45s Speaker 1

Yes. Exactly. But that doesn't mean that we're gonna roll out a three star Michelin restaurant to everybody on the planet.

10m54s Speaker 0

100%. And think that the goal the goal of be with fiber, right, was to take what is objectively, and I think you would agree with this, objectively the best technology

11m4s Speaker 1

Yes.

11m4s Speaker 0

From a speed and reliability perspective and try to build it out to as many people as possible. Now realistically realistically,

11m13s Speaker 1

60 as

11m14s Speaker 0

$60,000 a connection is is not a good deal. Right? No. And there are better definitely more cost effective ways of doing that.

11m22s Speaker 1

And when I look at it, very, very rural America, Starlink. Then comes FWA, because carriers are going to overlay their existing networks, even in rural America, with 2.5, 3.5 C band, and 3.45 C band, right? And a very easy rule of thumb is 100 MHz of spectrum is two gigabytes of speed per sector. And if there are only four or five people in that sector or households in that sector, you can provide fiber like speeds with FWA. And for those people, FWA is the best, most cost effective solution.

12m5s Speaker 1

It will beat Starlink, and then the more urban you go, the more dense the population gets, the more fiber wins.

12m13s Speaker 0

Better the economic yeah. But my point is that

12m15s Speaker 1

more affordable it becomes.

12m17s Speaker 0

But when you do get to the area with the marginal coverage, right, that Bead is looking to cover, you get around, you know, 12,000,000 or so. What I'm saying is, obviously, T Mobile needs to make a decision. All the FWA providers need to make a decision on where they want to offer coverage and where they want to bid for this. But FWA is a viable solution. I think in many of those circumstances, you're not capacity constrained because it's areas with low population density.

12m41s Speaker 0

Yeah. I think it's a viable option. And given the choice between FWA or satellite, I think a lot of people are gonna opt for FWA.

12m48s Speaker 1

And we should let the people make that decision. Right? That's my argument.

12m52s Speaker 0

100%. 100%.

12m53s Speaker 1

People should make that decision. Somewhere the government will have to decide how many years of payback or how many years of, yeah, payback is too many, right? And everything above that will be covered with FWA or satellite. And so I completely agree with Vladnik when he says we need to find the lowest cost solution that makes people happy. And our NPS data shows that the people who have FWA are happy, and the people who have Starling are happy too.

13m27s Speaker 1

At the same time, you know, we can go over this again. We also see a lot of people returning these things because they are not happy with and it doesn't work in their location.

13m38s Speaker 0

Well, I would make the same argument about satellite too, by the way.

13m41s Speaker 1

Yeah, no, absolutely. One of the things we see in our Starlink data is Starlink operates what, like now two years, three years, somewhere like that. We have three times as many former customers of Starlink than we have of Starlink customers. So we can clearly see a lot of people have tried Starlink because they didn't like what they had. They tried Starlink and it didn't work either.

14m5s Speaker 1

And then they went back to the whatever unhappy solution that they had because they didn't wanna be even more unhappy. But there is a sizable part of people that when it works, they're very happy with it. That's my argument. Yeah. And so we should let the people try and see what makes them the happiest.

14m24s Speaker 1

And the government shouldn't tell them, you know, eat this, this will make you happy. Shut up, right? Be happy. That's not the job of government.

14m33s Speaker 0

Well, think if folks got to choose what technology they wanted, I think a lot of folks would choose fiber. I think Again, the $60,000 of connection is not a viable thing, right?

14m43s Speaker 1

So And I think people are completely indifferent to technology. They are very partial to outcomes. And if this would run on smoke signals or drums and give them fast enough internet that they can watch video, they would sign up for it too. And if it would be little gurgles running around with internet packets bringing it to their home, they would accept that as well, you know? People are technology agnostic, and so should be the government.

15m11s Speaker 1

That's my piece. All right. I think that's a good place enough now. Right?

15m15s Speaker 0

That's a good place to stop it. Alright. Thanks, Roger. We'll talk next week.

15m18s Speaker 1

Thank you. Bye.