Jeff Kagan: Changing World of 5G Wireless, Telecom, Pay TV in 2019

Jeff Kagan  |

The wireless, telecom and pay TV industries have seen so much change over the last several decades with the Internet and other factors. During the next few years I expect the pace of change to only accelerate. Let’s take a look at a few exciting examples what we can expect to see in 2019.

To begin, it’s important to understand the marketplace, where we are today and where we are heading. There is a growth wave or growth curve. It rises, crests and falls. Every product and in fact every company rides somewhere on that growth wave. Companies are either growing, cresting or falling. You want to focus on the companies on the growth side of this growth curve whether you are an investor, customer, worker or executive.

Understand the Next Growth Wave

On the growth curve, as always, leaders or early adopters will be first. The followers come next. The companies who are neither leaders nor followers will struggle as the change wave moves ahead without them. Over the next few years we will see the leaders and followers take root and grow. The rest will struggle at best.

We have seen this happen time and time again in industry after industry. Just consider the wireless handset or smartphone segment. Motorola was always the leader until the mid 1990’s. Then Nokia, Blackberry and Palm took the leadership position for years.

Then eleven years ago Apple  (AAPL) iPhone and Google  (GOOGL) Android entered and took the lead. Today, as we all know, Motorola, Nokia, Blackberry and Palm have fallen from grace and struggle at the bottom of the list.

Which Companies Will Be the Leaders and Followers in 5G?

We should expect this same thing to happen to other sectors over the next ten years starting today. So, who will the leaders and followers be? Which companies will do well, and which will struggle?

There are plenty of companies that will fit each of these categories in the wireless, telecom and pay TV industries. However, with 5G there will also be companies in other industries that will reinvent themselves and their entire marketplace.

As always it will start with a few leaders. They will transform the industry with innovation and courage. They will blaze the new trails their industry will follow going forward. Some of these companies will be right on target and grow. Others will miss.

Then come the followers. These are companies who are not first. They don’t pave the new road. But when the new road is paved, they come roaring in and succeed.

AT&T is Strong Leader and Verizon Strong Follower

As an example, AT&T  (T) is a leader. They transform and expand their industry. They have transformed from a telephone company to a leader in wireless, Internet, pay TV, wireless pay TV and so much more.

AT&T has already paved the new roads in many areas of telecom, wireless, Internet and pay TV providers are following. They created wireless pay TV, which is very exciting. With DirecTV NOW and WarnerMedia I expect to see more excitement in 2019 and beyond.

Verizon  (VZ) is a follower. They wait to see the new direction of the industry then jump in and succeed. I don’t know whether things will be different under the leadership of new CEO Hans Vestberg. Will he put the company in a leadership position? I hope so, but we’ll see. Either way, they have done very well over the last several decades and I expect that to continue.

T-Mobile and Sprint Need to Merge to Stay on Growth Path

T-Mobile  (TMUS) has done very well over the last five years. Their problem is, as the marketplace transforms to 5G, they have very little wireless data spectrum. With that said their future growth level is a question mark in my mind. They made a mountain out of a molehill over the last several years, so I would not bet against them.

Sprint  (S) may be reaching a critical moment. They are a good company with plenty of wireless data spectrum but have not grown enough in recent years. I am not sure they can continue to compete and win on their own.

The solution would be a merger between T-Mobile and Sprint. This could solve both of their problems. A merger could transform number three and four into a stronger number three. We’ll just have to wait and see what happens next.

Xfinity Mobile, Spectrum Mobile, Altice Mobile, Project Fi, Google Fi

Comcast  (CMCSA) Xfinity Mobile entered the marketplace roughly a year and a half ago and they have been rapidly growing ever since. They resell Verizon Wireless. Whatever they are doing is working. They are capturing a solid and growing slice of the wireless pie.

Comcast also owns NBC Universal. This gives them a unique growth trajectory that sets them apart from other cable TV companies.

Charter  (CHTR) Spectrum Mobile followed Comcast into wireless a few short months ago. In that short period of time, the word seems to be they are growing. How rapidly is the question? We’ll just have to wait and see. They also resell Verizon Wireless.

Charter could continue to follow Comcast and if they do, wireless will be an important slice of their pie going forward as well.

Altice Mobile  (ATUS) will start selling wireless on the same basis sometimes next year. They will be reselling Sprint wireless services. As competition and innovation grows, the question mark here is can they continue to show growth? Wireless will help, but will it be enough?

