Jeff Kagan: Comcast, Charter, Altice Growth Path Changing

Jeff Kagan  |

The cable television industry is going through enormous changes. We are in the middle of a massive reinvention which will continue for years to come. Cable TV is facing new competitors, new technologies and a changing marketplace. That means the way we measure the success of cable TV giants like Comcast  (CMCSA), Charter  (CHTR) and Altice  (ATUS) will have to change.

Comcast and Charter earnings last week gives us a hint of what we can expect going forward. Profitability can still be there thanks to additional services, as core market share shrinks thanks to growing competition. Let’s take a closer look.

New competition means cable TV giants must continue to improve their customer experience. They must continue to improve their services and reliability. Their service must be easy to use, without problems and the customer must enjoy the experience. Otherwise, the customer will simply leave.

As Cable TV Transforms to Pay TV

Cable TV companies never had to worry about the customer before. All they used to pay attention to, was the investor. The reason was simple. Where was the customer to go? There was no competition. So, whether the customer was happy or not was not much concern.

That’s why yesterday’s cable television industry had the worst customer satisfaction rating. Fortunately, thanks to increasing competition and new technology, things are changing in the last several years. Customers are noticing the improvement.

That said, there is still a big different between cable TV companies and their strategies. Some lead like Comcast. Some follow like Charter and Altice. Others have not changed, and they are the biggest concern to investors, customers and workers.

5G Wireless Pay TV Is Coming Soon

Today, competition is growing, and I predict it will explode in coming years with new competitors and new technology like 5G wireless pay TV.

In this changing world it is vital today's leaders improve the customer relationship. If they do not, they will lose. It will be too easy for the customer to simply cancel and move to a competitor.

Cable TV is evolving into the larger pay TV space and will continue to evolve into a 5G wireless pay TV space. Pay TV means users can watch television over a variety of technologies, not just cable. Today, they can watch over the Internet using IPTV, and tomorrow they will use wireless TV and more.

The move to 5G wireless television will enable even better pay TV to the marketplace. I fully expect all the major competitors like AT&T  (T) DirecTV NOW, Comcast Xfinity, Charter Spectrum, Altice and others to move into this 5G wireless space. Also expect new competitors to enter.

The Path of Mobile Pay TV Over Next Few Years

The marketplace will be full of smaller competitors during this first phase. Next, the consolidation wave will sweep across the industry, just like it did with wireless and telecom.

What we will end up with over the next several years are fewer and larger, national providers of pay TV using wireless to reach their customer base.

Comcast Xfinity is doing a good job of improving their service, reliability and customer satisfaction. They have expanded with NBC Universal and more. They have moved into wireless with Xfinity Mobile. They are getting better and keeping the customer happier than ever before.

Charter Spectrum is trying. They are better than ever however they are still not good enough. Not yet. However, in talking with their workers, I get the real sense they want to improve. That’s a first and hopefully a very good sign for things to some.

Xfinity Mobile and Spectrum Mobile Continuing to Grow

Comcast just reported they crossed the one million customer mark for their new Xfinity Mobile wireless service. This shows they have a good quality service which a sizeable slice of the marketplace is interested in. This shows they will be a player in wireless going forward.

Charter Spectrum Mobile waited a year to enter wireless, so they are far behind Comcast. With that said, they have the same growth opportunity. A year from now they could show strong growth as well.

This growth comes as their core cable TV business is impacted by new competition.

Pay TV competitors like AT&T DirecTV NOW, their wireless TV and their new WarnerMedia content gives them the ability to continue to rapidly grow in the pay TV marketplace. Next, 5G wireless will let them offer pay TV over the AT&T Mobility network better and faster than they do now.

Plus, I fully expect to see many new pay TV competitors. What I expect is many smaller competitors will enter. Over the next several years a wave of consolidation will change the industry as it did with wireless during the last twenty years. We will end up with fewer, larger, national pay TV competitors using both the Internet and wireless.

I also expect to see newcomers grow. Companies like Netflix, Amazon.com, Hulu, Google, Facebook and so many others. They will continue to be significant change agents in this space.

The pay TV space will continue to split up into several different slices. Each slice will be attractive to one part of the marketplace. This is the world the cable television industry owned a few short years ago. This is the world that is rapidly changing.

Xfinity Mobile Hit 1 Million Customer Mark

Comcast Xfinity has done a remarkable job so far with their transformation and move into Xfinity Mobile. They are losing traditional cable TV market share, but they are continuing to show growth due to the other businesses they are in.

Charter Spectrum has a similar opportunity, but they are not up to the Comcast level yet. They don’t have an NBC like opportunity, but they do have wireless. They are making improvements to the pay TV experience, but they still have quality and reliability problems I have written about extensively.

AT&T DirecTV NOW has begun to transform the industry. I see them continuing to do just that with their WarnerMedia, their mobile network and wireless pay TV.

So, I see the pay TV industry currently being led by AT&T DirecTV NOW and Comcast Xfinity.

Let’s keep our eyes on this changing pay TV space. It is already very different from the cable television industry of a decade ago. And a decade from today it will be vastly different from today. We are just in the middle of a massive reinvention. Who will lead going forward? That’s a question everyone wants an answer to. So, stay tuned.

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
CHTR Charter Communications Inc. 323.35 2.24 0.70 866,507 Trade
T AT&T Inc. 30.78 0.09 0.29 25,933,998 Trade
CMCSA Comcast Corporation Class A Common Stock 38.00 -0.34 -0.89 17,042,324 Trade
ATUS Altice USA Inc. Class A 18.45 -0.02 -0.11 4,460,502 Trade

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