What’s on the horizon for broadband industry for 2023 - ETI
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February 14, 2023

What’s on the horizon for broadband industry for 2023

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.

Pete Pizzutillo:

Hello, and welcome to another episode of the Broadband Bunch. My name is Pete Pizzutillo here at Calix Connections 2022. And I am joined by Mark Vena, he’s the CEO and founder of SmartTech Research. Mark, thanks for joining us.

Mark Vena:

Hey, glad to be here.

Pete Pizzutillo:

How are things going? I know you said you’ve been to a couple of these Calix events.

Mark Vena:

Yeah, I’ve been to several of them. And it’s interesting, Calix is certainly on the journey. And as the CEO Mike Weening mentioned today, it’s evident. You hear the keynotes and you hear the presentations and I wouldn’t say they’re markedly different than from the first session that I went to a few years ago but certainly you can see the fact that they listened to feedback. That’s the thing that’s most impressive about Calix. A lot of companies, claim to listen to feedback, they try to comprehend partner feedback but you really can see it in the presentations we’re given, the attention that’s focused on the partner base here, and it’s impressive. And it’s not a bad place to be in late October.

Pete Pizzutillo:

Yeah, lovely Las Vegas as we look over the golf course area. And my own personal observation is I feel like not only do they listen to the feedback but they seem to be mission-driven. There’s a real desire to help these broadband providers not only just be successful but to compete and serve their communities.

Mark Vena:

Well, it’s a challenge because you look at the big guys in the internet provider space, and as you know, most homeowners do not put cable companies on their list for Christmas cards at the end of the year. But the interesting thing is that there seems to be a very genuine feeling that permeates throughout the entire organization. It’s always impressed me about Calix, and it’s not to say that other big cable companies are evil or bad, I guess they’re not. But there’s an impersonality I think, attribute to the personalities of the large guys. And Calix, the way they structure their mission, the way they partner and they roll out channel programs, a tremendous amount of emphasis on really understanding the profile of who their BSPs are because their BSPs are in many cases, very small, very provincial, they don’t have a lot of resources. In many cases, you may have the person who’s doing marketing is also doing technical support and other things, and they’re really focused on providing the tools and deliverables at the BSP level to make them better marketers, which very, very much impresses me. Of course, you don’t see that with the large internet providers because they do everything themselves and they’re a lot less cookie-cutter oriented I think than what Calix is able to do because they really have to understand the different profiles of their customers.

Pete Pizzutillo:

Yeah. No, I think that’s a good indication of the market that you’re experiencing here. Just going back to Michael’s keynote, and Carl spoke a little bit today, Were there any takeaways that you heard today?

Mark Vena:

Yeah. What was really interesting … I thought the piece that they’re extending their managed Wi-Fi experience, which they’ve been a leader in frankly for the last six or seven years, and they’re extending it to other parts of the customer experience, which I think is very interesting. And I’m a big believer in that by the way, because one of the biggest frustrations that customers have from a Wi-Fi standpoint, is that all this change from Wi-Fi AC to 6C, to 7, ultimately to 8, 9, and 10, now it’s like a cartoon character. Your eyes start to roll after a while. And I think that the ability to give a BSP the ability to provide that experience to a customer who can seamlessly upgrade their Wi-Fi experience without resetting or redoing all their devices in their homes, it’s a very seamless experience but still take advantage of the latest wireless topologies that are out there. That’s a pretty big deal. I think that they’re continuing to invest in that work.

The other thing on the other side of the spectrum that I thought was really interesting, which I think is going to be a big deal, is this a whole idea of super … I think the phrase he used was super towns or the notion that you could extend the Wi-Fi experience to communities, to schools, to areas in a very seamless, structured way. And not only is that … I think there are benefits from a customer standpoint and there are benefits I think, from a BSP standpoint, but I think the other benefit will be the usage models that fall out of that, whether it’s caring for the elderly … Because all of a sudden, now you can track different objects and track different activities across geographic lines, not just in your home but potentially in an entire town, which is a pretty amazing thing. That whole notion is brand new. Anytime something’s brand new, you got to spend a lot of time explaining it to people. And I think they’re doing a very good job getting in front of that train because I think it’s going to be a big deal.

