The Half-Connected America and the Case for Universal Offers

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the three hundred and second 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 Retner. How are doing, Roger?

Roger Entner 0m22s

I'm great. How are you?

Don Kellogg 0m24s

I'm good. So Roger, you recently wrote a little bit about folks that may or may not be engaged with either wireless or broadband service. So who's not choosing those things?

Roger Entner 0m35s

Well, not at all. Right?

Don Kellogg 0m36s

Or not at all. Yeah. Why don't you tell us a little bit about this?

Roger Entner 0m39s

So I wrote a report called Be Half Connected America, which basically looks at the people who either have mobile but not home Internet, home Internet but not mobile, and people who have nothing at all. And what I did here is I took our survey and I combined it with the NTIA survey that looks at these extremely hard to reach segments. And in our data, because it's an online database, we have a much lower percentage, like in the two to 3% range, of people who fall into either one of those buckets. Obviously, we're an online and digital panel, we don't get the people who are not connected and we rely predominantly on NTIA for that. And it's really, really interesting what we see.

Roger Entner 1m35s

We have a lot of government programs and we have sometimes limited progress. And for some of it, it got better and for some of it, it did not. So for mobile but not home internet, that's lifeline. That's lifeline for low income. But there are people, even higher income, who are not doing that, and that's around 14,000,000 households.

Roger Entner 1m57s

Home Internet, but no phone, that's a relatively small number, several million people, and it's mostly seniors. And the not connected at all, according to NTI, is about 11,500,000 households. In the policy world, these are the unconnected people, and it's getting them collectively all three wrong. When we look at the people who are disconnected, and the NTIA survey is really good about that, it's people choosing not to be connected. And they knowingly do that, and it's a choice that deserves to be respected.

Roger Entner 2m34s

Because if they are low income and they want to have a mobile device, lifeline is there, it has to be means tested, right? And that's one of the problems because poor people lack a lot and the only thing they have is their dignity. And we shouldn't take the dignity away and we shouldn't make choices for people, right? We can make offers, but we can't make choices. So you have the people who are disconnected, and some of them are saying, look, I don't want to be surveilled.

Roger Entner 3m9s

We know the moment you go online, either with a computer or a mobile device, somebody will track you. If you wear a tinfoil hat, it's the government. And if you know what's going on, you know, it's the big Silicon Valley companies, because everything is connected with

Don Kellogg 3m26s

Ad tech.

Roger Entner 3m27s

Ad tech, and there you go. You can't get away from it. And some people simply say, I'm sorry, I'm not part of this game, right? I don't want to do this. And then you have a segment that on the home internet side, that simply can't afford a computer.

Roger Entner 3m44s

And nobody is subsidizing a low end computer. And so BEAT was spending $42,000,000,000 on tens of thousands of locations for thousands, if not tens of thousands of dollars at a time, and then we can't find $500 for a basic laptop?

Don Kellogg 4m5s

Well, you're not connecting people if there's nothing at the very end to connect to, right?

Roger Entner 4m9s

At the very end, right? It's the telecom equivalent of a bridge to nowhere. You have the fiber line running by the house, and the reason why nobody likes it is because we were too cheap for a 300 or $500 laptop. After spending $35 10,000 on connecting that thing. Or because we're too stubborn on like, we're not going to hand out a laptop, you know, the $510,000 get wasted.

Roger Entner 4m36s

Doesn't make sense. And $3,500 is the subsidy for a lot of people for a low end mid tier smartphone. So it doesn't make sense. So the first one who's like offering a subsidized laptop might actually capture a significant part of the group that is not connected because of money, not because of necessarily, you know, philosophical reasons. The other thing is really interesting is if we go to the people who only have a mobile phone and no home internet, where the mobile phone does the work and is powerful enough to do everything that a laptop can do.

Roger Entner 5m14s

And what's really interesting is that smartphone only customers have a significantly higher NPS than people who have both. So it's obviously working. They're not waiting to be rescued.

