The biggest problem in the mobile phone industry has gotten bigger

US wireless carriers have a problem: They’re running out of new customers to target. Pew Research data indicates that 97% of Americans already have cell phones. With such saturation, the best Verizon, AT&TY T Mobile reasonable to expect in the future is to switch subscribers and occasionally add an additional mobile device to an existing customer’s account. To this end, the three big names in the business collectively added just over 1 million connections to their headcount last quarter, increasing their total customer base by just one-third of one percent.

The point is that the industry was possibly lucky to secure that growth. The competition has emerged from an unlikely source and is making amazing inroads with consumers. In total, these strange wireless players captured a total of 700,000 wireless customers who would have otherwise belonged to T-Mobile, Verizon or AT&T Last room. And it’s not the first time we’ve seen these newcomers capture this degree of subscribers, although it’s another quarterly record.

This unlikely competition? cable television companies communications letter, ComcastY USA. With the nation’s cable TV crews having existing relationships with hundreds of millions of cable and broadband subscribers, traditional wireless providers like Verizon and AT&T simply can’t afford to ignore this paradigm shift any longer.

can you hear me now?

If you feel like you are misunderstanding something, you are not. Cable TV companies like Charter’s Spectrum, Comcast’s Xfinity, and Altice’s Optimum are also in the mobile phone business. It’s certainly not a huge profit center for any of them, at least not yet, but it’s a business that has grown surprisingly fast.

The chart below puts things in perspective. At the end of the first quarter, the country’s cable TV industry also serves 8.4 million wireless customers. That’s 8.4 million connections that the wireless industry’s old guard probably counted on serving in early 2017, before Comcast tiptoed into these waters with Altice and Charter following suit.

Cable TV companies now serve 8.4 million mobile phone customers.

Data source: Comcast, Charter Communications, Altice USA. Table by author.

That’s thanks to technological advances, mostly. There was a time when “wireless” really meant wireless, with cell phone calls relayed from tower to tower… with no cables involved. Not anymore though. Much of the mobile connection work is done by Letter, Comcast and Altice are now managed with each company’s physical infrastructure located in a central location. The part that these cable companies can’t handle is offloading to the towers of the aforementioned wireless brands, for a price, of course.

However, for the cable industry, it is worth the price. If nothing else, being able to offer low-cost wireless service that leverages infrastructure that already exists anyway is a great customer retention tool.

Ignore the trend at your own risk

To date, the conventional wireless telecommunications service providers don’t seem too concerned about cable’s incursion into their turf. Until now, cable companies have only made mobile service available to their cable TV or broadband customers. However, more familiar wireless carriers should be concerned about the obvious trend for a couple of reasons.

The first of these reasons is the price. While T-Mobile, AT&T, and Verizon may be competitively priced with each other, more than 8 million cable (and broadband) customers now enjoy wireless service for as little as $30 per month, and for some budget plans, even less. In an environment where subscription fatigue has millions of consumers rethinking their budgets, the expensive super plans offered by the conventional wireless industry have lost their shine.

The second reason mobile industry stalwarts should be sweating: While cable companies may only offer wireless services to existing customers, the three big names in the cable business currently serve in the order of 37 million subscribers. cable, according to data from the Leichtman Research Group, and more than 66 million broadband customers. Presumably, most of this crowd also uses mobile phones and is likely to be open to the idea of ​​switching to a lower-cost wireless service offered by a company they are already doing business with.

At the very least, investors in mainstream wireless names like AT&T and Verizon should put this headwind on their radars.

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