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

Full Transcript

0m10s Speaker 0

And welcome to the two hundred and twenty sixth episode of the week with Roger, a 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.

0m21s Speaker 1

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

0m24s Speaker 0

Good. So Roger, we have some of the first big news of the year that came in last week. AT and T is announcing a customer guarantee for both their wireless and their fiber customers. Can you tell us a little about it?

0m35s Speaker 1

Yeah, they are providing a guarantee. And it's the first one that is this comprehensive, that provides a guarantee on connectivity. So if their fiber customers experience more than twenty minutes of outage, and wireless customers experience a more than sixty minute outage where more than 10 cell sites are affected from a single incident, they will make good. You know, you get a bill credit equaling a full day of service. And this is not only for consumers, but it's also for small businesses.

1m16s Speaker 1

And for small businesses, they have a wider option of how they make good what had happened with small customers. Then they also guarantee to give you the best deal on any smartphone for new and existing customers. And unlike with other carriers, it doesn't require the most expensive plan like what the competitors do. And they have no hidden fees and equipment charges with AT and T Fiber. AT and T is doing this already, but now they are guaranteeing it, right?

1m51s Speaker 1

There's a lot of commitment that the best plans and devices for everyone is working, and that is their positioning. So they're doubling down on that. And then they are also giving you a guarantee that you speak to a friendly tech expert. Now, I hope they're always friendly. Within five minutes or schedule a callback, and that you have a same or next day technician available for that.

2m19s Speaker 0

So that's a lot. That's a lot, right? And it's a lot of different commitments. I know we talked about this with the Charter guarantee they came out with, you know, late last year. Similar

2m29s Speaker 1

and different.

2m30s Speaker 0

Right? Similar and different. Yeah. Can you talk about how this is different?

2m33s Speaker 1

Where it's different is on the mobile performance guarantee. It's different that AT and T guarantees the deals that customers want. What it is not, it's not a guarantee on price plan or commitment like on price plans, like what Charter did with slowly exploding prices. It's progressed. It used to be fast exploding prices, now it's slowly exploding prices.

3m0s Speaker 1

Customers still don't like it. You know, we're here where the carriers or the service providers are putting more muscle behind what they are committing, putting more permanency behind it. The word guarantee is an important word because customers love to hear the word guarantee. It's a lot stronger than commitment. It also has legal implications.

3m26s Speaker 1

I'm not a lawyer, you know, I pretend to be one on television. Just kidding. But guarantee, as I understand, it has like legal implications. So you can't easily back out of this. Whereas with a commitment, it's not that

3m42s Speaker 0

It's not a best effort sort of thing. Right? Like this is something that's that's more permanent.

3m46s Speaker 1

It has teeth. But I think what's really important is that AT and T here is doing things that are right for the customers, that are putting commitment and dollars and cents behind it for customers without any regulatory pressure, right? When you look at the change in FCC, a Democratic FCC like under Rosenwald, I don't know if they have the imagination to come up with something like that, but I wouldn't put it beyond that. A Republican administration and a Chairman Carr would never require a carrier to do something that AT and T is doing here voluntarily, and because it's the right thing for their customers. I think that's

4m34s Speaker 0

Well, that's I think an important question, like why are they doing this now? Why did Charter do this? Why is AT and T doing this? What is the benefit from the carrier side here?

4m43s Speaker 1

Well, customers love it when they hear words like that, like I'm committed to you, I am doing this for you. It's a carrier's way of saying to their customers, I love you. And I'm committed to you and I'm doing this. This is more than just best efforts as we've done before.

5m4s Speaker 0

I mean, the cynic in me says, okay, well customers love free lines too, but carriers give away free lines because they lower churn, right? So I read the press release, And they're saying nobody else can do this. So I think they think that this is a competitive advantage, right?

5m20s Speaker 1

When you listen to Chris Winfrey's comments at UBS conference in December, he said we did this because we thought nobody else could give customers a guarantee that they can talk to customer service within five minutes and have a technician the same day or the next day at their facility. And not even a month has passed, and AT and T is doing the same thing. If you want to, you can do this. The tough one is, do you live up to it? Otherwise, this gets expensive.

5m53s Speaker 1

And what happens if the perception of the customer is different to that of the operator? When you look at what Charter did, it's like, yeah, we can we give you a notification after fifteen minutes if there's an outage. And if it's more than, I think fifteen minutes, we give you the whole day off, right? That's like $2. Okay?

6m15s Speaker 1

What if the customer has an outage or experiences an outage that is just with them, not the whole neighborhood, because the whole neighborhood doesn't go down that often? A cablehead has 99.999% reliability, which is less than five minutes. Or what in this case, the outage is eighteen minutes for fiber or, you know, fifty three minutes for wireless, and they call in, what do you do? And we've done research on the charter side. And we're doing the research here for public consumption on the AT and T side.

