Tim Courtney: I would encourage the rural players to look at the BEAD money. Now, originally, that was fiber only. Some states are letting wireless come in. I think they're realizing it should be more wireless. When you see a $100,000 bill to a farmer two miles up the road, when we can do that in a few thousand dollars with fixed wireless, let's be efficient with the use of the money.
Jeff Johnston: That was Tim Courtney, vice president of sales and strategy at Further Enterprise Solutions, regarding the new business opportunities he thinks are out there for rural wireless operators.
Hi, I’m Jeff Johnston and welcome to the All Day Digital podcast, where we talk to industry executives and thought leaders to get their perspective on a wide range of factors shaping the communications industry. This podcast is brought to you by CoBank’s knowledge exchange group.
The wireless industry has evolved quite a bit over the last decade as new competition has entered the market, and the ability to differentiate service has gotten harder. Plus, new technologies and services have not had the customer impact business leaders had hoped for. Despite these challenges, opportunities exist and we’re starting to see wireless operators embrace them.
Tim is a wireless executive and has spent the entirety of his carrier building wireless networks and developing and executing strategies across the wireless ecosystem. Whenever I want the latest and greatest in wireless, Tim is the guy I call.
So, without any further ado, pitter patter, let’s see what Tim has to say.
Tim Courtney, welcome to the All Day Digital podcast. It is a pleasure to have you back here again with us today.
Courtney: Thanks, Jeff. It's good to be back.
Johnston: Hey, so super excited to have you on today, Tim. It's always a pleasure. I wanted to talk to you today about the wireless industry. I know we can take this in probably a million different directions, so we'll try and stay as narrowly focused as we can here considering of the time constraints we have. First off, give me the Tim Courtney 10,000-foot view of the current state of the wireless industry and then got a bunch of things that I want to drill down into.
Courtney: The wireless industry as you and I knew 10, 15, 20, 30 years ago was mobile phones, primarily. When we say wireless today are we talking about mobile phones? Are we talking about IoT? And an acronym that we wouldn't have even talked about a few years ago is FWA — fixed wireless access. When you take a look at the big three here in the U.S. and other parts of the world, you can see the number of mobile phone users is pretty flat. The growth, especially when you take a look at T-Mobile and Verizon, is in the fixed wireless.
You're paying $65 for your internet service. If that can be converted from a fixed service to a mobile service that's a high ARPU. In terms of wireless mobile phone business, I think we're going to see two bifurcation paths. One being just low-cost, no thrills, no add-ons. You're seeing those $25 rate plans. You've got Verizon Visible doing that. You've got Verizon and other carriers offering the bare-bones wireless service for $25. Then the opposite end of the spectrum, you're seeing everything all in the T-Mobile Tuesdays, free Wi-Fi on the airplane, Hulu, Netflix, you name it being bundled in.
It's the value add—or who's going to offer me the lowest price. I don't think there's going to be a whole lot in the middle. You're going to go to one direction or the other as a consumer. Then IoT it's really tough. IoT, you've got Amazon Sidewalk network out there. You've got the Helium networks, the LoRa networks, and a billion, 5 billion devices times a penny. There's not a whole lot of revenue to chase for the carriers.
Then fixed wireless. That's just exploding. T-Mobile is going to be one of the largest ISPs here in a few quarters or the next year. Who would imagine that, and it's all wireless. They've done a great job. Verizon also has done a good job with that and AT&T has entered in the market as well, even though they're a fiber-first carrier. That's what their CEO is pitching and is talking about. They've done very good on the fiber front.
Back to the bundling, all right, we talked bundling the video with the phone. Now, we're seeing a lot of bundling with the mobile phone and your internet service at home or work. You can get some very good deals. The cable TV folks are doing a great job with their marketing campaigns on bundling a mobile phone with internet service.
I think there's no more quad-play. There's no more triple play. Really, it's the dual play, the mobile phone with the internet service. The cable guys are going to use mobile to keep their internet customers happy, and then the mobile folks are going to use fixed wireless to keep the mobile phone users sticky and happy.
Johnston: Great overview. I want to talk about the winners and losers here recently because, as you mentioned, network quality once was a differentiator. You remember the Verizon guy, "Can you hear me now?" Running all over the place, and they made a big commercial campaign out of that and really touted network quality as a differentiator. As you mentioned, network quality feels like there's a, I think, good amount of parity here across all three of the national wireless operators. How do you think about the winners and losers here, and why?
