The US cable players are continuing to make their presence known across the wireless landscape, even if their total subscribers are dwarfed by those of Verizon, T-Mobile and AT&T. Over the course of the past few years, the cable players have captured an unignorable number of postpaid phone net additions throughout the industry, snatching subscribers from the major carriers and limiting their growth. In Q2 2022, Xfinity, Spectrum and Optimum Mobile together captured 694,000 postpaid phone net additions. While this lagged AT&T’s 813,000 and T-Mobile’s 723,000, their subscriber growth far outpaced Verizon’s. Together, the cable companies stand as a significant competitor to the wireless incumbents and one that is having a significant impact on the shape of the industry.
| *From Q2 2022 earnings releases |
Cable players offer strong value
Over the course of the past two years or so, the dynamics of the US smartphone industry have changed, with the carriers bringing back huge device subsidies that allow many customers to get new flagship devices for free. The cable players played a role in this dynamic, challenging the postpaid carriers to offer better value to their subscribers in fear that the cable players could win them over with their low service plan prices. Based on pricing for two lines of entry-level unlimited plans, the cable companies offer wireless service for half the amount per line that Verizon and AT&T charge. But there are drawbacks. For one, mobile services from the cable companies are only available to existing customers. Additionally, Xfinity and Spectrum both throttle data speeds on their unlimited plans after customers use 20 GB of data, below the threshold of the carriers. The carriers also offer Wi-Fi hotspot data with their unlimited plans, an extra perk the cable players do not offer.
Thanks to their low operating costs due to the leasing of spectrum from the carriers and the dynamic use of existing Wi-Fi networks, the cable companies have been able to offer much lower prices for wireless plans than are on offer at the carriers. This value proposition has been recognized by consumers who are looking to save money amid macroeconomic uncertainty and high inflation.
Competition to stay hot in H2 2022 as Boost Infinite and Cox Mobile launch
The competition between the postpaid carriers and cable companies has helped to keep service and device prices low for consumers even as inflation reached the highest level in decades. The battle over value is likely to stay hot through 2023, as Boost plans to launch Boost Infinite, its long-awaited postpaid service, in Q4, and as Cox Communications launches its own wireless services in several states.
With about 6.8 million customers, Cox Communications may not have the extensive subscriber base that Comcast or Charter have, but its entry into the market shows the impact that Comcast, Charter and Altice have had, pioneering a new model that other cable companies are following. Like its forebearers, Cox Mobile will operate as an MVNO while offloading traffic onto its extensive Wi-Fi network, when possible, to keep costs down. Progress will be slow at first. Right now, Cox Mobile is available in only three locations – Hampton Roads (VA), Omaha (NE) and Las Vegas (NV). Cox offers services in 18 states across the country and the strong value cable companies can offer customers is sure to capture mobile customers. If customer adoption follows in Comcast, Charter and Altice’s footsteps, wireless service penetration of existing Cox customers could be about 10% in three years.
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