6m50s Speaker 1

What happens if the customer calls in and I experienced an outage, I would like to have a credit. The Net Promoter drop is like 50 points, at least on the charter side, when we tested that. If the customer calls in says I have an outage, and the customer service rep says, Sorry, your outage does not qualify. Customers are fuming, right? Right.

7m12s Speaker 1

And so the difficulty will be here, how the operator is dealing with, on one hand, honest mistakes where the perception of the customer and the perception of the operator is varying. And the other one is, how do you deal with the certain percentage of people that are just not nice people and who try to game the system?

7m36s Speaker 0

I remember you and I worked on a project for Sprint way back in the day looking at credits. Yeah. What we found was that there was a subset of the customer base. There was a cohort. Once they discovered kind of what the limits on credits were, they would call back over and over again.

7m50s Speaker 0

Yeah. So there's a risk there

7m52s Speaker 1

in terms of

7m53s Speaker 0

training your customers to ask you for money. Right?

7m57s Speaker 1

And then they treated Sprint like an an ATM. Yep. Normally, credits are like a dollar a month on average. At Sprint, was like 5.

8m7s Speaker 0

It was even more than that. Yeah. They they were capping it at 20.

8m10s Speaker 1

Yeah, it was like insane. Like on average, was five or seven. And I remember it, I showed it to Dan Hesse and I said like, here's what you're doing at Sprint, which has the better network than at Nextel where you're not doing it where you have the problems. And your customer sat is the same. At Sprint where you don't have the problem, you have like $7 bill credit.

8m31s Speaker 1

And on Nextel you have one. Money can't buy you love, okay? And so why don't you stop it? And he did, and it saved him like billions of dollars a quarter. Like,

8m43s Speaker 0

The other thing that we saw on that analysis was that there are diminishing returns beyond a certain point. Yeah. If you give away 10 versus $15, there was no appreciable difference in terms of satisfaction. Yeah. Because From a business perspective, there has to be a cap.

8m55s Speaker 1

There's a sweet spot. It can't be too low and it can't be too high. And I think what's more meaningful to a lot of customers is when the operator acknowledges that we let you down, and we make it up to you. And I think it's a good step.

9m12s Speaker 0

Yeah, mean, I think I think what I'm hearing from you, and I agree with this is that it's a positive consumer friendly move. How they orchestrate delivering on it will also matter quite a

9m22s Speaker 1

bit. Yeah. Well, I'm with you. It's a customer friendly move. And by the way, you know, there was a a post on LinkedIn by Jeff McElfish, who's the COO, where he said like, you know, we worked on this for years.

9m34s Speaker 1

And so it's very interesting that both of them, Charter and AT and T, were working on this in parallel for a long time, right? Carries are slow moving beasts. And things like this are in the works for a long time. So it's very interesting. So one didn't copy the other.

9m54s Speaker 1

It's like they were working at this. AT and T didn't look at what Charter did and said like, we got to ruin people's Christmas and come out with something similar.

10m4s Speaker 0

Well, it'll be interesting, know, now we have two major operators doing this or network operators I should say. It'll be interesting to see if anybody else decides to kind of follow suit. Yeah. In some ways this feels a little like a like an Un carrier type of thing to do. It'll be interesting to see specifically if T Mobile decides to answer this.

10m23s Speaker 1

T Mobile might have the opinion, know. It's like a little bit like relationships. Some people need a marriage, some people are for twenty years together without a marriage. And they might look at it like, you know, we used to have contracts, now we have equipment financing plans, you know, it's different kind of contract. Right.

10m44s Speaker 1

But you know, it's customers on the log upset that they're under contract, right? So okay. I think the important thing is, and I think the focus that AT and T and Charter bring here is you want to do your customers right. It's a vow basically, right? And by the way, we talked about it with Verizon with a credo over the holidays.

11m6s Speaker 1

Yep. Which is very similar to this, it just doesn't have

11m10s Speaker 0

Well, it's more internally facing, but it's a formal declaration of a set of values and commitments.

11m17s Speaker 1

Without the $5 reward card if they let you down, right?

11m22s Speaker 0

Right.

11m22s Speaker 1

So it will be very interesting to see, you know, people say they love this, if they actually will move for it. That I think is the question that is still out there. So people say they will do it, but will they actually?

11m35s Speaker 0

Well, I know we'll be keeping a close eye on it.

11m38s Speaker 1

Oh, very much so. And I'm sure that, you know, if people are moving, we will know in the second quarter. This comes early in the quarter. And so we will see if it how much of it makes an impact. In the next couple of days, we will see if it makes a difference for Charter.

11m55s Speaker 1

From what Chris Winfrey said at the UPS conference, I don't think he could quantify. And we will see when they come out with their results. And for AT and T, we will know when they release first quarter numbers in what is that? Probably April or so. April.

12m13s Speaker 1

So it will be interesting. It's a good move. Love it.

12m16s Speaker 0

I agree. I agree. Alright, Roger. We'll talk to you next week. Thank you.

12m20s Speaker 0

Bye bye.