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

Full Transcript

0m10s Speaker 0

Hello, and welcome to two hundred and seventh episode of the week with Roger, conversation between analysts about all things telecom, media, and technology from Recon Analytics. I'm Don Kellogg, and with me as always is Roger Ender. How are doing, Roger?

0m22s Speaker 1

Hey. I'm great.

0m23s Speaker 0

Roger, we've got some interesting activity happening in the prepaid part of the wireless market right now, which is, you know, I think timely given our topic from last week talking about Mint. Do you wanna tell us about it?

0m34s Speaker 1

Well, of all, Aaron North gave us a really nice shout out on LinkedIn. I really appreciate it. Shout out again. Then Verizon, Nancy Clark, great leader in the industry. She is running Verizon Value right now.

0m53s Speaker 1

She's fighting back. And announced that with Visible, you know, you can get $15 you know, unlimited, with a five year price guarantee. And unlike with Mint, you don't have to bring four lines, and you don't need to pay three months ahead. You know, the fight is on, right? And I think that's really awesome that there is activity and when one company offers a great offer like Mint does, somebody else comes out and gives an equally, if not better offer right away.

1m26s Speaker 1

That shows that competition is alive and well in this market.

1m29s Speaker 0

Well, I mean, think it's how the market's supposed to work. You left out, I think, what's the most compelling part of the Verizon visible offer, the $15 a month taxes and fees included, but with a five year price guarantee, which, you know, is an eternity in wireless. Right?

1m44s Speaker 1

Well, here's the funny thing is the premium prepaid, like Cricket and Mint, they've gotten now churned down into the twos, and sometimes like the mid twos. And for prepaid, that's spectacular, right? For traditional prepaid, it's in the threes and in the fours. If you're at 4%, that means your customer life is twenty five months. That's two years plus a month.

2m12s Speaker 1

At 3%, that's a little bit less than three years. So giving somebody a five year price guarantee and they stick with you, your churn goes down in in the ones. So that's the really interesting thing about that five year price guarantee. That if somebody actually does this, it's awesome.

2m33s Speaker 0

The one caveat though, right, is it's a single line offer.

2m37s Speaker 1

Well, you can add multiple lines together at $15. That's still awesome.

2m42s Speaker 0

Yeah. When I think about prepaid though, you know, I think of prepaid as being a transitional product for a lot of folks where, you know, when you're first starting out, you don't have credit. I was one of these people. You get prepaid for a couple years, and then you realize there's better offers out there, and then you upgrade to postpaid. We've seen that a lot of the net ads in the industry that are happening on the postpaid side are originating from prepaid.

3m2s Speaker 0

Right? So sure, it's great from a customer facing perspective, $15 a month for five years is great. From kind of a business health perspective for Verizon over the long term, I think they probably do wanna promote some of those folks. Right?

3m15s Speaker 1

Well, of course. Because by the way, 15 is a spectacular deal, right? For 1 or $15 for $45 for like three or four, that's a smoking deal. We've done research about that prepaid postpaid transition and things like that. I don't want to spoil all the wealth of information that we collected, but one of the things that was consistent was that prepaid was seen as price wise, right, the lower priced offer, and postpaid was seen as from a total package perspective as the better thing.

3m52s Speaker 1

And of course, you know, if you have somebody like Verizon or T Mobile throw in the kitchen sink with, you know, 26 different value add offers, I can see that, right? But at $15 you know, if you don't need three different streaming providers and free Frostys and this and that, and you're willing to buy your own phone, and more and more people want to keep their phone longer, right? If you're not into the device market and want a bare bones, no frills thing, These prices are spectacular. But what's also interesting, right, there was the Prepaid Expo in Vegas this week and another friend of the show, Peter Additon, was there as well. He got a little bit into a heated exchange with David Kim, who is the Chief Revenue Officer of Verizon Value.

4m50s Speaker 1

You know, he points out that all this unlimited is overkill you know, with Mobile X, you can have it even cheaper. And there's also a lot of truth to it. If you're a younger individual, you want to have an unlimited plan. If you're like me, 55 plus, I'm not sure I need unlimited. Right?

5m11s Speaker 1

So it's very topical and very situational what kind of an offer you want, how price sensitive are you. Right?

5m20s Speaker 0

Well, mean, it depends on the use case, think is what you're saying.

5m22s Speaker 1

And it depends on the use case. But somebody can get away with $10 with Mobile X. Right? Now does $5 make a difference in your life? In perspective, it doesn't even buy you a Starbucks coffee anymore.

5m37s Speaker 1

Yeah.

5m37s Speaker 0

Well, I mean, I think what I would say is that the use case for most folks is, you know, sitting at a desk somewhere or maybe you're out and about. Right? But the prevalence of WiFi pretty much everywhere, I think folks should think hard about unlimited. And that, you know, unlimited to some extent is more about do you wanna worry about it or not. Right?

5m56s Speaker 1

It's peace of mind.

5m57s Speaker 0

Peace of mind. Exactly. Right? So, like, I, for years, was on a bucket plan and was operating within the bounds of my bucket plan. And I switched to an unlimited plan that was maybe, you know, $510 more, but now I don't have to think about it, right?

6m11s Speaker 0

And if something changes in my schedule where I'm out and about more than I was before, or I start watching a lot more videos on my phone or something like that, then it doesn't matter, right?

