​Jeff Kagan: How Successful Will Cable TV Executives Be in Wireless?

Jeff Kagan  |


The wireless industry has been one of the fastest growing and continually changing spaces over the last several decades. Currently, the transformation wave is watching wireless carriers expand into and offer pay TV. At the same time, we see cable TV companies moving into wireless. The next several years are going to be very exciting as this next growth wave sweeps across the industries and changes everything.

Let’s take a closer look at how cable TV companies and executives are approaching this new opportunity. There are several players, but they are not all moving as quickly as each other. That means their performance may not be equal even though the opportunity is. I think we will see leaders and followers in this space.

I have met with some of these new competitors. And from what I hear, their strategy moving forward is different than you may think. Let’s look at the top three cable TV companies, Comcast  (CMCSA), Charter  (CHTR) and Altice  (ATUS).

Greg Butz, President of Comcast Xfinity Mobile

Comcast is the leader with their Xfinity Mobile product, which was launched more than a year ago. Greg Butz is the President of Comcast Xfinity Mobile. They have seen significant success with this new product, but their strategy is different than most expected. They are not following other wireless carriers like AT&T  (T) Mobility, Verizon  (VZ) Wireless, T-Mobile  (TMUS) and Sprint  (S).

Instead, they are taking a different approach. They are not competing for market share in wireless in the traditional ways. What they are doing is offering this new service to their existing pay TV customers as a part of their bundle. They are simply trying to make their customers happier and keep them as customers in a sticky bundle.

It’s all about the sticky bundle. This is a marketing strategy which started with the telephone and wireless carrier’s years ago. They would offer bigger discounts the more services you used. That’s where the terms double-play, triple-play and quadruple-play came from. This strategy worked and is not being used by the smart cable television companies.

Traditional Cable TV Faces Increasing Competitive Pressure

Over the last few years, traditional services have been shrinking. Similar to the way local phone lines are getting weaker, traditional cable TV service is getting weaker as well. This is happening as new and innovative and lower cost options are popping up all the time from existing competitors and new competitors, using new technology.

That’s why the cable TV industry had to find a way to hang onto customers. That’s where their bundle comes into play. And that’s where their wireless offering comes into play. It is not the goal of the cable television industry to win at wireless. Their goal is simply to stabilize their customer base and grow.

And that’s exactly what Comcast is doing with their Xfinity Mobile, which resells Verizon Wireless services.

Danny Bowman, Chief Mobile Office, Craig Cowden Sr. VP of wireless for Charter Communications

Next is Charter which will announce their new Spectrum Mobile service very soon. This is another good idea. However, it is also more than a year after Comcast. But at least they are moving in the right direction. Charter will also resell Verizon Wireless services.

In wireless, there is a first mover advantage. First movers create the rules of the industry others must follow. In this case, Comcast set the rules and Charter is following. This is similar to the way AT&T Mobility leads and Verizon Wireless follows. While Verizon does not set the rules going forward, they are still successful.

Jean-Charles Nicolas, Sr. VP of Altice Mobile

Next is Altice, which will offer Altice Mobile next year. Why such a long delay? This is a year after Charter and two years after Comcast. This makes no sense to me. They will be reselling Sprint services. That’s if Sprint has not yet merged with T-Mobile.

I get the sense that all three cable television companies will follow Comcast’s lead. They will very likely not compete directly with AT&T, Verizon, T-Mobile and Sprint. Instead, they will create a bigger bundle and try to stabilize their base the way Comcast has done.

So, don’t expect the same kind of advertising and marketing messages as we get today from the wireless industry, both on the handset side and services side.

How Successful Will Cable TV Companies Be in Wireless?

The next question is, how successful will each be? So far, Comcast seems to be successful with their strategy. Whether Charter and Altice will also be successful depends on how well they market their new service.

Quality has to be excellent. Customer care has to be excellent. Price has to be excellent. Offerings have to be excellent. The customer must feel as though they are making the right decision. If Charter and Altice can do this, then they stand a good chance of succeeding with wireless. We’ll have to wait and see if that happens.

There are also dozens of smaller cable television companies scattered from coast-to-coast. Some of these are also in hotly competitive markets where the local telephone company offers these advanced services. They all face new competition from companies like DirecTV Now, Amazon.com, Netflix, Facebook, Google and others as the cable TV industry continues to reinvent itself.

Smaller cable television companies may not have moved quickly in the past because they were not worried about losing their market share. Times have changed. If they don’t move quickly, I am afraid many will be seriously hurt and suffer reduced market share.

Going forward, the pay TV industry is dramatically changing. There are new technologies and new competitors that are recreating the entire space. Yesterday, we watched TV on our couch. Going forward we watch pay TV on our smartphone or tablet anywhere in the United States on wireless networks. Especially as 5G comes on quickly.

That means traditional cable TV companies must both stop the loss of customers and find new ways to increase their customer numbers and their revenues. This is the next challenge cable TV faces as we watch their next steps in this process that will play itself out over the next several years. Are they ready for this transformation? That’s the question.

Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at jeff@jeffKAGAN.com. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
S Sprint Corporation 5.91 0.09 1.55 15,709,327 Trade
TMUS T-Mobile US Inc. 64.78 -0.03 -0.05 4,068,427 Trade
CHTR Charter Communications Inc. 305.93 -3.35 -1.08 1,911,832 Trade
VZ Verizon Communications Inc. 55.65 -0.30 -0.54 18,895,777 Trade
T AT&T Inc. 29.75 -0.11 -0.37 44,497,114 Trade
CMCSA Comcast Corporation Class A Common Stock 35.65 -0.56 -1.55 23,690,273 Trade
ATUS Altice USA Inc. Class A 17.40 -0.21 -1.19 5,942,097 Trade

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