Both Charter Communications and Comcast remain upbeat about the prospects for their MVNO businesses, but executives from AT&T and Verizon are still waiting to see if the cable companies are going to figure out a viable business model.
Asked about the importance of wireless to the cable industry, “it’s significant,” said Tom Rutledge, chairman and CEO of Charter, at the UBS investor conference earlier this week. “We have over 200 million wireless devices connected to our network. We are a wireless company and we have a Wi-Fi business that we charge for, but not much relative to what people pay for mobility,” he said, noting that 80% of the bits on mobile companies’ devices “are coming through our networks because most of the future use of those devices is in sedentary environments, homes and offices.”
“We have this MVNO which we’ve exercised, I heard … it’s true that it doesn’t give you deep integration, so it has its limitations in terms of building a future product set,” he said, adding that Charter has applied for regulatory approval for 5G experiments. But he doesn’t see the need to do anything immediately on the MVNO front, reiterating that the company is unlikely to have a product to market until the end of 2017 and no big ramp until well into 2018.
Similarly, Mike Cavanagh, senior executive vice president and CFO at Comcast, said during the UBS conference that he’s aware there’s a need to overcome some of the skepticism of whether MVNOs can work, “but we’re optimistic that it can work for us against the goals that we have for that,” he said, according to a Seeking Alpha transcript.
Comcast revealed earlier this year that it had triggered a 5-year-old MVNO agreement with Verizon, and it’s concentrating on its own subscriber base rather than trying to launch a nationwide offering. Cavanagh said “we’re mobilized and we’re on top of it,” with 150 people working with Comcast Mobile President Greg Butz on it and “it’s going well. We have work to do to design the exact offering we want to have and lots of bits and pieces that go along with getting that right.”
Again, he said, it’s an opportunity to bring a product to Comcast’s customer base. “It's obviously got to be with people that are otherwise buying products from us that we have an affinity with to begin with,” whether via Wi-Fi or other products.
“What could work for us doesn't necessarily translate into what other people may think we ought to be trying to do, but for us, we have a—we are optimistic that we have a really good reason to believe that running hard at this—well, one, it's going to teach us a lot,” Cavanagh said. “We're in the learn and explore mode. It's the right thing for us to be doing at this stage, and maybe when we're sitting here in a year we'll have some kind of results to point to.”
At the same conference earlier in the week, AT&T Chairman and CEO Randall Stephenson said it will be interesting to watch whether somebody can finally figure out the MVNO business model. “These MVNO strategies are really kludgy,” he said, according to a Seeking Alpha transcript. “We’ve all tried them. Several people in the market have tried them, and they’re really difficult to execute on.”
Verizon Communications CEO and Chairman Lowell McAdam said he agreed with Stephenson’s point that over the past 20 years, “you’ve seen MVNOs come in and out. As you look at the dynamic in the marketplace and you look at the products that are coming, having a static offering, I think is going to be difficult.”
He said he wouldn’t change how the MVNO deal with cable is structured. “I mean MVNOs have been great for us over the years. They have very strong margins and I would certainly rather have the cable companies on the Verizon network where we get those margins than somebody else providing it to them, so we are satisfied with that and hopefully they are as well,” he said.