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Comcast, Charter, Optimum Gaining Ground in Wireless: Jeff Kagan

Columnist, Key Opinion Leader, Influencer

Jeff Kagan is an Equities.com columnist. As an Industry Analyst over 30 years, Kagan follows wireless, wire line, telecom, Internet, pay-TV, cable TV, IPTV, Cloud, IoT, AI, Mobile Pay, Smart Cities, Smart Homes, Automotive, Self-Driving Cars, Healthcare, Digital Health and more. He is a well known KOL and Influencer.
Jeff Kagan is an Equities.com columnist. As an Industry Analyst over 30 years, Kagan follows wireless, wire line, telecom, Internet, pay-TV, cable TV, IPTV, Cloud, IoT, AI, Mobile Pay, Smart Cities, Smart Homes, Automotive, Self-Driving Cars, Healthcare, Digital Health and more. He is a well known KOL and Influencer.
Why reselling wireless is a great business to be in right now.

The return to wireless by Xfinity Mobile ( Comcast Corp - Class A - $35.15 0.10 (0.00284%)  ), Spectrum Mobile ( Charter Communications Inc. - Class A - $387.79 13.43 (0.03463%)  ) and Optimum from Altice ( Altice USA Inc - Class A - $4.01 0.16 (0.0399%)  ) seems to be gaining traction this time around. After an embarrassing first attempt failed more than a decade ago, their second go-round — which started in 2017 — seems to be more successful. To be sure, their service offerings are better. But their success has something bigger going for it.

Xfinity Mobile and Spectrum Mobile both resell Verizon ( Verizon Communications Inc - $37.07 0.32 (0.0085%)  ) Wireless services. Optimum resells T-Mobile. Cox has also recently entered wireless; better late than never.

Beyond the cable television industry, the entire MVNO reseller marketplace is also doing well. However, there is a difference between cable TV wireless and more traditional wireless resellers.

Cable TV’s first try at wireless occurred during a pivotal time of change in wireless. The industry has gone through several of these major, pivotal moments — like when it moved from analog to digital in the 1990’s creating the world of apps and mobile data. During that time, the previous leader of analog handsets, Motorola, quickly fell from the top to the bottom of the list of competitors.

Another pivotal moment was years later when the cable TV companies all seemed to jump into wireless at the same time — and then quickly failed. That was when the iPhone and Android were first introduced. They quickly transformed the entire industry sending previous leaders like Blackberry and Nokia to the bottom of the list of competitors.

If you recall, that was when the market for digital data services exploded from a few hundred apps for Blackberry to millions for iPhone and Android.

Years later, the cable TV companies jumped back into wireless, and so far, they are looking like strong competitors in the MVNO reseller marketplace.

In the past, customers wanted post-paid and were users of AT&T ( AT&T, Inc. - $18.75 0.27 (0.01413%)  ) Mobility, Verizon Wireless, Sprint and T-Mobile ( T-Mobile US Inc - $150.62 0.70 (0.00465%)  ). In those early days, pre-paid was a way for credit-challenged users to go wireless. At that time, pre-paid almost had a stigma attached to it.

In the years since, the pre-paid marketplace has exploded with growth for mainstream customers as it matured.

Today, because of that competitive threat, every wireless carrier also offers pre-paid services.

In addition, there are quite a few competitors in this space — not just Xfinity, Spectrum and Optimum — but also Cricket (owned by AT&T), PureTalk, TracFone (owned by Verizon), Consumer Cellular and countless others, large and small.

The pre-paid marketplace is growing into a solid industry segment. And with the weak economy and users wanting to pay less, I only see this segment continuing to gain in popularity.

The reason is simple, it costs less. Pre-paid users typically pay less than post-paid. In fact, the difference in price can be 50 percent less or better.

In fact, Xfinity Mobile recently reduced the price of their wireless plan from around $40 to $30 per month. This is now a very attractive offer and should accelerate their growth. It could also start a new trend other resellers will follow, making the gap between post-paid and pre-paid wireless services wider than ever.

Traditional wireless services offer a wide variety of additional features and benefits. They offer these because they need to justify their higher prices to users. Some customers find these extra services from post-paid offerings of value. However, users looking for the lowest price for the pre-paid alternative.

Wireless is the focus for growth at cable TV giants Comcast, Charter and Altice. Bundling and blending wireless with their traditional cable TV, Internet and IPTV offerings will create entirely new experiences going forward. And it gives them a competitive advantage for a while.

I believe wireless in the cable TV industry will remain a powerful source of growth beyond what we see with more traditional wireless resellers.

Today, the marketplace is carved up into slices, with each representing a different type of service focused on a different type of customer demand. So traditional wireless services offer more benefits, but they are also more expensive and are not growing as rapidly as the prepaid marketplace at half the cost.

That’s why the reseller marketplace is growing so rapidly. Based on the weak economy, I only see this trend continuing going forward. That’s for cable TV companies and the entire reseller marketplace.

So expect pre-paid to continue to grow as the post-paid services continue to struggle in a rough economic marketplace. This will continue as far ahead as we can see today.

Jeff Kagan, a telecom, technology and wireless industry analyst and consultant, is an Equities.com columnist. He covers 5G, AI, IoT, the metaverse, autonomous driving, healthcare, telehealth, pay TV and more. Follow him at JeffKagan.com, and on Twitter @jeffkagan and LinkedIn.

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