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 fourth 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 Etner. How are doing, Roger?

Roger Entner 0m22s

Hey. I'm great.

Don Kellogg 0m24s

So, Roger, we've got some interesting developments on the spectrum front, and it's been a while. So let's talk about it.

Roger Entner 0m32s

Alright. So represent Guthrie wrote a bill on creating a spectrum pipeline of 600 megahertz. And the FCC has to auction off 200 of that within three years, and the remaining 400 within six years. And they're looking at raising $88,000,000,000 from this, which I think is quite reasonable and they desperately need in Washington, you know, more money to afford the increasing deficit that the new bills, the big beautiful bills have.

Don Kellogg 1m9s

So wait a second though, I think you're burying the lead here. Does this bill restore spectrum authority for the FCC?

Roger Entner 1m15s

Spectrum authority without spectrum to auction is meaningless.

Don Kellogg 1m20s

So the short answer is yes.

Roger Entner 1m21s

So the short answer is yes. But the only reason why you want spectrum authority is you need the spectrum pipeline. The guys who don't want to have full powered licensed spectrum would gladly give the FCC spectrum authority tomorrow, because it would have authority over auctioning exactly zero spectrum. So without a spectrum pipeline, the auction authority is meaningless. Right?

Roger Entner 1m47s

It's actually defeating.

Don Kellogg 1m48s

We talked about this couple years ago or maybe about a year ago, right, when the Biden administration came out with kind of their forward looking but very vague plans for spectrum. How does this relate back to that?

Roger Entner 1m59s

Well, as we predicted then, that this very big Biden proposal led to nothing, because it was designed to lead to nothing. Here we actually have a specific goal, timelines that are within somebody's lifetime, you know, like three years, instead of like, whenever the whoever comes around, this is actually moving. What the big difference is, is the Biden administration didn't give a hoot about spectrum and license spectrum. And you got exactly that. Whereas the current administration, just like it did four years earlier, is actually caring about licensed spectrum.

Roger Entner 2m43s

It's caring actually about all of it. And things are actually moving. Amazing.

Don Kellogg 2m48s

So tell us the details.

Roger Entner 2m50s

Well, that's the details. 600 megahertz, 200 within three years, the remaining 400 within six years of the bill passage.

Don Kellogg 2m58s

Do we know what spectral bands they're targeting yet?

Roger Entner 3m0s

That is what we know. Okay. That's what we know. And that's all we need to know, right? But they need to now find the spectrum, they have to work with the federal spectrum owners and get that done.

Roger Entner 3m13s

And with the leadership in the White House, the DOD will be will not be playing cookie like they did over the last four years, and said like, no, no, no, la la la, I can't hear you and I need everything. I need everything that I have, which we all know is not really true. And just like, when was that six years ago, when the last time Trump was in the White House, when they put their fist down, suddenly 100 megahertz got cleared within like what eighteen months and auctioned off in '24. That was like record speed. But I think what's also important here is to note that the wireless industry didn't get everything they wanted.

Roger Entner 3m58s

They wanted to have 1,200 megahertz, and they didn't get that. So it's a compromise bill. And I think we should be happy that something is moving.

Don Kellogg 4m8s

Right. We know that spectrum is always good for innovation. And we need more spectrum. The industry needs more spectrum at full power to build out robust five gs and six gs networks.

Roger Entner 4m20s

Yeah, and in particular, we need this for more FWA. In urban markets, we're nearing capacity levels. And you can see that you can't buy FWA. And I think we should have more choice. And the increasing subscriber numbers and very high satisfaction numbers that we're seeing is a testament that customers want it.

Roger Entner 4m45s

And this bill is a recognition that we want to have more competition in the broadband market, just like we want to have more competition in the wireless market. So that's really nifty. The other thing that's really interesting, talking about more competition in the wireless space, is the spat between SpaceX and Dish, where SpaceX now went out and said like, you know, in AWS four, where dish needs to build out within a year, according to SpaceX, 96 to 99% of the spectrum is not being used. What's really interesting is typically, our friends at dish got basically every pass there was from the FCC. Now, I think times have changed because Commissioner Carr basically said like, well, maybe you show us what you're doing with the spectrum.

Roger Entner 5m39s

And by the way, if the FCC would do the same thing with CBRS, and ask all the CBRS licensees, both PAL and GAA, what are you actually doing with this? What is actually deployed and how heavily are you deployed? I think we would get a lot more clarity about that situation, how heavily it's being used.

Don Kellogg 6m1s

The way I would say it is that similar to spectrum authority, if you're not using it, what good is it, right?

Roger Entner 6m7s

Exactly.