T-Mobile clearly is doing just an incredible job and has been for many years taking share in the wireless industry. Then we're seeing the cable operators more recently, as you mentioned as well, also do a really good job taking share in the wireless industry. Then you got Verizon and AT&T, they've been struggling when it comes to subscriber additions. What do you think's going on here?
Courtney: T-Mobile's just had a very, very sound game plan that they've stuck through. They're very, very consistent, they're very consumer-friendly. I don't think there are any losers. All three of those carriers, they're still making decent margins. They're all paying dividends for the first time. They're returning shareholder value. A lot of the press, as you said, goes to T-Mobile. They've been aggressive in spectrum acquisitions with Sprint. They've been aggressive in deploying that spectrum and putting it to good use.
Johnston: Got you. That's helpful. Then when you think about threats and opportunities for the wireless operators, and I want to talk about the rural guys in a moment, but before we go there, when you think about the three national wireless operators, love to get your thoughts on where you think they could be vulnerable and where do you think there could be some opportunity.
Courtney: On the opportunity front, and I'm a big believer in, to give credit to Comcast and Xfinity, they have the Storm-Ready product. That's an LTE modem backing up their primary cable TV service. I'm a big believer that every home, every small business should have two internet service providers primary standby. We just got hit by a power outage here in the Philadelphia region that affected our home. Our alarm system has a backup modem. There's all sorts of maybe backup devices you don't even know that exists. But if you could have, as a consumer, set up your own service primary backup, I would say every home and every small business could be a target for the carriers at a minimum for a backup service.
As we just talked about a few minutes ago, primary is a fixed wireless provider. Now, is it going to be hard to churn a fiber user to ed wireless? Yes, absolutely. That's the gold standard, let's not kid ourselves. Even though you're talking to wireless guy, I know fiber is a great product, but cable TV, DSL, there's no technology out there, the rural areas. That's definitely an area for growth and winning for the carriers. Then on the counter, the threats would be the cable TV guys, again, back to marketing, you got to pat those guys on the back, they've always known how to bundle.
We talked about quad play at one point, triple play. They know how to bundle and create value, and their bundling with being a wholesale provider or other people's wireless service. As you noted, that is a growth market for them, growing the mobile phone, and they've said they're making money on a stand-alone basis for the mobile, clearly not as much margin as the operator-owned, facilities-based carriers. That bundling with the internet is powerful. That's going to be their competition. The primary wireless operators are going to be battling the cable TV providers, I would say.
Johnston: Great. Then how about on the network side? As I understand it, we went obviously, 1G, 2G, 3G, so on and so forth. I think when we got to 3G to 4G transition, there was like a step function increase in network performance.
Courtney: The speed.
Johnston: Yes, speed. Then what about the spectral efficiency of these networks? Is there anything to look forward to down the road from a network operations cost standpoint
Courtney: From a consumer standpoint, probably not a whole lot of excitement. As you said, 4G to 5G, the spectral efficiency bits per hertz were getting in the weeds was about 15%, whereas 3G to 4G was over 100%, so we had a huge step function. As we move further and the technology improves, the spectral efficiency is going to be very, very hard to make a lot better. Now, that's why the carriers, and governments, and internet think tanks want more spectrum put to use, be it unlicensed or license. "If we can't increase spectrum efficiency, let's just make the pool bigger, so we can serve more swimmers," let's say. We're definitely going on that front.
From a business standpoint, there's network slicing. If you're a TV crew, and you need to broadcast a news event, you can get guaranteed bandwidth on a carrier. That's the service you can charge and add value to. Then for the new technologies, the folks selling the phones are really going to push the technologies.
Johnston: I agree. No, that all make sense. Then the infrastructure manufacturers, I'm sure, are going to want to push new technology so they can sell more gear into the wireless operators. I guess it's a business case. When and how much do you adopt these technologies, and what value can you create, and what costs can you reduce? We'll just have to see how that all plays out. It doesn't sound like there's really anything, like you said, that 3G to 4G transition, huge network efficiencies realized, but maybe that's a thing of the past.
Courtney: Yes. Back to the network, I think millimeter wave, there's some pretty smart people out there. Pivotal Commware has got a millimeter wave repeater. There's only so many fixed wireless users you can put on a mobile network today. If you can imagine a home or a business is using probably 20, 30, 40 times as much data than a mobile phone. When a carrier says, "Oh, we have 4 million fixed wireless customers." Someone on Wall Street would say to me, "Oh, Tim, why are we even talking about that? That's 4 million. That carrier has 100 million mobile users." Four times 40 times usage, that's 160 million equivalent.
