The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.
Joe Coldebella:
Hello and welcome to another episode of The Broadband Bunch. I’m Joe Coldebella and we are at Calix Connections 2022 at the Wind Resort in Las Vegas, Nevada. Joining me is the CTO of Schurz Communication, Tom Williams. Tom, welcome to the Broadband Bunch.
Tom Williams:
Great. Thank you very much for having me.
Joe Coldebella:
Hey, it’s awesome to be here. Awesome to be chatting with you. Before we dive into your topic at hand, would love it if you could give our listeners just a little bit of background on yourself in terms of your broadband journey.
Tom Williams:
So I’ve been in the broadband business for about 25 years now. I was inducted into the pioneers of the telecom industry a couple of year years ago, so that was a very special honor. I’ve been around, I’ve done things like deployed video on demand for the first time in the country, I deployed the first digital set-top boxes in the country, and deployed things like Comcast.net, when @home collapsed. So I’ve been around for a lot of these changes in the industry, both from a video perspective but also from a broadband perspective as we’ve evolved, certainly DOCSIS over the years from, DOCSIS 1.0, all the way to 3.1 today, and then the evolution of fiber as well. So when you look at EPON, and GPON evolving into XGS-PON and offering these multi-gig speeds to our customers, that’s what I’ve been focused on primarily, and then add to that, not only have I focused on technology, but also engineering technical operations, call center and I’ve run marketing organizations as well.
Joe Coldebella:
Wow. So just to go a little off script, it must be amazing for you just to see how much the industry has changed and then how much in the last just few years, how much everything’s been accelerating, it must be crazy.
Tom Williams:
It is crazy. When I first started in the industry of research and development years ago at Scientific Atlanta, I mean it was all analog at the time. It was analog video services, there wasn’t even an internet service available by these operators, and today we’re offering multi-gig services to these homes where you can have 20 high-definition TVs throughout the home, all streaming 1080p all at the same time. The amount of bandwidth that’s going from our co-locations to the home is just incredible. Consumption continues to grow. When I look at all of our systems where we have six systems, just the consumption rates month over month continue to go up and it’s not stopping and I don’t see it stopping because the amount of applications that are being developed and things we haven’t even thought of today, from an application standpoint, is going to continue to consume more and more bandwidth.
Joe Coldebella:
I did some interviews with some folks who did a 10G challenge and the stuff that they were just envisioning and rolling out, it’s just amazing where people just have no idea what’s coming down the pike.
Tom Williams:
And I’m a member of a couple of other consortiums, and one of the things that’s interesting from a technology standpoint is, for instance, light field technologies, where you watch Old Star Trek episodes next generation and you see these holodecks and those are the things that are being worked on today where the video is actually coming out of these screens and you’re able to manipulate the video with your hands and you’re able to watch a movie, but you’re able to change the angle so you can see the movie in a different perspective, and it is going to take an incredible amount of bandwidth in order to be able to do those types of things, in order to be able to work with someone across the world as if they’re in the room with you. Those are the type of technologies that are being developed today that are just going to consume more and more gigabits of bandwidth.
Joe Coldebella:
It’s funny, I’m a big VR Oculus guy and it’s one of those things where they’re making a big deal about, “hey, now we’re finally getting legs.” So it’s definitely incredible how we’ve just scratched the surface, we haven’t even stepped up to the plate yet
Tom Williams:
I mean we are certainly in the first inning of both AR and VR and it’s just going to continue to grow over the next few years. Again, technologies that haven’t even been developed yet, aren’t even on people’s minds and it’s all coming. People ask me all the time, “why do we need five gigabits going to the home?” Well, you may not need it today, but I’m telling you, you’ll need it in the next few years.
Joe Coldebella:
I couldn’t agree more because I do talk to people and they’re like, “well, I’ve got enough to do what I do now”, but it’s like, man, there’s going to be a digital economy and you’ve got to make sure that you’re a part of that as well because things are changing.
Tom Williams:
They are changing every day.
Joe Coldebella:
So, just wanted to dive into your work with Schurz. So you’re the CTO there?
Tom Williams:
I am.
Joe Coldebella:
And for your talk that you’re going to be having here at the Galix event, could you just give us a little bit of a framing of that?
Tom Williams:
So the high-level vision is that when you look at wars, and what’s going on in the marketplace, everybody thinks of the war between all of these different broadband companies as being a price war, or you’re hearing a war on speed and that’s not the war, those are battles certainly so, and these broadband providers are going to battle back and forth between price, who’s got the lowest price? Who’s got the contracts? Who’s got the data limits? But where the real war is going to be is around who’s going to be second into the marketplace. If you look at the total market across the United States, just about all of the areas have been taken up to being first in the marketplace, and unless you’re going to go get broadband funds from the federal government to go build these very rural areas, then all of the first places are gone.
