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 forty ninth episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Callaghan. With me as always is Roger Entner, this time in the flesh.

Roger Entner 0m23s

Yeah. This time we're together in one room. It's awesome to be there.

Don Kellogg 0m27s

Yeah. And we have a great show. This week, we're continuing our Titans of Prepaid series. We have Peter Adderton, founder of the iconic Boost Mobile brand in both The US and Australia, as well as Digital Turbine, one of the largest carrier focused app install platforms in the world, and also founder of MobileX. Yeah.

Don Kellogg 0m46s

So Peter, welcome to the podcast.

Guest Speaker 0m47s

Well, thank you guys for having me.

Roger Entner 0m49s

Well, we love having you. So what have you been up to?

Guest Speaker 0m52s

You know, just starting an MVNO. Obviously, I don't feel unique anymore. I feel like there's seven times more MVNOs every time I wake up every morning on x. But yeah. No.

Guest Speaker 1m3s

Literally, just building a, uh, a brand that I think is important. I think it's much needed. I think after the kind of failure of Boost Mobile and some of those other brands that have been acquired, I think it's important to have new brands like ours come out there. So, yeah, I I get up every morning thinking about how I can make consumers lives better in the prepaid space or in the mobile space, and that's really the dedication and focus we have.

Roger Entner 1m23s

You know, I think what you're doing is terrific. You know, one of my lines is with Mobile X. Every time I talk with my mother, I'm using Mobile X, which is every day.

Guest Speaker 1m34s

Good.

Roger Entner 1m34s

I'm a good son. I'm actually talking twice to my mother every day. So can you tell us a little bit more about Mobile X? What makes you different other than me calling my mother on your service? What makes you different?

Guest Speaker 1m48s

Yeah. It's a good question because there's obviously a lot of a lot of brands out there. And when I was thinking of launching mobile x, I knew that the world didn't need another unlimited brand, that we had to do something completely different. And, you know, back in 02/2019, when I was thinking about this concept, was like, you know, this is before AI became a buzzword and machine learning was probably more the keyword that they were using back then. Was like, well, how do we use machine learning and AI to help customers understand their needs?

Guest Speaker 2m13s

And that was really a passionate focus of mine. You know, the traditional carrier model today, as you know, is to keep people in the dark. They don't want you to know how much you're using because they wanna sell you plans and then upsell you plans, you phones with that and get family plans on there. And the last thing they want you to know is what you're using. And so what AI does is it brings you into the light.

Guest Speaker 2m33s

Right? And so what we are focused at at Mobilx is just making sure that you have all the right tools and all the right information to get that right plan that is specifically for you. Now don't get me wrong. We're not for everybody. Right?

Guest Speaker 2m45s

And so how I am AI may tell you, hey. You know what? Mobilx does not have a plan for you. There may other plans out there, but at least you know that you're on the right plan and you're spending the right amount of money and you're not being ripped off. And so that really was the focus of what I wanted to build.

Guest Speaker 3m0s

And it's funny because everybody got it here now that's coming into the MVNO space and even carriers that are starting to talk about AI and now starting to talk about customized plans, helping customers understand what they need and giving them those plans. We were doing this in 02/2019. So I think that I'd like to consider ourselves pioneers in this space. That's something that I think Mobile X has a real point of differentiation in in the marketplace.

Roger Entner 3m22s

Yeah. I haven't seen from anybody else having the AI introduction and figuring out what do you really need. In a way, you also are creating a lot of problems for yourself with it. Because, you know, we always say wireless is a breakage game. You know, the worst customer for a carrier to have is the one that uses exactly their plan allotment.

Roger Entner 3m47s

You make money on the people who don't use everything or who are using more than what they paid for. And I think you want to right size this. You almost eliminate this significant profit pool for traditional carriers.

Guest Speaker 4m3s

Yeah. There's you know, the biggest, I guess, program for the carriers out there on their p and l's is breakage and overage. Right? That's where they make most of their money from. I'm not about, again, looking at it from the carrier's perspective, which is where most of these guys do.

Guest Speaker 4m16s

I mean, you can't be a consumer champion and fight for consumers and then protect yourself. Right? I don't think that makes any sense. It frustrates being right here, all these carriers, and including some MVNOs that they're going, we're customer first. We're all about the customer, but they're not.

Guest Speaker 4m29s

I mean, let's be honest. Right? Because you're right. Our ARPU, average revenue per user is significantly lower than what is out there in the marketplace today. And that's because we're giving people what they need.

