This year was the year of convergence in the U.S. telecom industry. Not long ago, there were fears about a demise of wireless competition due to the removal of Sprint from the market. But wireless competition is fine, thanks to convergence. In addition, the wireline telecom market – formerly a duopoly comprised of cable and telco – now has increased competition from wireless.
Two decades ago, I worked for Sprint LTD, which was a local phone company with nearly 5% of U.S. access lines. Our DSL products went head-to-head with cable companies for broadband. It was a duopoly and in some places, it was a monopoly, as there was no cable company in some markets, and our DSL coverage was far from universal.
As 2022 started, this was basically unchanged. Sure, phone companies like AT&T and Verizon have more fiber than before. The cable companies have improved their speeds by launching more up-to-date variants of DOCSIS. However, broadband competition was still a duopoly.
T-Mobile and Verizon end the broadband duopoly
T-Mobile and Verizon combined for 920,000 fixed wireless subscriber additions during 3Q 2022, while cable companies had only 39,000 net additions and the top phone companies combined for a loss of 139,000 broadband subscribers, based on a recent study by the Leichtman Group. There was similar dominance of broadband additions by T-Mobile and Verizon during the first half of 2022, also.
T-Mobile in December issued a new report: “The State of Fixed Wireless Access,” which states that 51% of those who choose T-Mobile Home Internet are switchers from cable companies. The report also indicates that the leading reason for switching is price, which makes my point about increasing competition.
But the cable companies are fighting back. Comcast has been airing TV commercials starring actress Judy Greer, who goes into homes to counsel families who have poor internet performance. In one of the ads, “We’ve Become Nocturnal,” a family wakes up in the wee hours of the morning to go online as that is supposedly the only time when the performance of T-Mobile Home Internet is adequate. The family is likened to vampires. In this “Shared Interests” TV ad, a couple of young gamers are so frustrated by T-Mobile Internet performance that they take up birdwatching instead. Prospects are driven to xfinity.com/TmoFacts.
Cox Communications is doing similar advertising. Its “Just Phone Internet” TV ad seeks to cast doubt on the reliability of T-Mobile Home Internet. T-Mobile Home Internet is said to be “just phone internet, not home internet.” In it, a girl builds a house of cards, except that she is using phones as cards for the house. The card house collapses.
T-Mobile returns fire
T-Mobile launched a new campaign this week, inviting unhappy Xfinity broadband customers to break up with Comcast. For 25 hours a T-Mobile billboard truck circled Comcast’s headquarters in Philadelphia while playing a video that talked about Comcast’s price hikes over the years.
Meanwhile, Comcast and Charter are gaining ground in the wireless space. Xfinity Mobile and Spectrum Mobile are set to cross the 10 million wireless subscriber mark.
The early years of Xfinity Mobile and Spectrum Mobile have been highly successful. Comcast in October announced that it had more than 5 million Xfinity Mobile lines in service. Charter stated that at 3Q 2022, it had 4.7 million Spectrum Mobile lines in place. It seems inevitable that these two carriers will end 2022 with more than 10 million wireless lines.
I think the early success of Xfinity Mobile and Spectrum Mobile is sustainable. Both have a huge customer base and are using these customer relationships to pitch wireless service. They have upgraded their stores and are adding more stores. The $30/month unlimited family line pricing is certainly part of their success. Cable customers are often choosing T-Mobile for pricing, and I have no doubt that customers of wireless carriers are choosing Xfinity Mobile and Spectrum Mobile for their $30/month unlimited and affordable “by-the-gig” pricing. Finally, both companies have deep pockets and have shown a willingness to spend heavily on advertising to build awareness.
More cable companies enter the fray
Cox Communications, the third-largest cable company, has launched Cox Mobile broadly across its footprint. My firm, Wave7 Research, has been closely watching this launch, and it is still nascent. There is no known advertising for it and only Galaxy phones are sold so far, with an iPhone launch likely soon. A formal launch of Cox Mobile is slated to occur at CES in January.
Cox is all in. I travelled to a market last week where Cox Mobile had just been launched. Cox Mobile signage was pervasive at the store. I joked to a Cox store rep that had I just landed from Mars, I would think that Cox was a wireless company, not a cable company. The rep laughed and seemed to agree.
In August, I wrote about the rise of “junior cable” in wireless competition. In July, WOW! announced that its wireless service was “available to customers across the company’s entire footprint.” The cableco has a network that passes 1.9 million customers.
Its wireless service is powered by ReachNext, an mobile virtual network enabler (MVNE). An official from ReachNext recently informed me that it is working with “dozens” of cable companies about potential launches of wireless service.
Bundling is a new development for 2022
Charter has been heavily advertising its new Charter One bundle in recent months. Charter One “offers internet, advanced Wi-Fi and a single mobile line for $49.99/month for 12 months,” as reported by Fierce Wireless in October.
“Ditch cable,” Verizon has been telling prospects this year. The carrier launched a bundle that provides Verizon Home Internet at the attractive price of $25/month, assuming the customer chooses autopay and premium unlimited. T-Mobile since May has pitched T-Mobile Home Internet at a bundled price of $30/month, assuming a family chooses autopay and the Magenta Max plan. This was announced as part of an “un-carrier” move that also included a Price Lock guarantee, a free trial of the service, and a push for business sales.
Positive for competition
The publicity efforts and negative advertising are fine with me. It just shows how real cable/wireless competition has become. As the cable companies increasingly battle wireless carriers for customers, offers have been getting better. Increased choice brings savings to customers and requires service providers to stay at the top of their game.
Sprint? I miss it, as it kept competition lively in the days before wireless/wireline convergence was a reality. As of 2022, that has changed, and the convergence is real.
Here’s a happy thought, as we close out 2022. I think convergence will get even better in 2023.