Lady on mobile phone outside

Cable companies garnered at least half and perhaps as much as 98% of net wireless subscriber additions in the first quarter of 2022, according to a research note from financial analysts at MoffettNathanson.

Although the data reported by the providers shows cable companies with a smaller share of net additions, that measurement is too low because AT&T’s and T-Mobile’s subscriber growth was less than reported because neither company factored in customers lost when they shut down their 3G networks, the analysts said.

According to the analysts, “Without subscriber growth, wireless now becomes a zero sum game for the incumbents.”

While some might argue that this is too pessimistic, it is true that the wireless market has become heavily saturated. Almost everyone who wants a wireless phone now has one.

To address this, Verizon recently raised wireless prices and AT&T did, too, although AT&T’s increase was restricted to discontinued plans.

The MoffettNathanson analysts question whether Verizon’s move will stick, however.

They note that T-Mobile and the cable companies have said they will not raise prices and that the industry’s average revenue per user (ARPU) has not increased in a decade. They also speculate that cable companies are likely to begin subsidizing phones this year, which will put price pressure on the traditional players.

Another concern for the traditional players is that while cable wireless has been comprised primarily of Comcast and Charter, Cox is poised to also enter the market, and Altice could see share gains now that it has lowered its prices.

Cable industry wireless subscriber gains benefit Verizon to some extent, as the cable companies continue to rely on Verizon to handle some of their traffic. But according to the analysts, “that recapture almost certainly falls short of fully offsetting the retail subscriber losses the MVNO agreement generates.”

The analysts estimate that the cable industry has about a 3% share of the U.S. wireless market, which means that the cable companies “have a very long runway ahead.”

T-Mobile is best positioned among the big three wireless companies, according to the analysts. The analysts note, for example, that T-Mobile is the only company that is growing ARPU as more customers opt for higher value plans. The company’s churn rate also has improved as it has transitioned Sprint customers to the T-Mobile network.

Of course, with the exception of T-Mobile, wireless isn’t the only business for any of the major telcos or cable companies. And as T-Mobile gains serious traction with its fixed wireless broadband offering, it, too, has entered the fixed broadband market.

A previous MoffettNathanson analysis looked more broadly at cablecos versus telcos and argued that just as cable company wireless gains are hurting the telcos, telco broadband gains threaten the cable companies.

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