Don Kellogg 6m7s

If you've got spectrum, which is a, you know, it's a public asset, right, that the FCC allocates based on kind of auction rules. If you're not using it, what good is it doing the public, right?

Roger Entner 6m19s

Yeah. And then we have late breaking merchant news, right?

Don Kellogg 6m24s

Yeah, Cox and Charter, tell us about it.

Roger Entner 6m27s

So Charter is buying Cox for $34,500,000,000 And there are a couple of interesting things going on. There have been a lot of rumors that Deutsche Telekom wants to buy Charter to put it together with T Mobile, that Comcast would buy them and all of these things. Basically, Charter is following Disney's strategy of I buy everybody and then I become so big that nobody can buy me to ensure that they are a standalone company. And so they're buying Cox. The plan fits together, the efficiency gains should be way north of $500,000,000 that they're claiming.

Roger Entner 7m10s

So this should be from an operational perspective, a really good deal. It looks very similar. So the other thing that's very interesting is the merger will close at the same time as the Liberty stock buyback will happen. And so for the people who don't remember, Liberty owns 26% of Charter, which is a blocking minority. Liberty is like 51% controlled by John Malone, who's like a legend in telecom.

Roger Entner 7m47s

And John Malone is basically defraying his very tightly woven telecom empire because he's getting old. And I think he's making things easy for his heirs. They don't have to have their fingers in. So what happens here with Liberty and Charter is Charter is buying back the shares that Liberty owns even at a slight discount. And so everybody walks away really happy money.

Roger Entner 8m22s

And John Malone is no longer breathing down the neck of Chris Winfrey, the CEO of Charter. So at the same time, they're buying Cox for equity and like $4,000,000,000 in cash. And the Cox family or Cox Enterprises, it's a privately held company by the Cox family, is getting 23% of the control back. The important part, 23 is below 25, which means they don't have a blocking minority. So the Cox family is not breathing down Chris Winfrey's neck and can block whatever he wants to do.

Roger Entner 9m1s

So that is very interesting of how they bought fourth largest cable provider and are expanding this. Now, the thing that like completely blows my mind is that within a year of the merger, the combined entity will be called Cox. And I don't know for the life of me, why you want to call your company dicks. I don't get it. Yeah.

Roger Entner 9m29s

I hope they can continue the Spectrum name because I think that's a pretty strong name. At least hopefully it's just the company name that they changed and not the branding.

Don Kellogg 9m38s

Well, maybe they really like roosters. I don't know. We'll see.

Roger Entner 9m40s

I don't know either, you know, or they have some kind of complex, you know, need to No, they were very fine people. And I liked them a lot, actually. Right. So enough of the jokes around.

Don Kellogg 9m54s

Well, it'll be interesting because I think you know, one of the things that's been a little harder to report on on the broadband side is Cox because they are privately held so they don't release as much information about kind of their business and how it's going. Whereas we can see a lot about what's going on with both Spectrum and Comcast because they're filing publicly. So it'll be really interesting and revealing to see the state of that business when it comes over into a publicly reporting entity?

Roger Entner 10m21s

My expectation, it's a worse run cable company. So Charter will come in because Charter is really, really well run. They are a machine. They have extremely good executives, and I think with the Charter team coming in, they will be able to raise the bar there significantly.

Don Kellogg 10m44s

Well, think like you always say, right, you don't buy somebody to do the same thing that they were doing before, you buy somebody to put your own spin on things, right?

Roger Entner 10m52s

Yeah, once had a boss who said like, you know, we get bored, this is awesome, they love what we're doing, you know, they're gonna leave us in peace. In my head, I was like, Oh, man, they didn't buy us to leave us in peace. They would have not bought us to leave us in peace. Give it a year and everything will change. And guess what?

Roger Entner 11m12s

Within the year, everything changed. So it will happen with Cox.

Don Kellogg 11m16s

Well, it'll be it'll be interesting to watch regardless, I think we'll get more insight into Cox mobile, which has been you know, another kind of wireless plus cable endeavor that we've been tracking.

Roger Entner 11m27s

I don't expect them to do as well. You know, I would expect them to do somewhere in between LTs and Comcast at this time. That's a big gap. Closer to LTs. How about that?

Roger Entner 11m41s

Right. That's my expectation. That's fair. We'll see what the numbers will show.

Don Kellogg 11m45s

Yep. Well, we do actually see them pop up a fair amount on our wireless survey. So Yeah. It'll be interesting to see the actuals on that.

Roger Entner 11m52s

Yeah. We know stuff. Right?

Don Kellogg 11m53s

Yep. Alright. We'll keep track of all this stuff and we'll talk to you next week.

Roger Entner 11m57s

Alright. Thank you.