Pete Pizzutillo:

And that’s a great point. Part of the collision that I see is that as we move to serve unserved and underserved communities that are not as fortunate as others, what is the challenge going to be like in terms of training and adoption? It’s one thing to have these services but it’s the other to gain the trust of the folks to say, “Yeah, I want you inside my house to help me manage this or to be secure.”

There’s that interesting tension that I don’t know if you’ve seen anyone addressing or talking about.

Mark Vena:

Well, there’s not only that but there are also the privacy implications that fall out of things like that. And just going back to that example we were talking about before, that technology, when you extend it to the furthest degree, and that probably will be a few years before that really happens but when it does happen, some wonderful usage models will come out of it but there’s also going to be some very broad, really pertinent privacy issues that are really going to fall out of it. And Calix is going to have to be very careful other service providers, of providing those protections to people, saying, “Hey listen, I don’t know if I really want to be tracked when I’m outside my home. And I want to make sure that I opt into activities like that.”

They’re pretty savvy enough that … I haven’t talked to the team about that yet but I am sure that they’ve already comprehended those minefields. But going back to your other question about providing those tools and capabilities, Calix has always been very, very good about really providing very profound tools. They’re very tools oriented, whether it be videos or webinars. I think they do a pretty outstanding job in terms of really equipping their BSPs with the right tools because you’re absolutely right, as these tools become … These applications and usage models become much more sophisticated, it’s not something that you can train for in 24 hours. You really have to have teams that are dedicated and understand the niches of the capabilities, and what it takes to implement them. I think Calix knows that they’ve got to continue to make investments in that area.

Pete Pizzutillo:

Yeah, it’s going to be interesting to see not just for Calix communities but for all communities, the realization of this opportunity. I just wanted to switch a little bit about funding. There are a lot of folks in these rooms that are counting on public funding to help them get there. What are your thoughts on the current state of how the money’s coming out and how people are utilizing it?

Mark Vena:

Well, I think just talking about the United States, the United States of course over the last couple of years with the current administration, there’s been a lot of money authorized for investment in infrastructure. The challenge is a lot of those dollars sometimes, especially when they come out of Washington, they might dedicate … Just to use a hundred dollars as a round number, a hundred dollars gets allocated, really $45 effectively becomes to spend because so many people touch it. And I’m not saying that there’s anything illegal going on, that’s just the inefficiency of bureaucracy. I personally think there’s a recognition politically that infrastructure, really good broadband infrastructure, whether it’s the evolution of 5G, whether it’s the evolution of fiber, the evolution of a combination of different technologies, I really think those things are so important that there’s an appreciation now on both sides of the political aisle.

And especially extending that technology to lower income groups that potentially don’t have the access to those dollars, which by the way, makes the … The example that Michael Weening used, I think it was Michael used on stage, where during the pandemic if this capability had been in a place where there’s a significant amount of the underserved population that might have been able to get internet access, they wouldn’t have to go to Starbucks or … But the dollar piece of it, I’m not really too concerned about that the dollars are going to dry up. I’m more concerned about inefficiencies in anything that Washington … Just speaking from an American, anything that Washington does, you have to discount it 40% to see what the true impact’s going to be.

Pete Pizzutillo:

Well no, I think it’s a great point. And I think there’s a lot of inefficiency opportunities, and that’s my concern, is there are some folks, some of the big dogs that are looking for some public failures. You see some of the criticism around the RDOF funding as people are starting to backpedal from that. And so the real question is how much money at the end of the day will be actually put into this market and utilized?

Mark Vena:

But it’s important too because some of the data that I’ve seen if you look at average broadband speeds across the United States, it’s shockingly low. And by the way, in the United States, the FCC has a shockingly, almost pathetically conservative definition of what defines broadband. Nobody in this hotel would ever accept that level of performance at their house. And I think in many cases, the federal government has to step up and understand, “Hey, by the way, a really good immersive broadband experience is much higher than that. Maybe it’s not 900 megabits down but it’s certainly not 25 or 35 megabits down.”

I’m hopeful that there are going to be applications coming out over the next couple of years, especially AR and VR, those are the applications you’re not going to be able to get by with 25 or 30 megabits down. I can’t even say those words without laughing.

Pete Pizzutillo:

It just becomes sunglasses. One of the things that they’ve spent a lot of time talking about here, and I’ve heard from a lot of operators, is lead times and supply chain issues. Is there relief in sight or are we just going to get worse?

