T-Mobile US, Inc. (TMUS) Earnings Call Transcript & Summary

Good morning, everybody. This is Tim Horan, the cloud and communications analyst at Oppenheimer. A pleasure to have T-Mobile presenting here in a fireside chat for the next 45 minutes. Neville Ray, who you all know, really has been the leader in the industry for driving the industry to 5G and has, as a result, I think, massively transformed the wireless industry in the United States and globally at this point, virtually single-handedly, and he's definitely been one of my heroes in this industry. He's been building up this network for longer than basically any other, I think, President of Technology of any of his peers out there, and it kind of shows in the network quality and in their innovation that they've been doing. So we're going to take some time to really delve into what's going on with T-Mobile and what Neville is focused on and all the changes in technology out there. And Neville, thanks so much for joining us.

Delighted to be here, Tim, and look forward to this opportunity and spending some time talking about 5G and where we're going and all those exciting pieces. I have a disclosure, Tim. Can I do that before we get started?

Absolutely, please do.

And I read it just to make sure I don't upset our lawyers or IR folks. Is that okay?

Of course. Of course.

So before we jump in, I just want to note that today, we may make some forward-looking statements that involve a number of significant risks and uncertainties, and we encourage you to review the risk factors set forth in our SEC filings. Also, we are still in the quiet period for Auction 110, and we cannot comment on that proceeding. That's the formality done, Tim.

Great, Neville. So just remind us how long have you been at T-Mobile and maybe just what actually are your day-to-day responsibilities these days?

Yes. No, thanks, Tim, and thanks for the awesome intro. I'm not sure I can ever claim to single-handedly doing anything. I have a great team here. But I've been here in the U.S. building out wireless since '95 in the early PCS days. I started my career with Pacific Bell Wireless, and I joined what was then VoiceStream in 2000. So yes, 21 years completed. And yes, my role is to oversee all of our technology operations and services and rollouts. And that includes, obviously, the network piece as well as our IT services. And so all of that comes under my wing, so to speak, but I have an incredible team that really does all the work, Tim, so.

And just can you talk about what your high-level strategy is for both the network and IT at a bird's eye view, what's the goal and direction?

Yes. I mean, obviously, for us, I mean our goal and our plan, the one we're executing against is to become and be a leading 5G provider and not just in terms of the stakes in the U.S., but globally back to your earlier points. I think a big part of the combination with Sprint. And our advocacy with the various government agencies and entities that we worked with was to really accelerate, drive an acceleration of the U.S. marketplace into the 5G space. And I'm delighted as we go through the discussion this morning, I'll highlight the activities and the progress we're making against those goals. But we're delivering against everything that we said we would do. And a huge element of that, Tim, is really driving 5G adoption, creativity, innovation, all of the things that we need to see here in the U.S. in this 5G space. So that's kind of network is -- we'll talk about in more detail. And then from an IT perspective, it's making sure that we've got just tremendous services for our customers, but also for our frontline teams to bring and embrace our customers into our 5G and LTE well today in T-Mobile, whether that's in our stores, the Care interactions, our digital work. And we're driving very, very hard. We learned a lot through the pandemic. That digital channel is super important. That's a big, big focus in the IT space. But really the whole IT program as well as the network, it's all about driving customer delight and making sure that we are a frictionless and very -- an easy company to work with. And that customer -- being a customer champion is so at the core of T-Mobile and the Un-carrier philosophy that we've led with and driven across this business for many years now. And everything is centered around making sure that customer experience is the best possible experience it can be in all dimensions and not just from a network perspective.

And I guess in that regard, where do you think is the low-hanging fruit where you're looking for -- to get the most improvement in that customer experience?

Yes. I think there's always opportunity, Tim. I think the piece for us -- I mean, one of the big differences, I think, for us as T-Mobile is we've been a tremendous growth engine and growth company. And we like switching behavior in the marketplace because we win, and we've won for years and we'll continue to win. And so we need to make sure that any pain point, any issue that a customer considers, worries about, thinks about in terms of switching and changing wireless provider that, that path is made easy and simple and straightforward. And we all know that the wireless industry has opportunities there. The digital paths are making sure that we have just a tremendous outstanding digital experience, not just if you want to switch to T-Mobile, but how you manage your relationship with T-Mobile, how you deal with issues, how you manage your billing and all those different things. Everybody has work to do there. And that's one area where we're really putting shoulder to the wheel. That's -- I don't think the wireless industry is great. Obviously, there's fabulous pure digital companies out there in the U.S. and across the world today, and wireless as a sector has a lot of opportunity. And so that's an area where we believe customers are very focused, and we need to be focused on making sure we drive great experiences. But lots happening, and we continue to drive that core culture about customer passion, customer excitement, customer delight across all the channels of the business. And technology is obviously a key part of all of that.

