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How T-Mobile is taking on the cable internet giants

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Yahoo Finance's Dan Howley joined Yahoo Finance Live to discuss T-Mobile expansion plans.

Video Transcript

EMILY MCCORMICK: And switching gears to the telecom space, because T-Mobile is out to take on cable companies. That stock is trading just below the flat line this afternoon. But the carrier just this week introduced a new $60 a month wireless home broadband service in its latest push to distinguish itself in the 5G race. We have Yahoo Finance's tech reporter Dan Howley here with more. And Dan, is this latest offer from T-Mobile a compelling one, considering all the competition that's out there?

DAN HOWLEY: It really is actually, and I think at $60 a month for in-home 5G, it kind of shows that T-Mobile is very serious about not only its 5G capabilities, which it has the largest 5G network in the country right now thanks to sucking up Sprint, but as well as taking on the home internet providers that really are kind of the entrenched players in the space.

Talking about the likes of Comcast, Charter, CenturyLink, anybody along those lines. That's what T-Mobile is going against here. Not to mention AT&T, which is one of the largest home internet providers in the country. So this is essentially rather than having a pole and a wire having to deal with coming into your house, people drilling into your walls or whatnot, if you live in a rural area, even being able to get access to that, what this does is, it's a router essentially, that you would put near your window sill. And it would pull in the 5G connection from the outside world into your home.

And then that would then allow you to get up to 100 megabits per second of speed from that connection. You can spread that across your different devices in your home. And just as an idea, you only need 25 megabits per second to stream 4K Netflix, so you're going to have plenty of connectivity with that 100 megabits per second, especially for rural areas.

And basically what T-Mobile is saying is, it's available to 30 million people right now in 49 states. That's the lower 48, including Hawaii. But 10 million of the 30 million are in rural areas. And that's something that's been talked about a lot as far as the digital divide in the US, where rural regions don't have access to broadband. But they also did mention that urban areas without much competition could benefit because in a lot of those places, there's only one particular carrier or ISP available. And so with T-Mobile coming in, that could be one more.

The reason why they're focusing on rural right now, though, is because they're kind of hitting capacity limits and they want to make sure because this is riding off the standard 5G network, that they don't overwhelm the system that they have. So what they're going to do is, as they push out more capacity for 5G, they'll make this available to more customers.

SEANA SMITH: And Dan, speaking of that and the focus there on rural America, it was interesting there in their press release just noting the number of jobs that they expect to create. Over 7,000 new employees they expect to add in small towns and rural communities over the next few years. And like you were saying, this is a part of the population, many have felt left behind. And many of them have really taken the brunt of the economic impact of COVID.

DAN HOWLEY: Right. And then being able to add, obviously, the broadband that everybody has needed throughout the pandemic could be huge. It means that people would be able to telecommute, it means the students may be able to work from their own homes or do home schooling through a virtual school. So it's really come to the point where you can't say broadband is a luxury anymore, it's a necessity.

And there is a lot of kind of debate in the US as to how many people don't have broadband or how many people do have broadband. The FCC has said that an overwhelming majority of people do have broadband. But in reality, other FCC members say that there isn't. I just want to read a stat to you. Essentially, what the FCC says, is that only 18 million people don't have internet access or high speed internet access, while acting FCC chairwoman Jessica Rosenworcel says that up to 100 million don't have access to broadband internet.

So really a huge gap. The reason being, is because carriers are able to and ISPs are able to say how many people exactly they cover without being then vetted by the government. That's something that I think the FCC might want to look at if they want to get an accurate measure of who exactly has internet where.

EMILY MCCORMICK: And Dan, also want to switch gears and talk just a little bit about that semiconductor, that chip shortage that we've been talking about for months now. Because Bloomberg now reporting that there's a 60-week delay on router orders, so more than a year delay. What companies are going to be impacted by this, and what's going to be the extent of the damage because of these delays?

DAN HOWLEY: Yeah, this is part of the ongoing chip shortage that we've seen around the world. Obviously, we talked a lot about how this is impacting cars and whether or not automakers are going to be able to produce vehicles, as well as the fuel efficiency standards that these vehicles have. But now it's hitting even greater numbers of consumer goods.

We talked about obviously those routers. It's going to be a delay of I think six weeks. And as far as what's going to happen for them, I think what people are going to have to do is just make do with what they have. These are going to be orders that companies may be making, as well as consumers. And at a time like this where home internet is so important and work from home environment is probably here to stay for a number of Americans, the ability to access a router is of the utmost importance.

And you see in the beginning of the pandemic, so many people went out and bought new ones because they realized how bad their old routers actually were. And with the technology continuing to advance, we talk about 6G in home networking, not to be confused with future 6G cellular, people do want newer routers. And this delay is going to be a bigger issue.

We obviously have those reports as well that Apple is being hit with delays as well for their Mac line of products. So it is coming to the consumer goods that we know and love. We know that it's been a big problem for Microsoft and Sony as far as putting out their new consoles. So expect to start to see even more shortages going forward.

EMILY MCCORMICK: All right Dan Howley with the latest on the chip shortages, as well as T-Mobile's latest push into cable.