Guest Speaker 4m39s

We're saving them money. But there's two things you and I both know, Roger, in this industry is the thing that cost you the most is cost per gross had to get that customer, and then there's churn. And so as long as you can get a lower churn, I. E. Less customers leaving you and the less need to actually continue to keep spiffing customers, offering them handsets, you know, making an eighteen month life cycle payback because you've given them so much upfront, I think you win.

Guest Speaker 5m3s

So I I agree with you that lowering an ARPU is not what the carrier wants, but people seem to forget the 3,000 retail stores that they're building, the cost to that, the handset costs that it takes to be able to give somebody a handset, you know, basically, you know, pay that off for them. I think our model is the sweet spot. And again, it's not for everybody. I think our model is the sweet spot for the majority of Americans who don't use a lot of data. As I said, I think that's a majority of Americans.

Guest Speaker 5m28s

You and I had this debate before. And I think you're seeing that the data growth is actually slowing. It's not going up. A lot of reports coming out saying that mobile data is is slowing. I think the cable guys worked it out very well.

Roger Entner 5m38s

Yeah. On the device we are, how should I say, asymptotically leading to a ceiling. The increase that I see on mobile devices is that they're using higher video resolution. But they're using all the time that they can use on the device the way they want to now with a higher resolution. Where the increase from the networks is FWA and hopefully we see soon XR, VR products.

Roger Entner 6m7s

That I think will be that step stage. But like the mobile device as we know it, that rectangular touchscreen slab, we're nearing what it is, right?

Guest Speaker 6m18s

I think I said this to you guys last time. There's only a certain amount of hours in the day. Just on the video resolution, every unlimited plan, most unlimited plans, are defaulted to four eighty or seven twenty. So it's not like the carriers are giving you this high bandwidth. In fact, we're the only ones, I think, in the market today that allow you to select from four k to four eighty.

Guest Speaker 6m35s

I've got mine stuck on four eighty on my screen. It's fine. But I think the point that I was gonna make is that the cable guys have worked it out, that we basically, as carriers, sell our home Wi Fi back to ourselves. Right? And that's basically what's happening in the marketplace today.

Guest Speaker 6m48s

And I think as Wi Fi proliferates around, I think as you start seeing some of these decentralized wireless networks come in there into the marketplace, I just don't think that this, hey, we're gonna need a 100 gigabytes on our smartphones a month, you know, in the next ten years is is a reality. Right? And so I think if you think about that in the context of what we're building, you get a very loyal customer who's like, man, the mobile x is the only ones who are lowering my bill every month. You know, I'd love to continue to keep lowering your bill.

Don Kellogg 7m16s

Yeah. I know. So how easy is this? I mean, is this something where you've gotta train it for a while and then it kinda goes on cruise control and you pay what you pay? Or because I think of with unlimited, I think of, like, peace of mind is one of the main things that folks are buying.

Don Kellogg 7m31s

They don't have to worry about this or manage it. Right? But it sounds to me like with AI, there's an opportunity to kinda hit a sweet spot, right, where you're you're not worrying about it, but it's still not costing you whatever $30.40, $50 a month. Right?

Guest Speaker 7m43s

Yeah. I mean, it's so funny that you say that the peace of mind, but not one other commodity that you buy today. Can you buy a peace of mind where you overpay for electricity just on the instance that you may leave your fridge or your lights on a little bit longer? You're saying with gas, right, that you may leave your oven on. Right.

Guest Speaker 7m59s

And you may leave your water heater on a little bit longer. You pay for what you use when it comes to a commodity, and it's way cheaper because if you took everybody's street right and says, okay, don't everybody's gonna use the same amount of electricity that you use in your house. So I'm gonna charge everybody up and down. So those who turn their lights off and are more efficient, they don't get to win. They get to subsidize you.

Guest Speaker 8m17s

It doesn't work that way. And I think consumers have become zombies. Right? Of I

Don Kellogg 8m21s

don't know. I I disagree, though. I mean, you think about, like, the marginal cost of data. It's almost nothing. Right?

Guest Speaker 8m26s

So It's not. Electricity operating network. Right? It's not marginally nothing. I mean, that's the part that most people miss.

Guest Speaker 8m32s

I'm an MVNO. I buy data. It's not marginally nothing. Right? There is an expense to data.

Guest Speaker 8m38s

Now it's marginally nothing maybe for the carrier.

Roger Entner 8m40s

Right.

