Rural broadband providers are considering offering broadband/mobile bundles using an MVNO (mobile virtual network operator) model, notes a new report from CoBank Knowledge Exchange.
As CoBank put it, “The days of offering consumers ‘triple play’ bundles of cable TV, internet and home phone service are in the past. Taking their place are broadband and smartphone plan bundles.”
Broadband/mobile bundles are already on the market from the large cable companies, Comcast and Charter. Those companies are offering wireless service within their cable footprints through MVNO agreements with large wireless companies – with considerable success.
According to the report, titled “Rural Broadband Operators Poised to Enter the MVNO Market,” Comcast and Charter have taken about 50% of the postpaid net additions of smartphone plans in recent quarters, even though their offerings are only available to their broadband subscriber base.
“Recent market data shows that consumers in urban and suburban markets are gravitating to these bundles, and rural broadband operators are taking notice,” the report notes.
The author cautions, though, that the large cable companies have sacrificed margin in order to gain mobile market share. Rural providers that are considering broadband/mobile bundles will need to consider this as they evaluate whether to offer service.
“The decision to enter the wireless business is a big one, and it largely boils down to two factors: reducing churn and/or increasing market share,” the author observes.
Some rural broadband operators have such low churn that a bundled broadband/mobile offering may not make sense for them, according to the report. But bundling may make sense in more competitive markets.
The author also notes that some rural broadband providers are proactively offering the bundle as they “try to get head of what they believe will eventually be a standard bundled offering.”
Whether to offer a broadband/mobile bundle is a big decision, with opportunity cost and risk, the report concludes.