Cable Set for 'Healthy Chunk' of Mobile Service Launches
Expect cable operators to roll out plenty of mobile wireless services in coming months, wireless and cable industry watchers tell us. However, mid-tier and regional cable operators are facing a steeper uphill climb in making such services profitable. Breezeline began offering mobile service this spring, joining the likes of Comcast, Charter Communications, Altice and Cox Communications. Mediacom said it plans a roll out of mobile service this month (see 2405210068).
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The National Content & Technology Cooperative mobile virtual network operator (MVNO) agreement struck with Reach Mobile in early 2023 (see 2302280034) let a small handful of cable operators roll out mobile service this year, including Breezeline and TVS Cable in Kentucky. But more mobile offerings via the Reach agreement are expected on the market in coming weeks, NCTC CEO Lou Borrelli told us. The next two to three months should see "a healthy chunk of launches," with multiple NCTC members testing mobile services now, he said. Initial expectations of multiple rollouts in 2023 were thwarted by the level of integration work required, Borrelli added.
More organizations like NCTC are making arrangements with wireless carriers, so internet service providers can offer some version of cellular seems likely, CCG Consulting President Doug Dawson said in an email. But smaller cable companies won't have rates as attractive as Comcast's, he added. "The real secret sauce for being profitable with cellular is for the cable company to carry as much of the traffic as possible on their own network," he said. Comcast has spent years creating extensive outdoor Wi-Fi coverage, Dawson said. Breezeline and Mediacom likely can be nearly as successful as Comcast, but smaller cable companies have lower likelihood of being able to offer "a super-affordable cellular product," he said.
Comcast and Charter Communications have shown a clear strategic and economic path to cable operator success in mobile and the value of bundling consumer broadband with consumer mobile, David Young of consultancy Cartesian told us. But execution is a big challenge, he added. Comcast and Charter have proven effective at selling a connectivity bundle, Young said. The two are material competitors today in wireless and "nearly there" in terms of market share.
Young said the experience with Comcast, Charter, Altice and Cox could make mobile carriers more willing to enter into MVNO arrangements with smaller cable operators. He said small wireline players acting as resellers of Big Mobile, instead of offering mobile service through an MVNO, could be plausible.
Comcast, as of the end of its most recent quarter, had 6.9 million domestic wireless lines, while Charter had 8 million and Altice had 352,000.
The cable industry has shown that being an MVNO can be a profitable, viable business, Daniel Graham, Cox Communications assistant vice president-Cox Mobile Product Management, said in an interview.
Breezeline anticipates that its mobile service will reduce subscriber churn and generate profits on its own, Heather McCallion, vice president-new business and business transformation, said in a statement. "We are convinced that the value proposition we are offering our customers through our mobile offering will propel long-term growth and profits. We also believe that the mobile offering will provide an additional, strong tether to the home, enhancing customer satisfaction and loyalty."
Breezeline's goals in recent years were expanding markets through major acquisitions, launching a cloud-based TV service and investing in its core broadband infrastructure, McCallion said. "Having successfully accomplished these things, we believe the timing is right for Breezeline Mobile and that it will respond to the need in our markets for a great mobile product at a very affordable price."
Cable's mobile wireless earnings are overshadowed by the subscribers lost to fixed wireless access competition, S&P said this week. While cable operators have taken significant share in the postpaid mobile wireless market, mobile wireless margins are modest compared with the higher margins for in-home broadband, it added. S&P said Comcast and Charter are better positioned than other cable providers to benefit from their Verizon MVNO, while smaller cable operators lack the scale or negotiating leverage for similar wireless services. The economics of smaller wireless services coming via the NCTC-Reach agreement won't be as good, and those smaller operators have modest opportunities to offload mobile traffic.
The cable industry can increase its mobile subscriber base significantly during the next three years with low prices and high network quality, S&P predicted. Many cable wireless subscribers defected from prepaid wireless plans or brought their devices, and cable will need to offer equipment installment plans and maybe handset subsidies to compete for higher-value subscribers, it added. Moreover, the gap between earnings lost to fixed wireless and those gained from mobile might narrow and even reverse when fixed wireless' spare capacity is exhausted, it said.
Like all cable companies with mobile service, Cox is looking at routes for offloading traffic from the MVNO onto its spectrum, Graham said. He said a challenge for smaller operators entering mobile is covering the fixed costs that a service requires. He said the company's aim is for its mobile offering to be profitable as a stand-alone business but also to help retain Cox subscribers. Cox didn't divulge subscriber numbers, but Graham said the company is "very happy with the growth we have seen."