T-Mobile CEO: 5G Home is like Toyota vs. fiber’s Ferrari

T-Mobile’s rivals in the home broadband market like to point out the limitations in its capacity to serve customers due to their hefty bandwidth requirements.

Now that it’s had a couple years to study the behavior of customers using its fixed wireless access (FWA) network, what’s it learned? That’s one of the questions that came up during T-Mobile’s fourth-quarter 2022 and full-year 2022 earnings call today.

T-Mobile CEO Mike Sievert said it’s kind of stating the obvious. When a fiber provider says “that product is not as good as our product,” it’s kind of like the people at Ferrari pointing a finger at the world’s best-selling car, Toyota, and saying “you know, we’re faster. We have the faster car.”

Sure, that car may be faster, “but Toyota’s the world’s best-selling car, and that’s because, if you look at the case of T-Mobile 5G Home broadband … it’s perfectly suited for what people want,” Sievert said.

Although it has “less overall potential for capacity than a strand of fiber, which is patently obvious, it’s radically simple. It’s low cost. It’s transparent. It’s portable within tens of millions of households,” and it has the speed and capacity that allows people to do what they want, he said, adding that net promoter scores for T-Mobile are some of the highest in the industry – 10 points higher than fiber and 30 points higher than cable.

In fact, most of T-Mobile’s broadband customers are coming from cable, he said.

T-Mobile added 524,000 high-speed internet customers in Q4, ending the year with a total of 2.6 million high-speed internet customers. The Q4 number was lower than Q3, when T-Mobile added 578,000 high-speed internet customers, leading some to question the ongoing growth rate for the segment.

When T-Mobile launched the product, it talked about wanting to attract 7 million to 8 million customers by the end of 2025, and it’s “tracking beautifully to that,” Sievert said.

Unlike fiber and cable, T-Mobile is using its wireless network to serve FWA customers where it has excess capacity, and those places are expanding, he said. The company is increasing the number of eligible homes from 40 million to 50 million, and that means there are 50 million homes out of 140 million nationwide that will be able to get the service. “That is a big footprint and we think the product is beautifully suited to the times,” he said.

What about owning fiber?

T-Mobile historically has chosen to lease fiber rather than own it, but its foray into the home broadband market may make it more attractive to own rather than lease.

Last November, Bloomberg reported that T-Mobile was working with Citigroup to find potential partners to build a fiber network targeting the home broadband market, pinning the potential value of a JV at $4 billion.

Sievert did not address that relationship specifically but was asked about its wireline ambitions and role of FWA in bundled offers. He said customers will accept bundles, but “it’s far from certain whether bundles are something that they will require. We’re not interested in convergence because we feel like some flank is exposed that we have to protect. We’re interested in convergence because we have a lot to offer and we have a great brand.”

He said they haven’t decided whether that translates into augmenting its strategy with a wireline approach. “But if we did it, it would be because it’s good business, not because we feel like there’s some flank that we have exposed that we need to protect.”

While they haven’t made a decision about it, he went on to describe some things they have decided not to do. “I personally have no interest in having some kind of major change to our strategy as a company or the financial outcomes that will flow from that strategy or the shareholder remuneration that flows from our financial outcomes. We’re on a mission to become the best in the world at wireless and we’re pursuing that mission ambitiously and so far very successfully,” he said.