Convergence of wireless and wireline offers is a telecom megatrend — Moore

Jeff Moore Industry Voices

There is an unprecedented level of convergence of offers, with top telecom companies now offering discounts for converged wireless/wireline bundles. This was not happening before 2022.

Sure, competition between the national carriers and the cable companies was very real by last year, as I wrote in Fierce Wireless in November. T-Mobile was targeting 500,000 internet subscribers by the end of the year, while Verizon had just announced that it had 150,000 fixed wireless subscribers. Xfinity Mobile and Spectrum Mobile were putting up some good numbers.

Sure, Xfinity and Spectrum were requiring internet service as a condition for wireless service. However, there was no bundling discount and there were no converged offers.

T-Mobile, Verizon, and Xfinity launch converged, discounted bundles

T-Mobile in May announced “Internet Freedom,” an Un-carrier initiative that provides a $30/month price for companies adding a line of internet to a Magenta Max family plan. Prior to that, there was no discount available with T-Mobile 5G Home Internet, apart from the autopay discount.

“Ditch cable: Now, get Verizon Home Internet starting at $25 per month” was the headline of a June 16 press release from Verizon. As with T-Mobile, the bundling requires premium unlimited plans. Signs at Verizon stores now pitch home Internet “starting at $25/mo.”

As seen here, Xfinity now has a “3-for-1 Bundle.” "Get Unlimited Internet, streaming, and Unlimited Mobile for only $75/mo,” the company is pitching.

Xfinity advertising for this bundle has been heavy. This “3-for-1 Bundle: Unlimited Internet, Streaming and Mobile” TV ad has had some 15,000 airings since May 15, Wave7 Research reported last week. Also, a radio ad pitching the bundle has aired more than 30,000 times.

Goals: Churn reduction and upselling premium unlimited

Churn reduction is a key objective. Churn is harmful to carrier financials and reduces the average customer lifetime value. It is cheaper to keep customers than to do the marketing necessary to obtain new ones. It is an axiom of the telecom industry that the more services a customer chooses, the lower the churn is likely to be.

As a Sprint veteran, I can still hear the voice of CEO Dan Hesse during quarterly employee meetings. He would walk the Sprint workforce through the mathematics of how negative churn was for profitability. At times, employee bonuses were even linked to Sprint’s churn rate.

T-Mobile CFO Peter Osvaldik said at a recent investor conference held by MoffettNathanson Research that rather than raising rates, T-Mobile was getting increasing numbers of customers to select its high-end Magenta Max plan.  Osvaldik said that “the majority of our loading mix is coming on to Magenta Max,” while only 15% of the base currently has Magenta Max. Customers are choosing more expensive plans that provide more benefits, in essence. Getting internet service locked in at $30/month is one of those benefits.

Verizon has been telling investors about its targets for increasing the percentage of its base on premium unlimited plans. Many of its best offers in recent years have required selection of a premium unlimited plan. Now, getting advanced, easy-to-install internet at $25/month is one of those incentives.

Converged services = converged advertising

Advertising is increasingly converged also. In the past, wireless pitches and wireline pitches were mostly separate.  However, it is hard to slice and dice a “3-for-1 Bundle” and the discounted Internet from Verizon and T-Mobile require mention of premium unlimited.

Xfinity’s “Egbert” radio ads are a good example. I live in Kansas City, which is mostly a Spectrum market, but certain areas of the metro area are served by Xfinity, so I often hear Xfinity’s radio ads. Xfinity has long used a character named “Egbert” in its radio ads, pitching various internet and TV offers. Now, this egghead of a character is pitching Xfinity’s new bundle. I expect to see more converged advertising.

More converged offers and more carriers likely to do this

I expect this trend to continue. Last year, Xfinity Mobile launched unlimited family lines at $30/month and Spectrum followed suit at $29.99 months later, so a similar bundle from Spectrum would not be a surprise. AT&T likely is watching developments closely. As the carrier deploys more spectrum in late 2022 and in 2023, it will have more options.

Other players could try something similar, such as prepaid brands and regional carriers. Cox has not launched wireless services yet. WOW, aka WideOpenWest, is a cable company that recently launched wireless service in Montgomery, Alabama, and launches in more markets are expected soon. Metro by T-Mobile could launch a similar bundle.

Convergence, a megatrend

Offers that are converged and discounted from top wireless and cable players is a megatrend for 2022. As to 2021, that was the year when competition between cable companies and wireless carriers got real. What’s coming up in 2023? More of both, I think, with more players involved. Egbert will have plenty of company.

Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition.  Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.