Analysts Don Kellogg and Roger Entner discuss the top weekly news stories in telecom, including an upcoming spectrum auction and its implications for satellite providers, as well as the latest developments and future direction of AI implementation.

00:00 Episode intro

00:25 New spectrum auction and implications

02:44 FCC is moving quickly

03:27 FCC approves more Starlink satellites

04:22 Deutsche Telekom's AI Investor Day and data center announcements

05:37 T-Mobile's AI implementation announcements

07:06 Live translation research and findings

08:02 Physical AI as the new frontier

09:14 Limits to AI advancements?

11:26 Episode wrap-up

Tags: telecom, telecommunications, wireless, prepaid, postpaid, cellular phone, Don Kellogg, Roger Entner, FFC, auction, spectrum, Ligardo, Starlink, Elon Musk, Brendan Carr, Deutsche Telekom, satellite, AI, T-Mobile, Germany, data centers, customer service, T-Life, Srini Gopalan, live translation, physical AI, Planet Fitness, churn, prices

Transcript: Episode 317

Don Kellogg: Hello and welcome to the 317th 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 Entner. Roger, how you doing?

Roger Entner: I'm great, how are you?

Don Kellogg: I'm good. So we've got another auction coming!

Don Kellogg: That's like pretty low midband too, right? I mean that's...

Don Kellogg: And it's low enough frequency that it should have really good propagation characteristics.

Roger Entner: It's reasonably good propagation. On top of it, on the other side of Ligado is, drumroll, Starlink's satellite MSS spectrum. So if you connect the dots and say like Elon Musk buys Ligado, and buys this spectrum, now you have like a massive amount of spectrum. In my opinion, Elon Musk has a lot more money than Ligado has, and one could buy one much more easily than the other, and create quite the extensive spectrum band here in the midband spectrum that can do both terrestrial and direct-to-device spectrum. So the FCC is really, really smart here in setting this up.

Don Kellogg: Everybody's going to have to bid on it, right? Offensive or defensive reasons.

Roger Entner: Exactly. And so when Chairman Carr said like, "Oh, you know, we're going to get $100 billion," I was like thinking, how are you going to do that? Well, here enters this auction from the left, or from the right, actually. I would think he would be offended if I say the spectrum comes in from the left. So here it comes from the right, thanks to Brendan Carr. We had Arpan Sura here, he didn't talk about this, but I'm sure he had it in mind. If you haven't listened to that episode, please do. He talked about bringing more spectrum really quickly to play. And so here is that. And then we have another announcement from the FCC, right? That plays into this.

Don Kellogg: More satellites! More satellites, right?

Roger Entner: Yeah, so the FCC approved 15,000 satellites for Starlink. So more satellites means more capacity, it means probably with V3 satellites really good latencies. This is all on that path to make 5G NTN a reality. Because with the current amount of satellites and 4G that's in space, listeners know that, you can't do VoNR or in 4G VoLTE. Just doesn't work, the budgets are simply not there. With V3s and more satellites, different story.

Don Kellogg: So should be interesting. We'll keep monitoring it, but certainly the chess pieces are moving on the board, I guess I would say, right?

Roger Entner: Yeah, absolutely.

Don Kellogg: And then we also want to talk about Deutsche Telekom had their first AI investor day.

Roger Entner: Yeah, correct. It's the first telco that had an investor day. By the way, as a segue between the satellite and this, I think T-Mobile's T-Satellite removed the Starlink mention from the service, which I thought was like interesting. So here, Deutsche Telekom, they spent an entire day, which if you want to follow it, I think it's still up on YouTube, where you can follow all of that vision. They spoke very elegantly about it. They have their own AI data center with 15, I saw it somewhere, 15 megawatts, like 10,000 sites. For Germany, it's a huge deal. In the US, it would not even show up as a footnote in terms of size of that. They want to expand it and go to like 100 and 300 megawatts. Still for American circumstances quite cute, but not threatening. For Germany, it's massive.

Don Kellogg: Here we talk about gigawatts, not megawatts, right?

Roger Entner: Yeah, here we talk about gigawatts, we talk about 10 gigawatts. It's like 30 times of what they want to do, and it's getting deployed on a regular basis. But what was very interesting, Deutsche Telekom had also three of T-Mobile USA's executives come over and speak to them what they're doing doing here: John Freier, Jeff Simon, and John Saw. That was quite illuminating. John announced that they want to reduce human-handled customer care calls by 75% by the end of next year. And they already have reduced this by 55%. And AI agents are now handling 40% of customer contacts. And the star basically here is what they have called IntentCX, they have a close partnership with OpenAI, and so they are building more and more here. And it integrates all with the T-Life app. We've talked about that Srini Gopalan, the CEO, is a process optimizer, is an innovator who does drive a lot of profits to the bottom line through that. And I think here we're seeing some of that, and how it all plays out. And so as of October 1st, you have to go through the T-Life app whenever you interact with T-Mobile, and so this is all of that. And then John Saw talked more about self-organizing network capabilities, and he talked again about the life translation service. One of the things that we still have and waiting for this to go when they go live, we interviewed more than 25,000 people about life translation.

Don Kellogg: Just a few people, just a few people.

Roger Entner: Just a few people, right? Just because we can! We put it in our mobile survey, we put it in our home internet survey, we put it in our AI survey, we put it in our business survey, we put it in our airline survey... Did I forget one?

Don Kellogg: We have financial services as well.

Roger Entner: I don't think we put it in the financial services one. I think that one wasn't up at that time when it first came out. But we looked at the life translation service from every different angle of how it would impact, and some of the findings are quite interesting. So we're waiting for this to go live, and then we're going to publish quite a few things about it. But yeah, it's very, very interesting to see how they are doing it. They also talked about physical AI as the big next frontier, and Chris Sambar, he's running T-Mobile for Business, one of his explicit remits is physical AI. You see very interesting ways of how the DT and Deutsche Telekom initiatives are coming together around AI.

Don Kellogg: It's going to be interesting, right? I mean, one of the things that we've been looking at is, you know, some of these autonomous agents. The carriers are driving people towards agent-based care or AI care, and then on the consumer side, we also are seeing people using things like Instinct or Muse or Grokbot to go in and try and renegotiate their plans as well, right? So it's like AIs versus AIs, right? At some point, you know, there may just not be a human in the loop at all. You know, on one hand you can save your cost of care by putting people through the AI workflow, but then those folks can also push back and, you know, remove some of the barriers to switching, presumably, or at least doing price comparison and renegotiation of rates and things like that. On the consumer side, I just wrote something for that that we'll release soon as well in terms of the implications for carriers.

Don Kellogg: Yeah, I mean I would say that our data and others' data shows churn is still a thing, right? People still switch, right? And the number one driver of churn is price, right? We also know that while the cost of everything has gone up recently, the cost of wireless service we are seeing in some cases go up as well, although much slower than inflation, right? So I think if you put those two things together compared with network parity in a lot of situations, there's a use case for some of these agents, but I agree with you that some people are going to decide it's not worth it, some people may.

Roger Entner: I'm not afraid for telecom. A customer service minute costs $2 or $3. It adds up, and then you have half an hour with them on the phone, you know, that's $60-$80, that's the profit for several months. So it'll be very interesting, but we're definitely looking at this very, very closely.

Don Kellogg: All right, we'll talk next week.

Roger Entner: Okay, talk to you next week.