And I want to get into that. It's interesting because I've been going to AWS re:Invent for -- since the beginning. And I think it was 8 years ago, you guys were one of the first carriers I heard of, and I went to a presentation where you had adopted AWS. But I think at the time, it was basically for onboarding new customers, but it was very innovative, obviously, and I'm sure you've expanded way beyond that. And historically, I haven't talked to you too much about that, but we'll save it for the end a little bit on the IT side, what else is kind of going on. But I did want to touch on the network a little bit more. Can you give us an update with your 5G? What type of improvements in capacity you're seeing now? Or do you expect and also maybe latency or jitter or just other metrics and quality?

Yes. Well, lots to talk about. And if I go on to long term, which is a habit of mine, give me a head nod or give me -- because [indiscernible] but maybe we could just start with the rollout itself, Tim, and then I can talk about the benefits that customers are seeing as they enjoy these footprints. So it's 2 years since we launched nationwide 5G with our low-band extended range, 600 megahertz spectrum. And so that footprint today is 308 million people covered. So we've continued to make really strong strides in expanding that 5G footprint and story. And I think low band in 5G has been a really interesting one, Tim. Most of the world started and has been working on mid-band. And the U.S. is now with our leadership is catching up to that. But that stat, that 308 million, believe it or not, that's the largest FDD 5G footprint on the globe. So I don't see -- we work these competitive and industry sources all of the time. But we've been really driving an aggressive path for low-band 5G adoption. And it's critical, Tim, people -- that may not be the service that delivers gigabit-type speeds. Our extended range is delivering speeds twice as fast as LTE, so that's meaningful. I'll try and avoid talking about the competition and their services too much today. I'll try and avoid it. Anyway, Tim, you might bring it out to me, we'll see. But that low-band 5G from us is differentiating. And yes, we had fallow spectrum that we could leverage there. But what's important about that, Tim, from a 5G ecosystem perspective, if you want to ultimately have a full-blown 5G network with, for example, voice services on 5G, you have to make sure that you have the reach, range and coverage to provide the core service. And voice is not highly latency tolerant, coverage gaps are brutal. So you need like a low-band layer. So we see ourselves -- I mean, we're one of the first companies globally really pushing, and I'm excited about our progress on services like voice on 5G, so VoNR, which will come in 2022 when we're finally comfortable with the performance on the network. But that's coming. And it's similar to VoLTE, Tim. If you don't have a big cohesive layer of your requisite technology, then you're not going to have a great experience. There are hand-down mechanisms to legacy technologies and all of those things, but they're always plagued with challenges. And then the other piece is this world of IoT, there are so many use cases that are going to depend on broad and expansive coverage. And in the U.S., in rural America, all those places. So that 5G layer that is the bottom layer of the cake, as I like to call it, of the layer cake, is critically important, and we continue to invest and grow that. But the next layer is...

And Neville, just on that point, are you the only ones that have built down in that like very, very low-band layer 5G nationwide?

Well, so AT&T and Verizon have both launched 5G services in low band using dynamic spectrum sharing. And so I know you understand this stuff, Tim, but simplistically for folks that may be are somewhat new to this. I mean, AT&T and Verizon took 5G cars and put them on a 4G freeway, right? So they had constrained or limited spectrum in low band. And they basically put the 5G phones into the same space. So it's a shared freeway. And so the speeds are very comparable between the 5G and the 4G cars on the freeway, doesn't give you much delta. For us, because we had fallow spectrum and the other guys could have had fallow spectrum, but we went and spent billions of dollars on it ourselves. So what we did was we added lanes to the freeway, Tim. So we didn't just put 5G cars into the LTE freeway, we put a lot of 5G cars on the 5G freeway. And so right across the U.S., we've been adding lanes of new spectrum to 5G services. And so as a 5G customer, you have dedicated spectrum for 5G. And especially now, as you know, I mean, 30% of our postpaid phone customers now carry a 5G phone. So they're still in -- that number is big, considering where we were a year ago. But there's a lot of spectrum out there dedicated for those customers. And so the experience out there is exciting, Tim, and it's starting to really -- we've been hitting rural America for the last 12, 18 months. And the service and performance on that lane or that series of 5G lanes is exciting. And the more exciting thing...