So where are you going to go? And that’s really to be the second in the marketplace and people are like, “well, can we make money by doing that?” And we as a company, Schurz, has proven that we can, and if you can go get about 40% of a market, of an area, then you are making money and you’re making a lot of money by doing that, and as these bigger guys are coming into these smaller guys, guys like me, and they’re starting to take our 40%, well, I want to go take their 40%, and by the way, going and getting their 40% is much bigger than our 40%.
Joe Coldebella:
Absolutely.
Tom Williams:
So that’s how you win the war, are you attack, and it’s interesting when you go look at what these big guys are doing when they go to the street, they call it edging out, and it’s really funny that they call it that, what they’re really doing is they’re overbuilding and the reason why they don’t use the term over-building is it’s always had this negative connotation in the marketplace. So they don’t use overbuilding, but that’s exactly what they’re doing. What they want to say is, “we are overbuilding”, but they’re edging out. It’s an interesting dynamic, it’s an all-play on words and that’s what they’re doing because they don’t want to look like the big overbuilder, they want to look like, “oh, we’re just edging out a little bit further from our current properties.”
Joe Coldebella:
A slight incursion.
Tom Williams:
That’s right.
Joe Coldebella:
If I could pull from things that are happening around the world, a minor incursion, but it’s one of those things where, as the second person in, isn’t it also good for the market in general? Because what you’re doing as well as you’re fostering competition and what that does is that ultimately benefits the consumer as well.
Tom Williams:
It does and it allows the consumer to have a choice, and what’s interesting is, a lot of places where we are overbuilding or edging out, whichever you would like to term, we’re actually giving those customers a choice between a DOCSIS service that isn’t symmetrical and a fiber service, which is what we’re deploying, which is a symmetrical service, and we’re able to give 2.5 and five gigabits to our customers and they are jumping all over it, it’s interesting because even though these customers don’t need five gigabits, they just want to have the fastest service they can get, and so they’re jumping all over these five and 2.5 gig services, which is way faster than what these DOCSIS providers can give.
Joe Coldebella:
And so then, what happens from when… So if you move into the market as well, what’s the reception you’re getting from, I guess, from the competition as well as from consumers? So it’s basically, “hey, get out of here, and be positive”, sounds like
Tom Williams:
Yeah, it’s interesting from a competitor’s standpoint, they of course dropping their prices quite a bit and that’s where we get into that price battle that’s going on. They can’t compete with us on speed and they can’t compete with us on our speed to market. So it’s interesting when somebody comes to my company interviewing, they always ask me, and they come from one of these bigger guys and they say, “well, what’s the difference between working for you and working for where I’m at right now?” And my response is always, “when you make a decision, you can see your decision being in effect by the end of the day or the next day, when you work for the big guys, there’s like 10, 20 different levels that that decision has to go through before it’s even enacted or even put into the cycle of the process.”
So it could be months before you see your decision made. We move much faster than that. So for instance, we had one of the bigger guys coming into one of our markets and we immediately, within a few hours, decided we were going to overbuild that area from a DOCSIS plant into a fiber plant, and so when they started building in that area, the XGS-PON equipment was available from Galix, and I said, “Okay, you know what? Let’s deploy that equipment”, and we were immediately able to deploy multi-gig services. So now this big guy, they’ve now overbuilt this whole town and they aren’t gating subscribers, completely blowing their business case for building in that area because they thought they’d just steamroll right in and customers would convert to them, but that didn’t happen because our customers converted to our multi-gig service and they love it and it’s fiber to the premise.
Joe Coldebella:
Oh, that’s great also, and the fact that you’re not a behemoth, it’s that you’re much more nimble so you can make these moves, but I think also if you push that out, it also gives you an opportunity to be really responsive to your customers, which ultimately that’s the most important thing.
Tom Williams:
That’s right. Every day, I’m telling you, we look at our customers, “why did we lose customers? Why are we getting phone calls? What is going on with our market?” And I’m telling you, the guys in the executive levels aren’t doing that. And how do I know that? Well, I used to work for them. So I know on a daily basis, the executives aren’t looking at individual losses, they’re looking at tens of thousands of losses. I’m looking at individual losses. Are we having the right reliability? Are we putting the right resources in the right place? And I can, on a daily basis, make adjustments based on those answers.
Joe Coldebella:
That’s great. And then in terms of market size, are you looking at NFL cities or is it one of those things where second tier? Where do you guys think that, I guess, there’s the most opportunity for the small or more nimble guys?