6m20s Speaker 1

There are different strokes for different people, there are plenty of really appealing offers out there, and it's nice that people pay attention. I'm looking forward to potentially a reaction from AT and T, I don't know, with Cricket. You know, they have a new CEO. It should be really exciting.

6m42s Speaker 0

Yeah. I mean, think it's interesting. We've talked about this before on the podcast, but there's been a lot of changes that happened in terms of plan structure at the high end of postpaid. What we've seen is, you know, our bruiser continue to climb, but I think that places a little more pressure on the lower end and it's not surprising to see some action happening both in the low end and I I expect to see some more happening in the middle as well.

7m5s Speaker 1

As these prices and especially prices for legacy plans are going up, you know, creates a little bit of a vacuum there at the lower end. And prepaid has been losing customers to postpaid. But at the same time, you have the cable companies with really attractive offers and increasingly more generous offers. And they're reaping massive subscriber gains, right? Charter, for example, they offer now device discounts, you know, dollars 5 for insurance, things like that where it becomes a very attractive offer for a significant part of the segment.

7m53s Speaker 1

And on mobile, they're the real predators, right? They are on a prowl and they are herding. On the other hand, they are hurting themselves on the broadband side where at least up until now haven't had found an answer to FWA. That might change, right?

8m14s Speaker 0

Yeah. I mean, think it's tempting for us in the industry to think about, you know, kind of individual product lines and price points and things of that nature. I think a lot of consumers are probably approaching this from a total connectivity cost. Right? For example, with the charter offer, you've gotta have charter Internet as well.

8m29s Speaker 0

Right? And so when you put together whatever free line or discounted line plus the Internet costs, it may be, you know, roughly comparable to what your FWA plus your mobile bill and a competitive wireless rate

8m43s Speaker 1

is as well? It's probably lower because cable goes at it and says like, I can give you home internet and mobile for less than the MNOs give you mobile. The asterisk is it's for two years or maybe even only a year. Right? But still, it's a really compelling price plan and the mobile is spectacular.

9m6s Speaker 1

It comes from Verizon.

9m8s Speaker 0

For like the MSOs, they're by definition farming their installed broadband base. Right? Because you have to you have to be a broadband customer to be qualified for that. Right? Whereas I think, you know, on the wireless side, it's a little different.

9m23s Speaker 0

Everybody has a wireless phone. Right? And we've seen it in our data that the preponderance of they don't necessarily force you to have a mobile agreement, but they give you a pretty smoking deal there too, right? So we can talk about quote unquote free lines, but the total relationship is not free, right?

9m40s Speaker 1

It is not. Right? And and they are playing on time until DOCSIS four point o is a lot more powerful and or as they actually are cutting over to who are launching fiber. You know, one of the things that I just learned the other day was like in the ADOF markets where they build out or the fill ins, the cable companies are not deploying cable. They're deploying fiber, right?

10m7s Speaker 1

Which is kinda interesting, right? It's like that was already done. And by the way, I have a really cool research note coming out. It's either out or about out when this airs on the interplay between the cable companies and FWA, and it has a detailed look at the satisfaction level of the cable companies. You know, cable companies get a lot of criticism for low customer satisfaction.

10m36s Speaker 1

But when you look at the Net Promoter numbers, there are a lot of cable customers that are absolutely delighted by cable. Right? It's not like it's a universal pit of misery. But there's at the same time a lot of opportunity for fiber and the FWA players to wreak havoc as they have on the unhappy cable customers. And then cable has the opportunity to dramatically expand into mobile adoption.

11m8s Speaker 1

Because, you know, right now they have like what? Between 1113% penetration of their customer base with mobile. As a benchmark, what I think is the highest in the industry is AT and T with about 40% of their fiber base is converged. So there's plenty. If you thought that cable was done expanding in mobile, they have a ton of runway here.

11m35s Speaker 1

Right? And at the same time, FWA has a lot of runway into their base as well. So it's gonna be really, really interesting.

11m44s Speaker 0

As we look at what T Mobile's doing with fiber and the idea that FWA could be kind of a place you stop off for a couple years before you get fiber coverage. Then when you start reusing that FWA spectrum and bandwidth, it can potentially get pretty scary for the cable companies if they lose folks to FWA and then those folks upgrade to fiber at a later date. Right? So the gun shoots both ways is my point.

12m10s Speaker 1

Oh, Absolutely. And so it's very interesting also to look at what T Mobile is doing with their fiber buys. I look at like cable as like a piece of bread, and all the soft pieces in the middle are gone. Right? And you're going further out and out to the hard crust.

12m26s Speaker 1

What T Mobile bought is more on the slowly crusty part, rather than the fillet pieces or the the really nice soft stuff in the middle that has already been, you know, divvied up. It never gets boring in this industry. And I really appreciate that, you know, Verizon picked up the gauntlet from what Mint was doing and gave us an opportunity to double down.

12m48s Speaker 0

Well, mean, the the reality is that, you know, moves like this are consumer friendly and we wanna see more of them. Right? So

12m54s Speaker 1

And I'm excited to talk about more more things. You know, I think next week, we're gonna talk about satellite stuff. Right? Mhmm. And so should be exciting.

13m4s Speaker 0

Alright. Well, we'll talk to you next week, Roger.

13m6s Speaker 1

I'm looking forward to it. Bye.