And one of the clarification. The voice over 5G, why is that important? How much will the voice quality improve do you think? And what other features can you get on it?

Yes. I mean the -- so the voice call is going to be the voice call, Tim, right? But the piece is that you want to have an integrated communication suite on that 5G layer with all of that latency benefits. So you can combine great services, be that video voice, messaging voice, all the different -- there's so many rich use cases that are coming through on 5G. And you really don't want to be sat there with half of your services hanging around on this LTE network. And then you've got a bunch of stuff on 5G as any engineer will tell you, you want all of that on one layer. And that's what happened successfully with LTE. Now VoLTE was very difficult because it was the first time the industry had really advanced voice services on a mobility IP layer. And so it was clunky, the features didn't work very well, and it took some time to get that quality into the voice service. And we're facing a little bit of that with 5G, but we learned a lot of lessons from what happened with VoLTE. But for us, I mean, the way I think and my team thinks about where we're going as a company, back to your earlier question, we're a 5G business. And so we don't want to be forever a 5G, 4G, 3G, 2G business. We want to be a 5G business. That's why we built out a 5G core. A lot of that is supported on cloud-type services that I know we'll talk about. And we're driving very, very hard. We're the only company in the U.S. to build out the 5G radio, which I love to talk about because that's a huge, massive multi, multibillion-dollar investment, but that radio has to be paired with a 5G core. And until you do those 2 things together, Tim, you can't realize all of these use cases that we've all been talking about, the ultra-reliable, low-latency stuff. You need a stand-alone, that's the technical term we use, but that's basically a 5G core and a 5G radio. Those 2 environments have to be together. And we're the only company in the U.S. today that has a 5G core enabled. And so we have that stand-alone service available on our low-band extended range network. And that starts to drive latency improvements as well as some of the coverage and speed improvements I talked about earlier on. But I don't want to miss Ultra Capacity, if we could go there next. Is that okay?

Yes. Of course, that was the next question. Yes, yes.

So we've talked about that broad coverage layer. And now what we're putting on top of that is this depth of mid-band spectrum that came to T-Mobile through the Sprint combination. And that's a wealth of great mid-band spectrum, Tim. And we've been furiously deploying that. That's been a massive effort for us over the last 18 months really since we combined with Sprint. And I'll tell you this, I mean, it's not been an easy year for any of us, right? Pandemic, supply chain, all these different things to navigate in a world full of change, right? Every -- it feels like every week, we get new news on how we're navigating this pandemic. But I'll tell you this, Tim, I'm just delighted with our progress. And the momentum that we've built into our business on rolling out our Ultra Capacity mid-band layer in 2.5 gig is one of the most exciting things I've seen in this long career that we referenced earlier on. So to date, we've just recently celebrated, nationwide Ultra Capacity. So north of 200 million people now covered with that mid-band layer. And the volume of spectrum that's there, Tim, is between the 80 and 100 megahertz today. We're targeting 100 megahertz layer, 100 megahertz dedicated for 5G services just on that mid-band layer across 200 million people by the end of the year. So let's just put that 100 megahertz in perspective because folks forget. If you look back at the industry maybe 3 years ago and put millimeter wave over here, right, because that's a different animal. We can come back and talk about that. Us, AT&T and Verizon, we were running our entire businesses on about 100 megahertz of spectrum, between low and mid-band in LTE. So here's a world today with our customer base, 108 million, somewhere in that range, right, our last quarterly reported number, and we have 100 megahertz of dedicated spectrum just on mid-band 5G. And so to the heart of your earlier question about performance and quality, this is the most exciting change I've seen in wireless in my career. I mean we are now -- I was in DC last week, and I was just delighted with the performance. I was on like a rooftop terrace pulling down 600, 700 megabits per second on a mid-band carrier. And to go from 30, 40 megabits per second in LTE to orders -- an order of magnitude higher and more, that's incredible, Tim. I mean we've never seen -- that is like walking around with you've got your phone, and now you have like a broadband connection, a full broadband, high-powered connection in your hand. And LTE has been great, but we are finally now moving into this mid-band world where you can explore and enjoy hundreds of megabits per second on speed. And I hear folks say, well, what does that matter? Of course, it matters. Now we may not have a full certain suite of applications that can really drive to the edge of that performance for consumers or even businesses today. But you and I know we've been doing this a long time. When you build that type of capability into a wireless and mobility network, the transformation that will come with use cases and growth are going to be phenomenal. And I'm sorry to repeat myself, but I've been through all the Gs, and this is, by far and away, the most exciting thing I've ever seen. And so everybody is now chasing us, which is also great. C-band is coming. We can talk about some of the details there. But the progress that we've made to put 200 million people covered by the end of this year, which is really a goal and ambition for AT&T and Verizon at the end of '23, so 2 years from now, puts T-Mobile in a great position to really drive that growth and customer engagement and experience and all those things that we were talking about earlier on. For us as a company, Tim, we want to take that great network experience, combined and couple that with the great value that T-Mobile offers in the marketplace, which I think is undisputed. Still a lot of argument about the network piece, but we're winning. But you put those 2 things together, and for the first time, customers don't have to make a trade-off. They can get a great network and they can get great value and real competition in the marketplace, which, again, is what we promised to the country into the U.S. regulators when we said, look, what we can do when we can combine these assets between T-Mobile and Sprint and really drive this 5G ecosystem in the U.S. It's incredibly exciting.