You could argue they already have more capacity with their fixed wireless user base than their mobile use case. Most of the subscribers are on the sub-6 gigahertz band, and back to your spectral efficiency, there's only so much spectrum to be had at sub-6 millimeter wave. I'm a big believer-- Ultimately, you're going to have to, back to your technology question, convert the sub-6 fixed wireless subscriber to a millimeter-wave subscriber, so now you can add in the next customer.
Now, you can extend the ring in the user base a farther direction with the sub-6 gigahertz spectrum in rural areas, let's say. It is really going to be whack-a-mole in terms of addressing network capacity for the coming years. I don't think any carrier is going on a conference call yet and says, "Oh, we need to slow down our fixed wireless."
Johnston: You mentioned millimeter wave, and we've seen this before. We saw Verizon try and deploy millimeter wave, call it five years ago, or at least they were talking about it a lot, and it fizzled off. Have there been advancements in radio technology to address some of the propagation challenges with millimeter wave to where you think that we could have meaningful deployments of that? Because to your point, there's just an amazing amount of capacity available in that band, and if there's a way to deploy it, boy, you could offer some fiber-like speeds to a lot of people within that coverage footprint.
Courtney: I give credit for Verizon to be an early adopter.
If you go into Verizon-sponsored venues, there's lots of millimeter wave. Think of it as Wi-Fi on steroids. That is working phenomenally well. Then the users that had millimeter wave fixed wireless, that is a great service, too. You could say two of the three use cases, they hit it out of the park. The third one, a mobile phone just walking around. Back to your point, if they're already getting good enough speeds, is the customer even going to notice ESPN.com loading faster, let's say?
Johnston: No, not at all.
Courtney: T-Mobile has talked about their testing millimeter wave. They were very cautious, rightfully so. They let Verizon work out all the bugs, kinks, use cases, and now they're coming in. I think all carriers, back to my point, that you're going to have to offload your network eventually to millimeter wave for fixed wireless user growth.
Johnston: That could get really interesting if they can execute that successfully. That becomes a really interesting situation for fixed-line broadband company. Like you said, maybe not fiber to the home, but HFC or DSL. It gets pretty interesting, although T-Mobile has had a lot of success even competing in fiber to the home markets with their fixed wireless play. Maybe it's just price sensitive customers looking for a deal and not as concerned about performance. If you got all the major metros, say, for example, the NFL cities covered with millimeter wave, boy, that starts to get pretty interesting from a fixed-line broadband situation.
Courtney: Absolutely. As we mature, as we learn, fixed wireless is really only a two, three-year product offering for the carriers. We're in the early innings on this. From a technology standpoint, a network design standpoint, a knowledge base, it's only going to get better from here.
Johnston: Yes, and it's just gone straight up. It's been such a massively successful product launch. It's incredible.
Courtney: It's easy. The younger generation has gotten used to Amazon packages and food showing up on their doorsteps. Do you need a truck roll? Do you need someone to dig up your front yard? Do you need someone to go into your house to do this? They figured out, in most cases, self-installs are pretty good.
Now, there are going to be some cases where I think you're going to need the antenna on the house, back to broadcast TV type situation, more in the rural area or more in a dense, foliage environment to get the signal through. I don't want to paint it as one size fits all.
Johnston: Great. Hey, Let's talk about the rural wireless industry. We've still got a handful of rural wireless operators serving markets where, in some cases, they're the only source of communication, broadband that is. It's also been tough for these folks, whether it's the Network Secure Act, where they had to rip and replace or trying to rip and replace non-compliant Chinese infrastructure equipment. It doesn't seem like there's enough money available for these folks to do that. What are your high-level thoughts on the rural wireless market?
Courtney: It's going to be tough because the growth in mobile phones with the big carriers has slowed down. If they've got Chicago, New York, and LA tapped out; the only way to get subscriber ads is to get into those tier two, tier three cities. We're seeing activity there with all the carriers trying to get those subscribers. Then on top of it, they've got the fixed wireless products, so they can do the bundling, a mobile home business type connection. If you're just a single internet provider with no mobile, or a mobile provider with no internet, you're going to have a hard time keeping your customers.