Google Project Fi is another MVNO reseller. They just changed their name to Google Fi. It is three years old and resells T-Mobile, Sprint and US Cellular. This had so much promise when it launched but has been so quiet ever since. While the brand name is strong, the performance does not seem to move the needle. That could change now that MVNO is getting more popular. We’ll have to wait and see.

Frontier Business, Synchronoss Technologies

Frontier Business, a part of Frontier Communications  (FTR) offers a growing number of important and innovative communications services for their business customers. Example, their Unified Communications services provides business customers large and small with the ability to have a completely managed system.

That makes it easier for business customers to use, manage and keep up to date on all their locations around the country for voice, data, Internet, video and so on. Going forward, I see Unified Communications continuing to grow, which is a real growth opportunity for the company.

Synchronoss Technologies  (SNCR) is in the process of reinventing themselves under new CEO Glenn Lurie. He has a rich background and could be the ingredient that puts Synchronoss on a real growth path.

Lurie was the head of AT&T Mobility and has been in senior leadership at AT&T for a long time in the wireless and telecom industries. Synchronoss is a company that serves wireless and wireline carriers with assorted and necessary services as the marketplace continues to change and grow. This is an important space, so keep your eyes on this one.

Future of 5G Wireless, Telecom, Internet and Pay TV

As you can see, the wireless, telecom, Internet and pay TV industries are showing strong growth and innovation. With that said, I also expect 5G to be the gasoline that is thrown into the fire. That’s right. Over the next few years as 5G becomes engrained into the system, I see it creating enormous changes waves.

I expect 5G to create an entirely new industry segment, wireless pay TV. That’s right. No longer will we have to have pay TV brought to our home and office by wire alone. 5G will be fast enough to allow competitors to also deliver it wirelessly.

What does that mean exactly? I am keeping my eyes on two parts of this story. Existing pay TV leaders like AT&T DirecTV, Comcast Xfinity, Charter Spectrum, Altice and others could enter the wireless pay TV market. That means a quick and easy installation with a wireless device in the home or office.

Expect Growth Wave for 5G Wireless Pay TV

I also expect to see many newcomers use 5G to enter the pay TV market. Some already exist today. These are companies like Hulu, Amazon.com  (AMZN), NetFlix  (NFLX) and others. There will also be an incredible number of new competitors entering the 5G mobile pay TV space.

Over the next few years I expect the big pay TV marketplace to explode with new services and new competitors because of 5G mobile pay TV.

Plus, I also expect to see companies in many other industries jump into the new 5G marketplace. There will be the same kinds of leaders and followers in this growth wave as well.

Industries like healthcare, retail, automotive, restaurants and in fact every other industry will dabble with 5G. The early adopters will try and create the next big thing in their space. Think about the way Uber and Lyft recreated the taxi and limousine industry.

This is what I expect from countless other players in countless other industries.

Companies Have a Choice: Lead, Follow or Get out of the Way

So, as you can see, I am very excited about 5G wireless, telecom, Internet and pay TV in coming years. I see growth and innovation changing every industry and every competitor. I see the leaders paving new roads. I see followers jumping in and also showing growth.

The companies that will fail are those who choose not to play in this new 5G world we are moving into. Now is the time to be thinking about and strategizing for the next several years of growth for your company in your industry.

It is vital that you and your company catch this next 5G growth wave. Now is the time to jump in. The waters great. If you don’t, you have no one to blame but yourself when the next growth wave passes you buy and leaves you behind.

Ask yourself a question. Do you want to be successful like the leader AT&T, or the follower Verizon or do you want to be a failure like Motorola, Nokia, Blackberry, and Palm? The choice is yours.

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


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
FTR Frontier Communications Corporation 2.89 -0.09 -3.02 4,298,389 Trade
GOOGL Alphabet Inc. 1,067.33 14.15 1.34 1,215,675 Trade
AAPL Apple Inc. 169.36 -0.24 -0.14 37,449,082 Trade
S Sprint Corporation 5.97 0.04 0.67 3,896,911 Trade
TMUS T-Mobile US Inc. 65.99 0.26 0.40 1,730,424 Trade
CHTR Charter Communications Inc. 314.43 -1.21 -0.38 656,181 Trade
VZ Verizon Communications Inc. 59.26 0.99 1.69 10,910,068 Trade
SNCR Synchronoss Technologies Inc. 6.18 0.09 1.48 230,557 Trade
T AT&T Inc. 29.90 -0.02 -0.05 34,916,290 Trade
CMCSA Comcast Corporation Class A Common Stock 37.11 -0.24 -0.64 14,866,156 Trade

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