- Meta’s Muse sparked fears that AI agents could pressure wireless prices by negotiating better deals for consumers
- TD Cowen sees little risk of a wireless price war, citing low switching appetite, contracts and carrier pricing floors
- Telecom stocks remain under pressure as investors wait to see whether the AI-agent threat is real or … artificial
As if the Big 3 wireless carriers don’t have enough to worry about with SpaceX’s impending launch of a combined satellite/terrestrial network destined to take over the world and with it, everybody’s pocketbooks.
The next big threat? Physically, it’s in a much smaller package: Meta’s personal AI agent Muse, which has the financial markets in a bit of a tizzy. The reasoning goes something like this: Muse agents can negotiate better pricing on the part of consumers, thereby creating a race to the bottom of the price barrel. As TD Cowen analysts put it: The general premise is that Muse agents can do the bidding for consumers.
But will consumers let them do their bidding? And if so, will it be the end of the Big 3 wireless carriers as we know them? Fortunately, some analysts put that theory to the test so we don’t have to. (And we’re thankful, because frankly, giving Meta any more of our personal information just seems… downright awful, to put it politely.)
Ookla analyst takes Muse for a spin
Mike Dano, lead industry analyst at Ookla (and former Fierce Markets boss), recounted his experience on LinkedIn, making no bones about the fact that he wanted to use Muse against his [unidentified] carrier to negotiate a lower charge or get discount of some kind.
“Also: I kind of love the idea of being able to use an AI chatbot against my carrier's customer service AI chatbot. AI vs. AI, and all that,” he wrote. (Editor’s note: Yes!)
Confessions aside, Dano got right to the point. “Long story short: It didn't work. I created a Muse account (super easy) and then finally managed to get it logged in to my carrier's website (long, involved process with lots of ‘what code did they just text you’ exchanges.)”
In the end, he discovered that his carrier stopped offering a chat function on its website and after several tries, the only customer service chat that would work was the one inside his carrier’s smartphone app – a place that Muse can’t reach.
TD Cowen analysts muse over Muse
He wasn’t the only one taking a deep dive into Muse. TD Cowen’s Canadian telco analyst Vince Valentini and his team were asked whether they believe Muse could be a threat for the telcos.
In a note for investors, he recounted all the (six) reasons they don’t see Muse making a strong case against telcos in relation to its ability to help consumers find better deals on mobile phone plans.
For one thing, surveys suggest that fewer consumers care about shopping around anymore, as they’ve already got a good deal and advertised wireless rates are no longer lower than what they’re paying. For another, prices advertised on websites are rarely the best deals available for people who shop around in malls or who haggle with a contact center representative.
Other reasons include the fact that flanker brands have been around for 20+ years and still only a minority of consumers switch to them for a lower price (even though they use the same networks as the big carriers) – and many customers are on contracts that aren’t that easy to break. Plus, carriers will use their own AI to adapt to Muse, making the whole exercise rather moot.
Then there’s this: Consumers don’t need Muse to shop around. “A simple query into Claude or ChatGPT will spit out cheaper wireless or internet options if one cares enough to look… After three years of increased competition and negative repricing, it seems like fewer consumers care anymore about an extra 20-30 cents per day (aka $5-$10 per month),” Valentini wrote.
His U.S. counterpart agreed and described a future where both the consumer and carrier will have agentic AI at their disposal, with carriers arguably getting access to more sophisticated models with hyper-personalized customer data.
“It would be reasonable to believe that while it is possible that some consumers may be able to get a lower phone plan in the short term, in the long run the carriers will have the upper hand,” said U.S.-based TD Cowen analyst Greg Williams in a research note last week. “Further, service providers still have disciplined parameters, essentially a ‘floor’ on what they can offer the customer in retention situations.”
Carriers have always had a "‘walk away" price and AI agent interactions won’t change that, he added.
Hey AI, why is it so hard to switch?
That jibes with Recon Analytics founder Roger Entner’s assessment. As he put it, comparison shopping sites have been around for a long time. “This just makes it even easier,” he told Fierce, adding that with AI agents talking to AI agents, the experience can sometimes end in some “hilarious” results – and often times, a lot more time and hassle.
That said, even with AI agents in the mix, mobile operators don’t make it easy to switch despite efforts to do otherwise. “There are so many things that are in the way that insulate carriers,” Entner said. “There are a lot of structural impediments in the way” designed to protect both the carrier and the consumer.
All told, businesses like Planet Fitness are probably more susceptible than mobile carriers.
“I’m much more afraid for the fitness clubs where people sign up after Christmas. They go in January, they forget it and they pay until October,” Entner said. “That’s something where there’s a disuse model” that an AI agent could easily identify and, with any luck, correct it by canceling the contract.
Wireless stocks take hit – like it or not
Will these arguments be enough to satisfy investors? AT&T stock was down a smidge, or 0.76%, in early morning trading today and Verizon was similarly down slightly, or about 0.79%. T-Mobile shares were down about 2%.
Here’s how Wolfe Research analyst Peter Supino summed it up in a note for investors today:
“U.S. telecom stocks are down 12.5% since Meta’s launch of Muse. The bear case is clear – AI agents ‘negotiate’ better terms, driving a race to the bottom. What’s unclear – can an ‘agent’ actually close the account (churn) and leave a consumer briefly ‘stranded’? Can a telco’s ability to identify bots limit AI negotiations? Does a rise in ‘always on’ inferencing drive up traffic and thereby price?”
His conclusion: “While we skew more positive on said issues, the telco growth algorithm is led by price and churn, which means AI agents remain an overhang until proven benign.”
OK, AI algorithms: Go forth and prosper. The rest of us will be on Planet Earth waiting on hold for someone to answer our calls.