Talking to some of the executives in the tier two carriers, they're losing mobile phone subscribers. Now, they're adding fixed wireless subscribers, knock on wood, but that's very, very tough to compete with a nationwide carrier, with their marketing program, et cetera. Short term, I'd say it's going to be hard. I would encourage the rural players to look at the BEAD money, the $42 billion. Now, originally, that was fiber only. Some states are letting wireless come in. I think they're realizing, some states, it should be more wireless. When you see a $100,000 bill, to a farmer, two miles up the road, when we can do that in a few thousand dollars with fixed wireless, let's be efficient with the use of the money.
I would say, "Hey, if you're a mobile carrier, rural carrier, try to figure out the BEAD program and do that bundle with a mobile phone and a fixed internet service," let's say, be it fiber or wireless.
Johnston: Whether it's a bundling strategy or probably more importantly a hedge for these folks, a lot of these folks are running 3G networks because they don't have the money from the government to upgrade them to 4G. If you've got Verizon coming in or AT&T or T-Mobile and overbuilding you for growth, they're going to quickly take those wireless customers so that is problematic. Maybe as a hedge, you pivot a little bit and you say, "Look, there's underserved or unserved customers in our territory where we can leverage government money to go after and service those." It's not a wireless play, but it's a hedge off of the core business that's struggling and could get worse quite frankly.
Courtney: I would think the rural folks could bring a better, efficient capital model. A big carrier has a higher cost basis. Are they going to have to parachute people in, versus a rural carrier that has a local workforce? For the same dollar, can a rural carrier serve 10 customers versus a big carrier from out of town, can they only serve 8? I'm just making up numbers. There's some hope there that they can get their hands on that money and build out that fixed/fixed wireless network to serve their pace.
Johnston: We've seen time and time again from a customer service standpoint, rural operators ranked significantly higher than national operators because you're at your soccer game on Saturday morning, and you're standing next to the general manager of the communications company and you're like, "Hey John, buddy, I'm having some issues here. You need to fix it." These are your neighbors, so they tend to move pretty quickly to make sure that service is restored or improved or whatever needs to happen, opposed to calling into a large operator and sometimes waiting on hold for a long time and not really sure when you would get somebody out there. There's that angle, too.
Courtney: I agree with you and the technology, the technology the big carriers that the rural carriers can get, too, so there's no barrier of entry there. It's really just putting together a good marketing program, a good value equation and really getting out there to serve the customer. An iPhone on a rural carrier and an iPhone on the big three should operate the same way, right?
Johnston: Absolutely. Tim, look, we've covered a lot here today, which is fantastic, but before we wrap it up, I just want to give you an opportunity to discuss anything or bring up any points that we didn't talk about that you think are important for us to discuss.
Courtney: Just the satellite communication. We got Starlink and T-Mobile working together, and I know Starlink wants to go to other parts of the world. Apple's done a fantastic job with global star and the stories you read on the people they've saved in some remote areas of the world, it's incredible. Again, who would have thought a few years ago we would be having a conversation that a normal "cell phone" would be talking to satellites, and you could basically have communication almost anywhere on the planet, especially trying to loved ones or save yourself in a hairy situation.
We're, again, early innings on this as well. We talked about fixed wireless, the satellite communications is going to be a part of the value proposition as you buy a cell phone or buy a vehicle. I think in the future as well, I think we're going to see satellite connectivity to your cars eventually. It's just an incredible place to be. There's a lot of things happening in our space to keep us connected, to keep us safe. Be it backup internet access, be it a satellite communication on your phone, or providing internet to your home and business in the middle of nowhere based on a wireless carrier, things are looking bright for everyone, I would say.
Johnston: Well said, especially the satellite piece, that's super exciting. As you mentioned, we're in the early innings, but whether it's safety or communication everywhere, lots to look forward to, so it should be a lot of fun to see how all that plays out. Hey, thanks for being here today, Tim. It's been a pleasure having you, and thanks for that.
Courtney: No, you're a great host, Jeff. I thank you for all your questions here and I look forward to talking to you and your team here in the near future.
Johnston: A special thanks goes out to Tim for being on the podcast today. The rural wireless industry is in a tough spot as they wait for Congress to appropriate more money to pay for the rip and replace program. In the meantime, I think Tim made a good point about the BEAD opportunities that are out there for them to deploy fixed wireless. Because as Tim mentioned, fixed wireless is where the growth is for all wireless operators – both rural and national.
Hey thanks for joining me today, and watch out for the next episode of the All Day Digital podcast.