Tom Williams:
You have to be real careful when you start building into downtowns, and so we’re staying outside of that and looking at the bedroom communities of these big towns, I’m not going to name any right now, but I know you’d like me to, but I have to stay away from that. But that’s what we’re looking at, is really these bedroom communities for these major cities, that’s where we see the value, where it’s the high-density amount of homes in an area or townhomes or even apartment complexes, and that’s what we’re looking at, and I’m telling you, there’s a massive amount of market out there for it because everybody’s too afraid to go after the big guy, and that’s what it is, and by the way, these big guys don’t compete against each other when you really look at it, they stay out of each other’s areas, they don’t want to create that kind of war where a Comcast and a charter is competing, or a Cox is competing.
Joe Coldebella:
Well, I remember interviewing someone, this was several years ago, but one of the things that he said is that those guys have such massive pads of margins that when someone like you comes in, they can drop their price, but then if the service isn’t equivalent, then there’s definitely an opportunity there
Tom Williams:
There is. And they’ll do things like give away a $300 gift card with a signup, which is tough to compete with, I don’t have that kind of margins to be able to play with, but they do. So what we focus on is our reliability and our locality, and that’s one of the items in my talk is staying local. When you call one of my call centers, most likely the call center rep that’s answering the phone lives down the street from the person that’s being called. So we stay focused on being local, and deploy applications that help us stay local, things like the Calix Cloud for instance, that helps us manage Wi-Fi service, those kinds of applications help us stay local and be able to help our customers on a daily basis. It’s interesting, even some of our technicians are so well known in our marketplaces that the people actually know who’s coming to their house because they live down the street or they’ve been there before, that kind of thing to upgrade services.
Joe Coldebella:
And it’s funny as well when they’re… Joe, this is just an anecdotal story, but I was told that this small provider, they were proud to walk into their local supermarket, because they brought superior service, whereas they said they know friends who work for other companies whenever they would walk in, they wouldn’t be wearing their company logo. So definitely local is always better
Tom Williams:
And I mean, we have customers that still come through our drive-throughs and into our facilities to pay their bills because they want to say hi to so-and-so that’s in there because everybody’s local.
Joe Coldebella:
That’s great. If we could just pull out a little bit, I know that we’re coming to the end of 2022 and there’s a lot of money entering this space, and I was wondering, for 2023, what do you see some of the more exciting things happening for you and then maybe perhaps some challenges?
Tom Williams:
So some opportunities that we’re looking at, I have put together a whole new IP video platform that’s being deployed, what’s interesting about it is, we wanted to take away all video processing out of our head ends, I have six different head ends around the country, and that meant I was processing video six different times. So if we launched a new channel, it’s a new satellite receiver in each of the six systems, it’s integration into the encoders and stat muxing and all those different things. So I’ve completely outsourced our video processing to a third party, I’ll let them manage it. “Hey, we’re launching a new channel”, I just pick up the phone and say, “hey, we’re launching X channel, get it onto the fiber feed and it needs to be done by X date”, so much easier. The other part of that is deploying our new IP video platform, which is a complete ABR platform.
Now, most people may say, “well, why would you stay in the video when it’s on the decline?” The reality is, and what’s interesting is that video is the number one consumption of broadband services. Number one, go look at the stats, the number one consumer of broadband is video. So I want to keep that connection to the customer and I believe that the reason why there have been such video losses is we have not provided a service that our customers actually want, we’ve done a very poor job of that and we’re late with that. So we’re deploying a whole new IP video platform. Another thing that we’re doing is we’re deploying a broadband-only video platform, and what I mean by that is, there will be no linear channels on it at all, it will be an Android set top that gives people a consolidated search across all of the OTT options that are out there.
So if you have Netflix, Hulu, Prime, any of these guys, Disney Plus, or HBO Max, you’ll be able to simply press the speech button, ask for The Office, and it’ll serve up every location that The Office is being played, even down to the episode, and then you can simply hit it and it’ll start playing right from our application, and then when the episode’s done, it’ll pop back into our application. So we think that’s going to be very powerful and it’s for our broadband-only subscribers.
Joe Coldebella:
Okay.
Tom Williams:
So we’re pretty excited about that product. From the perspective of a challenge, one of the biggest challenges is, if you look at what went on with Covid in 2020 and 2021, we had probably four years of gains within that period of time.
Joe Coldebella:
Absolutely.
Tom Williams:
And what we’re seeing in the marketplace is that that has really leveled off, and we did a great job of budgeting. We realized that it was going to level off. A lot of the big guys did not.
Joe Coldebella:
The sugar high is over with.
