I’ll point you, though, from an overall high level guidance, I’ll point you to the priority that I finished our conversation with about 2024, which is we’re laser focused on return on capital. And so if there are BEAD opportunities in ’24 or in ’25 that help us expand return on capital, meaning we can have really efficient use of our internal capital spend, and we can drive attractive returns on it, we’ll participate. If it’s not a good use of capital, we won’t. And I’ve also made that really clear to both the states and to NTIA. These programs have to be structured in a way that it’s a positive return on capital equation, not just for UScellular but for anyone that’s going to participate. And so if we were to expand our capital spend in the future because of BEAD, it would be because we see returns that are over and above the current ones that we would expect as part of our long-term plan.
Michael Rollins: Thanks. And just one other for you, LT. Going back to Slide 7, I’m just looking at the trajectory of postpaid handset gross ads, and I’m wondering if you can unpack a bit more of what’s happening on the gross ad front for UScellular? And are there opportunities to start to bend the curve on this and get greater output on that front? Thanks.
Laurent Therivel: Yeah. The — I mean, it’s a — the thing that has driven the slowdown in gross ads, it’s a pretty simple equation, and it’s been the expansion and the rise of the cable wireless players. If I rewind three years, they had a share of essentially zero in our marketplace or in the markets where we operate, across our footprint. Even though we see cable competing by now in about two-thirds of our footprint, they’re still not everywhere. And their market share is still only in the 3% to 4%. But their share of gross ads is about 15%. And so how are they able to do this? Well, it’s really twofold. The first is they offload almost 90% depending on which statistics you look at. Let’s call it 90% of their traffic is offloaded to Wi-Fi. But for us, that number is about 80%.
80% of the usage of our devices is done on Wi-Fi versus 20% is on cellular. And that doesn’t sound like a big difference until you think about it from a usage on cellular perspective. And then you say, okay, well, 10% of a cable device users is on cellular, and they have to turn around and pay for that from a wholesale rate perspective. Whereas 20% of our usage is on cellular, so it’s double the usage on the cellular network. And so their overall network economics are quite attractive. And then you couple that with their ability to essentially cross subsidize their plans with profits from their wireline business. Different people can agree whether or not it’s — whether wireless is a profitable business for the cable wireless players or not, but these are smart people, and they’re driven by economics.
And so they wouldn’t be in the business if they didn’t find a way to make money. And I think they’re either making money on wireless even with the price competition they’re putting in place or at the very least they’re breaking even and they’re seeing the benefit on churn. And so the combination of better offload economics coupled with being able to cross subsidize with their wireless plans, it makes a difference. And we’ve got spectrum in our markets that offer in a $29 plan for a month with one line free. So you’re talking $15 a month unlimited on the Verizon network. That’s significant price pressure that’s been put in place over time, and that’s affected us. It’s affected everybody in the industry. I mean, that is the major driver of change that has occurred.
And so how do you deal with that? Well, I mean, the first is, and we talked about this earlier in the call, we’re really investing in retaining our customers, invest in trying to provide a great customer experience. We’re invested significantly in our digital platform that’s there to ensure that customers have a smooth and seamless experience. We’ve put aggressive promotions in place. We went through the holidays with existing, same as new pricing, and you can expect us to pulse that in and out throughout the year. And so step one will be to really continue to invest in customer retention. And the second step, and this is a big one for us is to continue to enhance our network experience. We talked about rolling out mid band. Everywhere where we modernized for 5G, we see better customer results and higher customer perception of our network.
Everywhere where we roll out mid band, we see the same thing. And so we’ve pivoted our capital spending. By and large, we haven’t completed it, but we’ve slowed the rest of our 5G modernization. By now, you’ve already got 80% of our traffic being carried on 5G modernized sites. So we’ve pivoted the capital spend towards mid band. And that mid-band investment will create a better customer experience. And we think it will compete well in the marketplace, and the combination of a good network experience with an attractive price point, always been network and price that operates in our industry. We expect that to continue. But that’s the fundamental change, Mike, in the industry has been — over the last couple of years, has been the rise of cable wireless.
I don’t see that changing in the near term. I continue to think that we offer a really attractive alternative of a great network and attractive price. We’re going to keep doing that. We’re going to keep competing. But that’s what’s — that’s what driven the challenges in gross ads, and that’s what we’re doing to address it in the future.
