Based on the popularity of a story from earlier this week about Spectrum Mobile reducing the prices of its unlimited wireless plans, it appears that investors are suddenly very concerned about the wireless competitive landscape.
The new pricing from Charter’s Spectrum Mobile encourages customers to sign up for family plans. Its single lines for unlimited wireless are still $45. But if families add lines, the price goes down to $29.99 per line.
Charter basically followed Comcast’s lead with the new pricing. In April, Comcast’s Xfinity Mobile began offering its family unlimited plans for $30 per month, per line.
New Street Research analyst Jonathan Chaplin wrote yesterday, “We have been bombarded with questions from our clients about the impact of Charter’s new wireless pricing on both the broadband market and the wireless market.”
The cable companies don’t compete at the premium tier. They leave that tier to the big three wireless carriers, which offer device subsidies to help lure premium customers.
But according to New Street, there’s plenty of runway for the cable companies at the entry-level wireless tier that they’re targeting. At the entry level, none of the providers offer big phone subsidies.
For people who already have phones and are happy with their devices, the cheaper offerings from Charter and Comcast might look tempting. “We think about 20-30% of switchers are BYOD,” wrote New Street. “This means Charter has an incredible offer for perhaps 30% of the market.”
However, 556 Ventures principal analyst Bill Ho reminds us that both Charter and Comcast require their wireless customers to first be broadband internet subscribers. That requirement is part of their bundling strategy
So, the threat to the big wireless carriers of losing market share is limited to broadband subscribers within Charter's and Comcast’s broadband footprints.
The bigger picture
The dynamics are also changing in wireless due to more capacity coming online from CBRS and C-band spectrum.
The New Street analysts said they think Charter and Comcast will reclaim the margins they are surrendering with lower prices when they roll out CBRS spectrum. Both companies have talked about using their CBRS spectrum to offload some of their wireless traffic from Verizon’s network, thus saving on wholesale costs.
Analyst Mark Lowenstein said, “I think with all the new capacity coming online with C-band and all, I think there’s going to be more competition for MVNO customers.” He said carriers that have purchased spectrum recently “will be looking for more ways to fill their network with traffic.”
Wireless dynamics are also shifting due to changes in the prepaid marketplace.
Verizon’s nearly $7 billion acquisition of TracFone is on track to close before the end of the year. When that happens, TracFone’s 20.3 million customers, under its various brands, will suddenly be Verizon’s prepaid customers
And just last week, MobileX, a new mobile brand launching in the U.S. next year, struck a network deal with Verizon.
Wave7 Research analyst Jeff Moore has noted that while the number of prepaid wireless operators is shrinking, there is an increase in “power centers” in prepaid such as Verizon, Dish and a few others who manage several prepaid brands.
Lowenstein said, “I think the cable guys realize there’s going to be more competition coming from prepaid.” He said their reduced pricing may be partly in anticipation of that.
As of the second quarter 2021, Charter had 2.94 million wireless lines, and Comcast had 3.383 million mobile customers.