I think you talked about a 15-fold increase in network capacity, and I never asked you this, but can you talk about how much spectrum of that is going to be in 5G? I think your boss talked about getting 200 megahertz in 5G in a few years. Just a little bit more color. Do you need 200 megahertz of 5G to get to 15x increase in capacity? Or any more color?

Yes. It's somewhere in that range. So we've talked about -- so that comparison, Tim, is if you looked at stand-alone T-Mobile and you cast forward to like 25 and then you look at the combined T-Mobile and Sprint, then you ended up with a 14, 15x multiple in offer capacity on the network. So that's a massive change. Anything when you can say there's an order of magnitude higher capacity, I don't care what the service is. I mean that's going to drive attention. And so yes, 100 megahertz for the end of this year. We've said by the end of '23, we want to be at 200 megahertz of mid-band 5G spectrum. Now we own about 300 megahertz roughly in the mid-band space. So that's a combination of AWS, PCS, our 2.5 and our C-band. So you stack all that today, that's about a 300 megahertz volume of mid-band. And so our goal by the end of 2 years from now is to have effectively 2/3 of that committed to 5G. When you think about it makes sense with 30% 5G phones, where will we be 2 years from now, how much spectrum do we need left to support LTE, it's in that range. Obviously, we'll push that. And if handset adoption accelerates or improves, it's on a great path today. But if it gets better, then we can commit more of that mid-band spectrum to 5G services. But when you go out further years, Tim, so if you go out another 5 years or so, as I said earlier on, our goal as a business is to be a 5G network. And we don't want to be in a position whereby we have to support a ton of capacity and spectrum for LTE services. And you ask why, it's because 5G is way more efficient than LTE. And so there's good physics and math and engineering behind all these things. 5G is way more efficient than LTE, the same way that, that LTE bit pipe was way more efficient than 3G. And so our whole thesis how we build that 14x, Tim, as you take all of the cell sites, and we're building -- I mean, we have an incredibly dense network, we're actually extracting sites out of it. But the most dense network in the U.S. with high volumes of spectrum dedicated to 5G and then very high spectral efficiency coming off that 5G layer, you can generate huge volumes of traffic carrying capacity on the network.

And what type of improvement in spectral efficiency do you see with 5G have you been experiencing?