Mark Vena:

I don’t know if it’s going to get worse but I’m not sure it’s going to get a lot better. If it’s not the Ukrainian war that’s creating a lot of uncertainty in the market, you’ve got issues in China. If you really want to see a crinkle in the supply chain, if something God forbid, happened in Taiwan, all bets are off. But I don’t see matters getting worse. I would like to see more action in the United States on the government side in terms of … We ping-ponged back and forth. During the Trump administration, there was this push on ripping regulations out. I think they had a rule for every regulation they put in, they had to take five out. I think there was the general rule of the Trump administration. Of course, the current administration’s gone the other way, where you keep heaping regulation after regulation and regulation. And as these new technologies emerge, and this is not just confined to broadband but even other technology areas, you can slow things down dramatically with the right one or two rules when you say that. And even if they’re the most well-intentioned in the world, they end up creating bureaucracy and creating difficulty in getting synchronized. And to me, that’s a tragedy.

Pete Pizzutillo:

Yeah. We’ve started to see this and I’d be interested to see if the government’s going to lean into it, as a lot of the manufacturers are shifting to building in the United States. They’re launching their own plants, and so …

Mark Vena:

The challenge with that is of course … And for those people outside the technology sphere, just to use chips, ASIC silicon as an example, you just don’t build a factory. Intel of course is building factories… Thank God, knock wood, is now starting to build factories over here. Those factories will not be online for another four, five, or six years.

Pete Pizzutillo:

Is that right?

Mark Vena:

Yeah. And because those foundries are so capital intensive and they’re so huge and … They’re like the modern-day version of the Hershey Chocolate Factory, except that they take a lot longer to get up and running. Yes, call it nearshoring I think, is a technical example that people now use for that. It’s got to happen faster.

Pete Pizzutillo:

Last question, okay. We’re back here next year. What do you think is going to look different?

Mark Vena:

I think what will probably look different is more progress in that whole notion of being able to link different communities in different areas in hybrid networks that allow you to seamlessly go from your house, your business, to a stadium, to a place of business. I think you’ll see more dramatic improvement there. The 5G infrastructure, I think we’ll be further built out, although I think in many cases, and it’s probably a topic for another podcast, I think 5G has been a bit of a disappointment in terms of the rollout. And I think that the carriers made so many huge promises, and I think most people will tell you, “I really can’t tell the difference when I’m using … When I’m streaming a movie, I’m not really sure I really get the difference between 4G and 5G.”

And you’ve got other topologies coming along too, which I wonder if the promised truck will start to kick up again when that happens. But I suspect you’ll probably see more progress. And from a Calix perspective, I think you’ll see probably even a stronger commitment if it could be any stronger, but they’ll always find ways to improve the relationship. They’ll find opportunities to create even more profound tools and better tools. Going back to the AR and VR thing, I think we’ll finally see some product activity from Apple. Whatever they came up with, I don’t have any inside information, but they’ll probably be in the market sometime next year with something and it’ll probably be mainstream oriented. I suspect the reason why Apple has hung back is right now, all the AR/VR Stuff that’s out there, whether it’s Oculus or all the other niche products that are out there, are pretty business and very narrow, very vertically oriented from an industrial standpoint. Once you see Apple getting into the game, it’s a different story. And the reason why that’s important for a company like Calix, is that that will have interesting Wi-Fi implications.

Pete Pizzutillo:

Sure, yeah. We were talking about that earlier, about VR is definitely going to be the iPhone killer. If you can figure out how to get rid of your phone, people are going to do it.

Mark Vena:

I think the moment Apple … This is my guess, and I know this will be timestamped. I think the moment Apple comes out with a VR version of FaceTime, where mom can have a call with a group of people, and if you feel like you’re in your house in Oradell, New Jersey just as an example, and you really think you’re in Oradell, New Jersey, or you might be in San Jose, California, then all of a sudden it becomes mainstream. But that’s probably going to require quite a lot of horsepower at the device level and probably a lot of bandwidth.

Pete Pizzutillo:

You’re going to need that mesh, that fabric, as they say. Yeah. Well, hey Mark, I appreciate you being on this nice episode. Enjoy the rest of the show, and let’s catch up.

Mark Vena:

I actually loved it, thanks very much.

Pete Pizzutillo:

Nice.

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