Wireless has been with us as an industry for more than 35 years. It has been growing and changing, but always was its own space. However, recently the wireless world is changing and expanding to include other companies and other industries. Consider how cable TV companies are using wireless to stabilize their customer base and in fact, grow.
The first attempt was several years ago when companies like Comcast
Now, some of these competitors are trying again, offering iPhone and Android and they seem to be well received. This is the start of other industries entering wireless.
It started with Comcast who introduced their wireless service called Xfinity Mobile. This started almost two years ago. They resell Verizon
In October 2018, Xfinity Mobile reached their first million subscribers. That is a rapid pace of growth for a non-wireless company. Their goal is to continue to grow their wireless subscriber base, but the ultimate objective is different.
Cable TV sticky bundle goal is to stabilize and grow customer base
Traditionally, wireless competitors try and win as much new market share as possible. They all want the same thing… to win at wireless wars. While this strategy works for wireless carriers, this is not the Comcast objective.
The goal of Xfinity Mobile is to offer their customers another service and to create a sticky bundle. It’s not to lead the wireless wars. It’s not to increase their market share for traditional reasons. It is simply to create a sticky bundle to stabilize and grow their customer base. And so far, it seems to be working.
Sticky bundles use multiple services and discounts to keep customers
So, what is a sticky bundle? When it’s easy for customers to switch providers and leave, companies must find a way to hang onto them. The sticky bundle has been successfully used in telecom and wireless for years.
Customers who use one service find it easy to switch away to a competitor. However, when they use multiple services and get a discount for the bundle, they become sticky and generally stay put. And the more services a customer uses, the larger the discount, the stickier they get and the less likely they are to wander.
That strategy has worked well in wireless and telecom for many years and is now being used in the cable television world with wireless, telephone, Internet and of course pay TV.
This is working for Comcast with Xfinity Mobile, and I expect it will work with Charter Spectrum Mobile, Altice Mobile and every other cable television company that enters the wireless space with the same objective in mind.
Expect Spectrum Mobile and Altice Mobile to create their own sticky bundles
The problem is, the sticky bundle is not a low-cost solution. With that said, the higher cost to the cable television companies is less than that of losing their customer base. So, the cost makes sense as simply a cost of doing business.
New competitors in the pay TV space are rapidly growing and changing the space with companies like AT&T DirecTV NOW and WarnerMedia, Verizon FiOS, the coming T-Mobile TMUS pay TV and more.
Plus, there are other competitors like Amazon.com, Netflix
5G Wireless pay TV is coming soon
Wireless pay TV is also going to be a threat as 5G comes in the next few years. New wireless pay TV providers will enter the space in the next few years posing an additional challenge.
Only some of today’s competitors in pay TV will enter the 5G wireless pay TV space. Others will not. So, this is setting itself up to be an interesting story going forward.
Example, AT&T DirecTV NOW already lets users watch TV over the AT&T Mobility network on their smartphones and tablets. This will only continue to grow and to expand with countless other competitors as well. Verizon FiOS may enter this space. T-Mobile has announced their wireless pay TV plan which is also coming soon.
So far, sticky bundles are working for cable TV players
Any way you slice it, expect this wave of change to continue. This is created by new competitors, new technology and new ideas. This challenge is why cable TV companies must create a sticky bundle to hang onto their customer base. They must also prepare for new competition and a different marketplace.
To date, this sticky bundle seems to be working, which is good. Remember, yesterday cable TV companies never had competition, so they never had to be concerned with losing customers.
That’s all changing. New competitors and new technology like IPTV and wireless pay TV are challenging the space. This is the same threat that Uber and Lyft created in the taxi and limousine space. The warning bell has sounded. Which companies are listening?
Bottom line, cable TV companies, large and small must prepare for the changing competitive playing field. This industry will continue to go through enormous changes in coming years, the same as it has already done over the last decade.
Which companies will lead going forward is the question? Sticky bundles may be part of the answer.
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 [email protected]. His web site is
www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.
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