So in the 50% range, which is super exciting. A lot of this is coming from the spectrum, the technology we're using, Massive MIMO, all these different features and capabilities. And the great news there, Tim, is we're not done. I mean there are hordes of engineers across the globe who continue to push spectral efficiency, antenna technology, the radios themselves, constantly driving because -- I mean look at the C-band auction that was recently held $90 billion of cash invested in spectrum. And of course, the industry is going to continue to drive the most efficient path to utilize that spectrum in the 5G domain. And on 5G, we're really -- we're just getting started. We're not kind of on first-generation product, right? But there's going to be a rich evolutionary path with features and capabilities, a lot of standards work ongoing on 5G to support better radio as well as what happens in the core, et cetera, so that we can fulfill the use case promise that -- if we're honest with ourselves, we still have a lot to do. 5G use cases are super exciting. But we're only now getting to that -- there's this tipping point, Tim, and it's coming with mid-band because of the breadth and depth. I always use this breadth and depth thing. We've had the breadth with low band, but mid-band now brings incredible depth to the network. And our Ultra Capacity footprint is targeted for 300 million people covered by 2023. And that gap between 200 million today and 300 million tomorrow, Tim, that's a 5x geographic coverage requirement in the U.S. So everybody thinks 200 million to 300 million, there's so like 50% more. I mean that's 5x the U.S. To get to that next 100 million people, you need massive geography to be covered. And that's why like millimeter wave. Great, great spectrum, lots of it, but so propagation constraint that everybody knew you could never build a broad and expansive 5G network with millimeter wave. Great in urban hotspots and where you've got real customer density. But we all know the U.S. It's a massive country. There's [ 2x ] million square miles in this place. It's enormous, and massive geography to go and attack, but we are going there with not just our extended range but with our Ultra Capacity. And as in stark contrast, Tim, to our competition, who to date, have not announced plans to really move above the 200 million POPs covered. So for us, a big growth area for the company is that rural American footprint where we haven't played historically because we didn't have network. We now have network, and we're going to bring a very differentiated set of network capabilities with 5G for businesses, for consumers, for in-home broadband, all those pieces, and that's a great growth vector for T-Mobile which is really just a space to AT&T and Verizon. They have to try and defend. But it's tough to defend the rural castle when you don't have the 5G tools and capabilities that T-Mobile is bringing to the table. So great growth vectors that exist in places like that for us. And that's why we're so compelled to go make this happen.

So what -- right now, what percentage of your cell sites have 5G? And what will it be in a year from now, do you think?

Yes. So we've not released a percentage number, Tim. So I'm cautious in giving you a specific count. We're well on our way to more than 50%. And so -- and that's a moving target because the network is very big, and we're decommissioning. But we have tens upon tens of thousands of low-band and 2.5 sites. I give you a stat from last week, right? So one of the things I get -- so Ulf Ewaldsson who runs -- came from Ericsson and runs our deployment engine, he texts me every Sunday night. And this week, his update to me was just last week, we upgraded, added new radio in mid-band and/or low band to over 900 sites in a week. So that was the Sunday through Sunday update. 900 sites had received a radio upgrade in mid and/or low band. So the pace at which we've been driving these upgrades in this rollout of 5G is phenomenal. And you have to compare that, Tim, to the coverage that comes off of these low-band extended range sites. We could be covering dozens of square miles of people who are now getting touched by 5G. And with Ultra Capacity, same story. I mean, literally millions of customers last week got an upgrade on their T-Mobile network, millions, with those types of numbers. And so that's the pace and momentum that we're driving and continue to drive as we go through the next 2 years.

And can you talk about the radius you get with the 2.5 gigahertz spectrum? It used to be kind of smaller and I know you've been able to expand it. Just the experience you're getting right now.

Yes. I mean, so again, it depends on the demographics and the topography of what we're trying to do, Tim. We can extend the 2.5 range into miles, and we can secure good, rational, in-building penetration too. That's the thing you really got to watch with 2.5, 3.0x, whatever it might be, is that in-building penetration. But the service and performance coming off 2.5 is tremendous. The piece that's really exciting is one of the ways, and this will come next year, is our ability to aggregate that low-band 5G layer that we talked about earlier on with the mid-band layer. And so all wireless networks are not all wireless networks. Most wireless networks are constrained on the uplink, and that's the piece from the phone communicating back to the cell tower. So on 2.5, there's great downlink. But the range of the site is compressed because of the uplink propagation where you can replace that uplink on 2.5 with low-band. And now you get to a point where you have almost a downlink constrained 2.5 cell. So what does that mean? That means much better in building, cell-edge performance, the speed and quality of the signal towards that cell-edge is much better. And so that's something that we're working on very hard. We have a lot happening in this carrier aggregation space. We can unpack that, if you want. But right now, we're driving this year to being able to combine mid-band spectrum sources above 100 megahertz. So we can take 100 megahertz layer and say another 20 or 40 above that and combine those as one layer. So everything I'm hearing from the team that's greenlit this year will start in parts of the network with certain funds, shelled out for Apple, those upgrades should be starting any day now for some of the newer models. So that's exciting. That feature also allows us to combine discontiguous spectrum sources. So we've got 40 megahertz, and we own another 40 and somebody is in between, we can combine those 2 into a 80 megahertz layer, and that drives efficiencies and capabilities. We can also start to aggregate spectrum between mid- and low bands in 5G, which is super exciting, again. More spectrum, more throughput, better quality. And then that feature I talked about, about coverage extension, that starts to come later as we move into 2022, not too late in '22. But we're doing everything. I hope some of this makes sense, Tim. We're doing everything...