Guest Speaker 8m41s

Right? To provide that gigabyte. But hang on. These guys are spending billions and billions of dollars a year in CapEx to keep that network up. They've spent hundreds of billions on Yeah.

Roger Entner 8m50s

But without their billions and billions, you couldn't do your shit either.

Guest Speaker 8m53s

Understand that. I understand that, Roger. My point is that it's not marginal. The actual delivering of the data is marginal. The actual producing and physically creating that piece of data, that gigabyte is expensive.

Roger Entner 9m4s

It's very high fixed cost, a very low variable cost.

Guest Speaker 9m8s

Correct. So,

Roger Entner 9m9s

yes. Yeah. Here's the thing. On an absolute logic basis, I completely agree with you. But as we know in this country, arguing with fact and logic doesn't get you anywhere, right?

Roger Entner 9m22s

So yes, we're there with electricity and water and candy and beer, but people like it. So what I admire you for is to take on the education to get people to understand why they should have a plan like yours. And I think it's a great endeavor.

Guest Speaker 9m44s

Yeah. But, I mean, let's just go back. People do not trust their carriers. Right? The fact that the cable guys

Roger Entner 9m50s

They trust the cable guys less than they cast their carriers. I can tell you that. We're running trust numbers all the time. I know exactly who trusts who how much.

Guest Speaker 9m58s

The trust in the sense of the industry, not trust is in the sense of everything. I posted the other day the top 50 brands that are loved. Not one carrier exists in that brand top 50. But you know what does exist? All the other brands like YouTube and Instagram, all these other brands that basically ride on networks, Apple, Samsung, they actually ride on network of these carriers.

Guest Speaker 10m20s

People do not trust their carrier full stop. Right? Now your point is, well, who do you trust the most the least? Right? And so that's the mindset that a consumer has when it comes to carriers.

Guest Speaker 10m31s

I was gonna make the point on the cable guys. The cable guys have a lower NPS score than the carriers. Significantly lower. People do not like the cable provider, yet they're the fastest growing wireless business in America today.

Roger Entner 10m43s

Yeah. Because it they're they're the cheapest, and people make the trade off. Right?

Guest Speaker 10m48s

But that's the point. The point is it's not about brand trust. It's not about quality of service. It's like who's the cheapest? Because everybody knows that this is a commodity.

Guest Speaker 10m56s

I need my phone. So

Roger Entner 10m59s

On the flip side, they're losing broadband customers to FWA and cable for either being better or cheaper or sometimes both.

Guest Speaker 11m9s

Well, I think we're using it because it's easier. I mean, let's face it. You know, rolling out a truck, getting someone to come out and hook you up, and getting an appointment where you can just walk in and buy a dog and then basically off you go. You're now connected to the Internet. Mean

Roger Entner 11m22s

Well, I think it's more the continuing relationship.

Guest Speaker 11m25s

I mean, the cable guys rid of the cable part of it. They've been very successful.

Roger Entner 11m29s

Coming back to mobile, where do you see Mobile X going? Can you tell us a little bit about your progress and where you see all of that coming together? Because I'm really excited about what you do, and, you know, I'm rooting for you.

Guest Speaker 11m44s

Yeah. No. Look, I I think at the end the day, every consumer should be ready for us, to be totally honest with you, because do nothing more than lower your bill and make the service a lot better. You know, let me talk a little bit about the background of Mobiles. I talked about this before that we have a lower ARPU, right?

Guest Speaker 11m58s

So what we need is lower churn. In order for our business model to work, we need to keep our costs low and we need to have a lower churn. And we're seeing that now. So if I take the customer base that we have today, we have, you know, three plans as you know. They need a hand plan.

Guest Speaker 12m11s

I I have no idea what I'm doing. Can you help me? That's where the AI kicks in. To build your own plan, I've got a tablet. I want one gigabyte.

Guest Speaker 12m17s

That's all I need. Or I know what I need, and I'm gonna set a budget. So I've only got $15 this month or $8 this month. So that's what I wanna set. And then there's the unlimited plans, right, which we have in the marketplace.

Guest Speaker 12m29s

If you look at our base, 70 to 80% of the customers that come in through the AI learning period are basically taking their personalized access. They're not taking the unlimited. What does that mean? They're lowering their cost significantly. It also means that churn is low.

Guest Speaker 12m43s

You look at the industry standard on churn is around four, four and a half percent. We're falling below two and a half percent this year as this month. I think we'll fall below 2%. When you actually provide a great service at a great price and you don't feel you're getting ripped off and you've got complete flexibility and customization, it's strange people don't leave you. You know?