Don Kellogg 5m28s

Well, they could be using hotspot too, right? Like there's no real way to tell, right?

Roger Entner 5m33s

Yes, And it works for them, and they're happy with it. They're not missing out. And by the way, with the senior citizens that only have a computer, a lot of them don't want to have a cell phone. And I looked at the data. It's regardless of income.

Roger Entner 5m48s

It is regardless of education. It doesn't matter if the person has a graduate degree or has a high school degree. They don't want to have a cell phone because when you lived an 80 year old full life, you did everything you wanted to do or some people not. What you definitely don't want to do is learn to use a cell phone. I saw it with my mother.

Roger Entner 6m10s

She struggled with this thing. And the older she got because the manual dexterity went down, it went down. Right? You know what's really also interesting, as a side comment, we're talking about couple retirement in California. And the answer here is wireless, but with a home Internet that wirelessly connects, but looks and feels like a normal handset.

Roger Entner 6m35s

That's what people want. And they don't care if what thing is connected with.

Don Kellogg 6m39s

So like a magicJack VoIP type of solution?

Roger Entner 6m42s

Or wireless. Yeah. It looks like your current phone, if you still have a landline phone, but instead of it connecting, we are a wired connection connects wirelessly, but everything else looks the same. You know, what's also really, really interesting is how price has stopped being the excuse, because low income qualified households can get a wire for $10 $15 A lot of it is due to government regulatory concessions that people make, and the open market is 30, but that's less than two streaming subscriptions. And people still say no.

Roger Entner 7m22s

And when the price is that low and the answer is still no, the product just doesn't have a job to do in that house because wireless might do the trick or they just don't wanna have it.

Don Kellogg 7m36s

So I mean, what's the policy prescription here? I know we spend tens of millions of dollars or more than that on lifeline and everything else. What should policymakers take out of this?

Roger Entner 7m46s

Well, first of all, you have to treat people with respect. Just because somebody doesn't have mobile or doesn't have home internet, there's not something wrong with them. But they might make just the educated choice and decision that that's not what they want. They don't need to be re educated. They don't need to be converted.

Roger Entner 8m9s

You have to respect the choice that people make. What we need to do is to make offers, and then let people take the offers and make them attractive. But then also look at it as the total connection from end to end. Lifeline does that, our current home internet connections do not. And so if we want to drive that, that's what stops speed from being the bridge to nowhere.

Roger Entner 8m38s

It's like people should have something there at the end of the connection, and that's important as well.

Don Kellogg 8m46s

Well, and it's only gonna get more important too, right? Mean, when you talk about kind of AI proliferating everywhere and everything else, I mean, like, if you don't have something to interact with these systems, think you're gonna potentially be in trouble at some point.

Roger Entner 8m57s

Absolutely. And AI on a computer is infinitely better than on a handset. And if we don't want to disconnect people, we need to make sure that the total connection is ensured. But the goal is a universal offer, not universal adoption. You can't force people into the happiness of being online.

Roger Entner 9m18s

For some people, it's just not the thing. And the one policy that would reorder the entire market that's not another connection subsidy is the one that buys the computer. And the newer and better computers, they last five years, six years, seventeen years. Some of the older Macs, right? I have a Mac that still runs after ten years.

Don Kellogg 9m39s

Well, I mean, other low cost option things too, like Chromebooks or something that's like Exactly. Web driven.

Roger Entner 9m47s

$100 and it does the trick. We don't wanna give everybody a Macintosh. There's not enough money around, but a Chromebook is a really, really good alternative there or something like it or an entry level laptop. And it would help in so many other cases.

Don Kellogg 10m5s

So folks want to read more about this, where can they find the report?

Roger Entner 10m9s

The report is on our website. There's also a research note which should be on our website and coming out soon at live reading and the report is, yeah, on our website.

Don Kellogg 10m21s

Awesome. Well, looking forward to following this and then we'll talk to you next week.

Roger Entner 10m25s

Alright. Thank you.