No, no, no. I mean it's fascinating. I mean it's not an...

[indiscernible] great.

It's absolutely fascinating. I mean the best of all worlds, if you can truly combine low band with mid-band with high band and get them to work as 1 unit, right, it's incredibly powerful in terms of overall improvements to quality. I mean it's almost -- it's really hard to describe, right, because it's a brave new world, literally.

Well, that was the whole thing, this vision of a layer cake, right? So low band, mid-band, millimeter wave on top, right, with more limited deployment because that's the nature of the spectrum. But my piece with the team, I don't know, we've made a lot of layer cakes over time, Tim, to edible ones. I think one with -- I'm saying what about this big. We actually had cake-making competitions to have some fun 1 year. But what I keep pushing on the team is, I want to be able to put a slice all the way through it, to your point. So I want to be able to combine all of those spectrum layers, low, mid and high band. And so you can be in a position where you can -- where you can see all those spectrum results, and that won't be everywhere because millimeter wave is going to be in select locations. But you can enjoy the -- the customers can enjoy the full benefit of that cake cut, all that slice all the way through. Now we're not there yet. Our primary focus has been on that mid-band and low-band piece because that's where we see the biggest step change where we can reach most customers, the millimeter wave piece. Also very important, people think on this like complete downer on millimeter wave. I'm not. I think as a team, we're just pragmatic about where and how you use millimeter wave. The Verizon guys told the millimeter wave story, Tim, because that's all they have. They didn't have low band to go and do 5G. They didn't have mid-band. They advertise and marketed what they had in their hand, which was millimeter wave. So a lot of expectations around multi-gigabit speeds across farmland in the U.S. I mean, unfortunately, we're starting to find some reality now. The key engine is mid-band. But we love millimeter wave. We're deploying millimeter wave in stadiums and venues, in hotspot locations where it makes sense. And we look at it as a capacity open, not dissimilar from what we would do. We might often do this with small cells. So in places in the network where you look at all of that capacity we talked about earlier on and you say, okay, we still need more. We believe that growth over the coming years is going to require more speed, more throughput, more capacity, then they are the types of locations where we push into millimeter wave deployment. And it's exciting, too. We've got a huge arsenal of millimeter wave spectrum that we've deployed in limited locations to date. But that's because we have a mid-band and low-band layer, which is touching and reaching the vast majority of our customers. That mid-band footprint, Tim, that -- 80% of T-Mobile's customer base lives within that 200 million footprint today. So if you go and pick up that 5G iPhone as a T-Mobile customer, you're going to see Ultra Capacity somewhere on your journey frequently for most customers. And that's a huge contrast to what's happening if you're hunting millimeter wave with one of the other guys. I think one of the reports last week talked about very low single-digit availability for customers on millimeter wave. That's great in those places, but that's not a 5G experience outside of that. So it's hard. I mean I don't think the industry has done a great job, Tim, of explaining to customers how all these things work, right, and we've still got some of that navigation to work through. But over the next 2 to 3 years, everybody will be aligned around the mid-band first strategy. I mean that's what AT&T and Verizon are doing. They invested very heavily in C-band. They're investing heavily now in their deployments over the next 2, 3, 4 years. The good news for us is that we're at first, we have a multiyear lead, and we intend to keep it.

So Neville, we have 5 minutes left, and I have 100 questions for you. And 200...

Sorry to keep talking at you. Sorry.

