The fastest growing U.S. cellphone carriers are not telephone companies, but rather cable TV providers, reports the Wall Street Journal. Currently, more than five million Americans pay for their cell phone service through their cable companies. Low prices, the possibility of adjusting phone plans without difficulty and flexibility have been key factors in this trend.
It’s cable operators like Comcast and Charter Communications that have been disrupting the mobile phone industry lately. Both companies have entered the wireless arena in recent years with the aim of building customer loyalty. Cable operators have seen more subscribers leave in favor of streaming services and Internet TV bundles. Pay-TV service providers have turned to their mobile companies to help make up for these lost customers.
“I think we’re real, right?” Comcast CFO Mike Cavanagh said of the company’s Xfinity Mobile unit at a recent conference,” according to the Wall Street Journal. Cavanagh added that the business will be profitable this year. “I don’t think anyone doubts that anymore.”
Last week, Comcast introduced new mobile plans in an attempt to undermine traditional carriers. However, the cable companies have not done too much damage to the business of the mobile operators; they had about 50 times more cell phone subscribers than cable companies at the end of last year. Additionally, cable companies still pay wireless carriers for access to infrastructure. For example, Comcast and Charter rely on the Verizon network and Altice USA works with T-Mobile.
Cable companies plan to overtake wireless carriers
Wireless carriers remain dominant in the mobile phone market, but cable companies have continued to try to advance. A former AT&T customer told the Wall Street Journal he switched to Charter’s Spectrum Mobile about two years ago because he was paying almost three times less a month for unlimited data. Cable companies can offer such discounts because cellphone users use Wi-Fi, which they control, more than cellular networks, which helps them keep their costs manageable. Currently, 80% of all US mobile traffic was on Wi-Fi, according to Charter chief executive Tom Rutledge. Market researcher Opensignal noted that the average US cell phone user is connected to a Wi-Fi network 60% of the time.
If Wi-Fi is not available, cable companies rely on mobile network operators to keep customers connected on the go.
“They’re an important corporate customer for us,” Verizon CEO Hans Vestberg said of the cable companies in December. “If they take part, eventually we take part.”
The evolution of cable companies into the cell phone industry has been going on for almost 20 years. They’ve struggled to gain traction at times, but now cable customers have acknowledged that they haven’t seen much, if any, difference in the quality of their service. Cable companies are also looking to reduce the price gap between themselves and carriers. Comcast, for example, recently announced that it would offer multiline discounts for $120 per month.
The keys to an increase in the mobile subscriber base for cable companies
In a race as tightly contested as that of cell phone subscribers, every increase counts. Cable companies have seen their mobile consumer base nearly quadruple in the past four years. Major U.S. cellphone carriers gained less than 2% over that period, according to research firm MoffettNathanson, The Wall Street Journal reports. Despite the growth disparity, wireless carriers are still far ahead of their cable counterparts – Comcast, Charter and Altice USA combined for 5.4 million mobile customers at the end of 2020. Meanwhile, major wireless carriers, Verizon, AT&T and T-Mobile currently serve more than 260 million subscribers.
Limited range is one of the potential reasons cable companies are so far behind in cell phone subscriber counts. For example, Comcast and Charter only offer mobile service to their customers. Altice, meanwhile, only offers wireless plans to customers who live in one of its operating areas. Cable companies could monetize their wireless services if they built their own infrastructure cost-effectively and relied only on major carriers to reach less populated areas, according to MoffettNathanson telecommunications analyst Craig Moffett.
“Cable companies are in this wonderful strategic position of having to build only where they want to be,” Moffett said.
Cable companies bring CBRS into the fold
The Citizen Broadband Radio Service (CBRS) has been touted as a way for commercial building owners to have their own private wireless network in their building. But recently, cable companies like Comcast and Charter bought CBRS so they can keep customers connected when not on Wi-Fi. They haven’t yet built the cellular infrastructure to deliver the service at scale. , but are testing it in some markets. According to Rich DiGeronimo, Chief Product and Technology Officer, Charter did not participate in the recent Federal Communication Commission (FCC) C-band spectrum auction.
In the meantime, Charter and Comcast have renewed their contracts to continue operating their services on Verizon’s network. AT&T said it may resell some of its network capacity to other carriers, but has not announced any deals with cable companies, The Wall Street Journal reports.
Joe Dyton can be contacted at [email protected]