Tom Williams:
The sugar high is over with. And so now everybody’s figuring out, “Okay, what’s going to happen next? Is it going to stay level?” Especially when we get into the things with the economy that’s going on and the recession, are people going to start pulling back? Are they going to start dropping services? Are they going to go from a one-gig package down to a 300-meg package in order to save a couple of bucks every single month? So that’s a challenge that we’re going to have to figure out because I think that’s a real thing that’s going to happen is I don’t think people will get rid of their services, I think they will reduce their services.
Joe Coldebella:
That will definitely be interesting because, and it’s funny that it really is an essential service in the sense that people can’t do without it. If you work from home as I do, or just for pure entertainment’s sake, it is an essential service.
Tom Williams:
It is an essential service, and you have all of these 5G guys that are spreading all this stuff, “okay, for 39 bucks, you can get X amount, but it’s not guaranteed”, and so it’ll be interesting, are we going to lose customers to that cheaper pricing even though it’s much less from a stability and reliability standpoint? Or are people going to stay with us but just lower their services? So that’s something that we’re watching pretty diligently.
Joe Coldebella:
All right. So then this has been a phenomenal visit, by the way. Thank you so much for your time. I would love it if we could even go out a little bit further and if you could unfurl your crystal ball and maybe look three to five years into the future, where do you see things? I would assume that you think that we’ve just scratched the surface, but I would love to get your thoughts.
Tom Williams:
Yeah, as I discussed earlier, AR and VR are really in their infancy. I mean, we’re barely in the mid-first ending of what is available there, and then things like light wave technology where it really brings this really interactive working together and experiencing things together. The metaverse is something that’s going to continue, it’s interesting, there are actually stores in the metaverse now where you can go in and buy a coach purse or whatever it may be. So I think there’s going to be more around that. To me, why do we have to continue looking at these applications that are being developed, by the way, there are applications that we haven’t even thought of yet that are going to be developed, and that’s going to continue consuming bandwidth. So I don’t think that there’s going to be any slowdown at all in the consumption rates going up with bandwidth usage, it’s just going to keep going up.
So what I have to do and what other people in my position have to do is continue looking at how this consumption’s going to raise and how we put in the right architectures in order to be able to support all of these things that are coming out in the next five to 10 years so that our customers continue having this great reliable service and they can get the bandwidth that they need to do what they want to do with all of these different applications, and when you look at… I’ll tell you another one, a big one is going to be around gaming, and I think that’s going to continue to drive consumption rates up both on the upstream and on the downstream.
Joe Coldebella:
I totally agree with you. I think gaming is definitely going to be an incredible area of innovation, but I’ve done some interviews with folks who are doing on the business side and some of the stuff that they’re doing with medical and AR and VR is just amazing. It’s one of those things where I’m really looking forward to just the opportunity out there.
Tom Williams:
And I think there’s going to be some things like medical’s a perfect thing. We’ve been talking about medical for 10 years and how sharing of labs and sharing of x-rays and MRIs and all these different things really hasn’t come to fruition. What thinks’s going to happen in the next five to 10 years is it is, and it’s going to be a great thing for the consumer and the patient to be able to have this interaction because the broadband speeds will finally be there where it doesn’t take hours to download an MRI scan, it’ll take seconds to download that MRI scan. It’ll make it much more usable for both the patient and for the doctors that are utilizing the technologies.
Joe Coldebella:
To your point, we just did an episode with a doctor, she’s a breast cancer specialist, and what she’s doing is she’s partnering with rural hospitals and they’re using AR for her to interact with the local doctor as well as the patient so that the quality of care is just growing exponentially. So to your point, it’s like there’s just so much opportunity out there for our world to become more connected in a very positive way.
Tom Williams:
And you can get these specialists that are in these big cities to be able to evaluate somebody in one of these rural markets, and that’s huge, and that’s important to people’s health and the way that they interact with their doctors in the future.
Joe Coldebella:
It’s an amazing time.
Tom Williams:
It is an amazing time.
Joe Coldebella:
Well, once again, I want to thank you. What can folks do if they want to either reach out to you or learn more about your organization, where can they go?
Tom Williams:
I think the best place certainly to learn about our organization is schurzcommunications.com. If you want to get in touch with me, probably the best way is through LinkedIn.
Joe Coldebella:
Awesome. This has been a phenomenal visit. Hopefully, we’re both here next year and I’d love to put you in and just see where things are at.
Tom Williams:
Yeah, that’s great. Thank you for your time.
Joe Coldebella:
Awesome. It’s going to do it for this episode of The Broadband Munch. Till next time, we’ll see you guys later.