No, no. We're going to keep things simple. And can you talk a little bit about the fixed wireless experience? What's it doing to your network? Is it overwhelming it? Do you have the capacity? Any thoughts?

No, we love it, Tim. So I mean, I talked about these avenues of growth for the business. Rural America, huge for us, big growth opportunity. The business segment, huge growth, not well penetrated. Home broadband, another great -- the start we've made -- the 500,000 customers on in-home broadband services Mike announced last week. Mike Sievert, our CEO. So you've got 0.5 million people already getting great broadband service from T-Mobile. A plan to take that to 7 million to 8 million customers in '24, so a real ramp on growth. And we can do that, Tim, because of all that capacity we talked about earlier on. We're generating so much capacity off this network with 5G efficiency and rollout and spectrum we're using that we're in a position where we can look to create growth on the traditional wireless side, but also great growth on the in-home broadband side. And just to put those 2 numbers in perspective, Magenta MAX customers, which is the best rate plan in the industry today for anybody that really wants to be in 5G spaces, works well on LTE today. But go for 5G, 5G phone of Magenta MAX completely unbridled, customers are doing 35 gig a month, Tim. So that's about 3x U.S. industry averages on LTE to a Magenta MAX customer, 35 gig. And if you want to translate to a home broadband, averages were about 10x, Tim, something like that. But both of those customer sets are in a great position. We anticipate wireless usage on traditional phones will more than double and be in the 70, 80 gigabit range before the next 3 years or so, 2 to 3 years. And then of course, home broadband will rise, too. But I'm super excited. We've -- as a new business for us, we're learning. We're learning for...

The home broadband or the busy hour usage or is it different than traditional mobile usage? Is it like maybe not straining the network as much as people think?

Yes, you've got a lot of kind of off-hour usage on -- compared to traditional wireless. That said, Tim, I mean people have taken these things home. There's a lot of customers. This is their broadband connection, right, is their smart phone. If you can do 35, 40 gig a month, those are average numbers, right? Imagine those peaks and troughs outside of that. So people are using these as great broadband displacement products. But you're right, that home broadband usage, you see the peak in the streaming hours for TV at night. But of course, during the pandemic, I mean video streaming, be it Webex, Zoom, whatever you're using, that's an all-day-long thing. So it's been -- there's been a lot of changes to navigate and work through. But we're working all sorts of ways to make sure that, that home broadband delivery is a great service, very customer-friendly and the performance and capabilities are excellent. And there's a lot of things you can do with the streaming providers, Tim, to ensure that you don't tax the network too heavily. And of course, we're not going to tax the network whereby it will impact our traditional wireless business.

And last question for me. Can you talk a little -- and it's a long question, sorry. Maybe just how are you taking advantage of the cloud in other ways in the network? Is it going to be a major improvement to operating efficiency and new products?

Yes. I mean I think we mentioned earlier on our IT space, we've been using AWS, other cloud providers heavily. I'd say our cloud activity is more organic than inorganic on the network sector. So we have a lot of cloud infrastructure that we manage ourselves. So when I talk about 5G core and many of our other services, a lot of that is our own cloud and how we manage those services. But also engagement, strong engagement in the business community on what's going to happen on the edge, what are the cloud services and computing needs that their applications and use cases are going to need. And so we're working all the angles. We're not making big splashy press announcements until we've got more to talk about. But absolutely, I mean, the cloud space is massively transformative, the efficiencies and benefits that can come from all of that. I'm not at a point, Tim, where I'm comfortable putting core services, which are critical to everything that happens on my network, right? The phone isn't going to ring, the data session is not going to happen unless that core service is up and running. I'm not at the point yet where I would put that in the hands of a third party. I will use cloud technology and efficiency, but I will do that in-house rather than provide it to pay another player. Now we'll watch that. We're in a position where, as I said earlier on, the massive investment is on the radio side. Core invests a very fine tune the team is very capital efficient. But we like to own that experience as much as we can ourselves because that's pretty critical in the nature of the business here. But very open working with all the cloud providers every day.

Neville, we're out of time. I can talk for hours. Jud, thank you for lending Neville to me for the last hour. Appreciate it. Have a great day, everybody.

All right. Thank you, Tim. Happy holidays, everybody. Enjoyed it. Thanks, Tim.

Happy holidays. Bye, guys.