Moore: There’s more to cable MVNO growth than meets the eye

As Sprint is absorbed into T-Mobile, leaving the U.S. with – for now – three national carriers, it makes sense to examine the growth and prospects of the cable companies’ foray into wireless. In most markets, a cable company now is effectively a fourth postpaid competitor.

Xfinity Mobile, having launched in 2017, already has 2.3 million subscribers. Charter’s Spectrum Mobile now has 1.4 million subscribers, having launched in 2018. Since May, Spectrum Mobile has heavily aired a radio advertisement stating that it is “the fastest growing mobile provider in the nation” and that it is “growing faster than Verizon and AT&T and even growing faster than T-Mobile.”  

Both are big cable companies, so their success was inevitable, right?  Wrong.

In 2006, Sprint formed a $200 million joint venture with four cable companies to sell wireless under the Pivot brand name. Combined cable/wireless service bundles were to be sold in parts of 40 states during 2007. But the effort was a huge failure, with one cable executive describing sales as “tepid.”  The effort was scuttled in late 2007.

Thanks to better pricing, use of the cable companies’ own brands, and a strong bring-your-own-device (BYOD) strategy, the results are far better this time. There is a major effort at mixing and matching unlimited plans and “by the gig” plans, which is different from Verizon mixing and matching unlimited plans, while not bundling cheaper plans with limited data.

The success to date of Xfinity Mobile and Spectrum Mobile, in my view, is no fluke and we should get used to the cable companies sustainably gaining share at the expense of the national carriers.

More cable companies

One reason for sustained growth is that more cable companies are launching. Altice Mobile launched in September and now serves customers in parts of 21 states. And Cox seems ready to launch an MVNO. The company serves 6 million customers in parts of 18 states. A Cox spokesman said in an email to Fierce, “We believe the market is becoming more attractive for us to enter the wireless space, and we are exploring it more aggressively now.”

Cable stores will also help cable’s wireless ambitions. As 2017 dawned, there were no cable company stores selling wireless. Wave7 Research has reported that there are more than 400 Xfinity Mobile stores, with this number growing to 500. Most sell wireless and all are likely to sell wireless at some point. There are roughly 700 Spectrum Stores. This number is growing and most sell wireless. Meanwhile, the number of postpaid stores (Verizon, AT&T, T-Mobile, and Sprint combined) peaked at nearly 22,000 in mid-2019 and has been falling. This fall in the store count is set to accelerate in 2020, given T-Mobile/Sprint store consolidation and an effort to do more business online amid the pandemic. Thus, the ratio of cable stores to postpaid carrier stores is changing rapidly.

Cable companies are also advertising more aggressively. National carrier ad spending has softened amid the pandemic, and Sprint’s spending is likely to halt altogether this summer.  Meanwhile, cable company spending on wireless has been robust and could gain steam, with Altice Mobile and perhaps Cox getting into the mix. Wave7 Research has reported that the wireless carrier advertising most aggressively via radio is Spectrum Mobile. Spectrum Mobile’s out-of-home advertising has been strong, including “takeover” or saturation advertising in some New York subway stations.

M&A impact?

One implication of the cable companies’ success in wireless is that the more subscribers they get, the more logical are the economics of owning a network. Dish Network has the spectrum it needs and has stated that it will build a nationwide network, so it wouldn’t be surprising if one or more cable companies did not at least analyze an investment in Dish Network or an outright purchase of it.

In recent decades, analysts have watched the cable companies move toward wireless, then move away from it, and then move back to it.  Cox is taking a look at getting back into wireless. It reminds me of the Eagles’ “Hotel California.”  When it comes to wireless, cable companies can check out anytime they like, but they can never leave.

Jeff Moore is Principal of Wave 7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition.  Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.

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