5 Gig Cable, BEAD Shakeups, and the Starlink Opportunity

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and ninety eighth 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 Retner. Roger, how are doing?

Roger Entner 0m23s

I'm good. Europe is calling.

Don Kellogg 0m26s

Europe is calling. Yeah. So we're doing this intercontinentally today. You're in Germany.

Roger Entner 0m30s

Yeah.

Don Kellogg 0m31s

But we've got some interesting stateside news happening. I thought we could start with Mediacom upgrading their network. Do wanna tell us a little bit about that?

Roger Entner 0m39s

Sure. Mediacom, one of the companies we work with, is upgrading their DOCSIS 3.1 network to five gig downstream speeds. This is something that we didn't really think was possible, but they're really making this possible by shifting spectrum around and providing a lot more speed. And they launched this across half a million of their homes in large parts of their network, like Alabama, California, Delaware, Florida, Georgia, Illinois, Iowa, Maryland, Minnesota. And Mediacom is typically in like second tier markets where they're providing both fiber and traditionally HFC services.

Roger Entner 1m27s

And so this is already coming ahead of DOCSIS four point zero, which they're also rolling out. And so this is one of the examples of a cable company not taking it, sitting down, but fighting back, improving the network to offer their customer something fiber like.

Don Kellogg 1m46s

Right. What I thought was really interesting about this is that they're doing five gig speeds on DOCSIS 3.1, right? I mean, that's like pretty incredible.

Roger Entner 1m53s

Exactly. And so, you know, they're teaching an old dog new tricks. And meanwhile, they're also going for four point zero. So we're seeing the upgrades to networks happening across the board. We talk here so much about fiber.

Roger Entner 2m10s

The reality is a lot of people are on DOCSIS and on cable. A lot of people are dogging cable. They have become better. Comcast is getting better, Charter is getting better, Mediacom is getting better. We're seeing it in the numbers and the people are recognizing that they're getting better.

Roger Entner 2m29s

Because I think they have seen it that happier customers are sticking around longer and, you know, it's a zero sum game and you better treat your customer well. That's what we're seeing. They're putting their money where their mouth is. They're investing money, and so that's a great thing. I think it's good for everybody that you have multiple options, even though fiber is probably the best option for fixed network.

Don Kellogg 2m53s

Well, think there's two pieces to the relationship to the equation. Right? There's speed and reliability. We know new technologies in general, and this is inclusive of DOCSIS four point o and upgrades to the 3.1 systems are more reliable as well. Right?

Don Kellogg 3m6s

So Yep. They've definitely got the speed piece figured out. I hope they also have the reliability piece figured out as well. But we're gonna watch it, right?

Roger Entner 3m15s

Yeah, the interesting part is Charter, for example, came out with Invincible Homunanet, where if the HFC network goes down, it jumps over to wireless and provides you with a it's invisible to the customer but it's an FWA connection, not as fast as the doctors experience, but at least the network doesn't go down. And they're bringing here to consumers something that until recently has only been available to businesses. They get it, they're helping and they're improving stuff. So you can't accuse them of like sitting down. They know that they have to improve the customer experience and they're actually doing it.

Don Kellogg 3m57s

Yep, absolutely.

Roger Entner 3m59s

Talking about doing it, right, or better not doing it, we have then the news from Nebraska that several of the beat winners are giving back their licenses because they are realizing that they got over their head with their bits and are not able to execute on it. And so that's a really critical thing that we're going to see is where some very small providers and by the way we saw the same thing in Wisconsin where very small providers that had like a few thousand locations or a thousand locations bid like a significant number or more.

Don Kellogg 4m38s

Well, mean, we should say this always happens to some degree on things like this, right? There's always folks that overbid and the whole process is about rationalizing what is kind of the most effective and efficient way to kind of reach these households. And if a provider doesn't think that they can do it, then they back out.

Roger Entner 4m55s

Yeah, when their eyes are bigger than the stomach. Right?

Don Kellogg 4m58s

Right. Right.

Roger Entner 4m59s

We've seen it with children. We're seeing it in a heartbeat.

Don Kellogg 5m2s

So what's the next step here? Mean, do they reopen for bidding, or how does this resolve itself?

Roger Entner 5m7s

They will probably reopen for bidding because, you know, I think everybody deserves connectivity. Yeah. So they'll probably reopen up for rebidding and then somebody else comes in. Which comes to shove, it's more for satellite. Right?

Don Kellogg 5m22s

Right. Right. We saw, I mean, historic winnings for Starlink and others.

Roger Entner 5m27s

At really low cost. Right. Exactly. $307,100 dollars. 300 and change dollars for Amazon Leo on average, and I think $7.70 for Starlink.

Roger Entner 5m39s

Starlink. I don't know which locations they gave back, but if it's very rural locations, one of the two will probably snap it up. More money.

Don Kellogg 5m47s

Right. Right. Speaking of satellite, the last kind of news item we had is that there's a report that came out from New Street Research that featured some data that we had helped them with. Do you wanna tell us a little bit about that?

Roger Entner 6m0s

We're working very closely with seven, eight of the sell side investors and we share our data with them, we share our reports with them, and we have very frequent conversation with all of them about what's going on in the market. I think it helps them, it helps us. Our friends at New Street are probably the most frequent quote titers of us. When we had a conversation with Vikash and with David from NSR, we shared some data of, look, here's the flow of where customers are coming from to Starlink and where they're going when they're leaving. And Vikash said like, oh, I would love to write a report about it.

Roger Entner 6m41s

Then like, how can we say no to friends? So Vikash and David wrote the report, which just came out. Our friends in the trade press have quoted the report and, you know, it's us bringing our goodies to more people, to more channels. It's very interesting what we see here. Cable and rural telco is like the main avenue, and about 10% comes from FWA.

Roger Entner 7m9s

Like, we see when the numbers are going, when shortages are appearing on on FWA and the numbers are tanking, that we see a flight to Starlink. And then if a better technology shows up, like auto fiber or, you know, when it comes beat fiber, it completely eradicate satellite.

Don Kellogg 7m28s

Well, so there's some more interesting data coming that we're working on with this too. Right? We're starting to do some speed test work.

Roger Entner 7m35s

We have a whole series. Right? We're not the only people who have heard that Starlink is having an IPO. And so we have somewhere like at least seven, if not 10 reports coming out on that topic, both as a research note, where people can read this in about 1,000 to 1,500 words, or if they want to dig deeper, we also sell them then as reports for a few thousand dollars to go like deeper in somewhere between fifteen and thirty pages, and bundle it with ours where you can ask questions on it.

Don Kellogg 8m14s

So I think we're gonna have a really deep perspective on, you know, Starlink and the broader ecosystem as it relates back to not only perceptions, but also empirical results on, you know, how those connections are performing.

Roger Entner 8m28s

How this is working and what he's gonna do. The two reports that I wrote, one of them is already out about what the chances are and how it would look like when Stalin becomes an MVNO. And then the one that is upcoming, I think, should be out tomorrow, Tuesday. That's about how this plays out of Starlink as an MNO, as a network operator, and what it takes for them and how this will probably play out if they decide to be an MNO. Exciting times.

Don Kellogg 8m59s

Lots of goodies coming, folks. So stay tuned, and I'm sure we'll cover it more as the IPO gets closer as well. Alright, Roger. Well, we'll talk to you next week.

Roger Entner 9m8s

Talk to you next week. Thank you.