Guest Speaker 13m2s

Who would have thought that, you know, providing a great product and a great service oh, I know who would have thought that every single brand that's got a a high NPS score who says, you know what? I'm gonna put the customer first. And so we're very encouraged by that. I think I announced we did about 30,000 in the month of May. Uh, sorry, April.

Guest Speaker 13m20s

We beat that in the month of May, and we're continuing to grow. And and what's good about what we're doing is that a lot of our marketing, which we put out there, is word-of-mouth. It's just people going, I can't believe I was spending $23,000 a year with a carrier when I can spend 2 or $300 less with MobilX. And so the amount of money we save people, it's a trip for the family to Disneyland and Roger. It's a lease payment on a car a month.

Guest Speaker 13m47s

That's why I talk about this, Don. These are significant costs to the household that you can save them. And if you save them, they'll stay with you. And that's our model is stay with us forever. We'll always keep continuing to to to look at your bill and making sure we got you on the right plan at the right price.

Roger Entner 14m3s

Yeah. And digital distribution for you people coming to the website, I would imagine it's very important to keep the numbers low.

Guest Speaker 14m10s

Yeah. I mean, consumer first. Everyone's like digital first, and I'm like, no. No. It's consumer first.

Guest Speaker 14m15s

But even if you take Walmart as an example, Walmart's a very unique position for us. Right? And very different. In fact, we collect the money from the customer and we pay Walmart. And the reason why we got in there, and I think the reason why they like us, is we don't go through their point of sale system, right, to be able to do activations and all that.

Guest Speaker 14m30s

There's a bunch of stacks that go inside of Walmart. You go and you scan the barcode. You buy the SIM card. You go home. You do it all via the app.

Guest Speaker 14m36s

And we have, as you know, a mobile x Walmart app together. We're the only ones that are app centric. Right? So we're app centric and AI driven. And every new MVNO that I hit coming in the marketplace, the fintechs that are coming in, they're all talking about AI and they're talking about app.

Guest Speaker 14m49s

And I'm like, well, hang on. We're doing that already. Right? That's where we are today. And I think it's time for the carriers.

Guest Speaker 14m55s

And I give credit to to our host carrier because they saw what we were doing, you know, in Verizon. I I give them credit because they saw what we were doing. They're like, you know what? This is a unique way to go to market. They realize they don't need another unlimited plan.

Guest Speaker 15m7s

I mean, they've already got when they bought TracFone, already bought 300 of them. And there's another 5,000 out there in MVNOs. What they saw we were doing is something very, very different, right, using AI and machine learning to help educate customers. Because at the end of the day, if you can get a customer and you get that customer to stay with you for life, right, you can bring that churn number down, which is what they all cry about when you talk about, you know, their postpaid. I mean, our our port in numbers, our churn is like below point o eight of a percent.

Guest Speaker 15m35s

We're actually industry leading in postpaid. And so that's the focus that we wanna focus on. That's the focus I say to the carriers is you should be focusing on your churn number, right, to get that down. Why is a customer leaving? And we think that our platform that kind of plugs that hole up to say, okay.

Guest Speaker 15m52s

There's no reason to leave. We've the best network. And and I'll just say this as well. I think T Mobile did the world a favor when they basically made the network agnostic. Right?

Guest Speaker 16m1s

They came out and said, we got the best five g network. Everyone was fighting the network battle. Verizon owned it before. And then suddenly, T Mobile jumped in and said, well, we've got the best five g, and then AT&T started crying about the best coverage. So what you've got now is an agnostic consumer who doesn't really care about the network anymore.

Guest Speaker 16m18s

A big loss for Verizon because that was a major reason why Verizon was so successful. A big pickup for T Mobile. But now customers are looking around going, okay. All networks are the same, basically. What's the best value?

Guest Speaker 16m29s

What's the best price? What's the best use case for me? And I think that's where we are today perfectly positioned.

Roger Entner 16m35s

Customers should definitely, if they're in the market of switching, should definitely look at you and what you provide. Peter, this has been awesome. Thank you for coming on the show. As always, great insights. Thank you for telling us more about Mobile X.

Guest Speaker 16m50s

Thank you guys for having me. Happy to come back anytime, Roger and Don.

Don Kellogg 16m54s

Thanks, Roger. We'll talk you next week. Thank you.