Charter Communications' said it will commit as much as $2,500 for customers to move up to five wireless lines from their existing carrier to Spectrum Mobile. 

The move comes after Charter CEO Christopher Winfrey said last week that the cable company will continue to eschew aggressive handset subsidies, but rather aggressively capitalize on "our opportunity from a subscriber acquisition standpoint to rip out multiple lines that are stuck in contracts" with large mobile network operators "that have locked up these devices and tied up these consumers."

Spectrum Mobile ended Q1 with 8,252 wireless subscribers, but quarterly net additions have been declining since a peak of 686,000 in the first quarter of 2023. From January - March, the cable wireless reported only 486,000 net additions. 

Winfrey said during a conference held last week by equity research firm MoffettNathanson that Charter will continue to refrain from handset promotions. (You can hear a replay of Winfrey's talk here.)

"We've never thought that being in the subsidies business for handsets was really a great business. I still think that's the case," he said.

Charter Communications is offering customers who switch to Spectrum Mobile up to $2,500 to pay off their existing plans.

In an era of cord-cutting and competition from wireless broadband, cable companies are still seeing significant growth in the mobile phone business.

“Our new phone buyout program is designed to help customers switch from the steep costs associated with other mobile providers and take advantage of Spectrum Mobile’s superior value,” said Sharon Peters, executive VP, chief marketing officer at Charter Communications, which operates the Spectrum brand.

“This offer is another example of how we are driving exceptional value and convenience in the mobile marketplace, and we look forward to welcoming new customers with the best service, speeds and performance Spectrum Mobile has to offer,” Peters said. 

In the first quarter, Charter said it added 486,000 mobile lines. Its total of 8.3 million lines is up 36% from a year ago.

Spectrum Mobile offers unlimited data plans for $29.99 per month per line. It includes nationwide 5G access. Customers can sign up for Anytime Upgrades for their mobile devices and get Speed Boost, which offers speeds of up to 1 Gigabit per second on phones.

The offer covers customers who switch to Spectrum Mobile from another provider and purchase at least three lines with at least one ported line. Spectrum will pay off their existing phone balance on ported lines up to $2,500 (with a maximum of five ported lines) while also enabling potential savings of hundreds of dollars annually on their mobile bills.

For Affordable Connectivity Program customers, Spectrum is offering a free Unlimited Mobile line for one year — a savings of $360 — that will help offset the loss of the $30 per month ACP credit.

Charter Communications on Tuesday announced two important new product features for its Spectrum Mobile customers, letting subscribers to its premium "Unlimited Plus" tier upgrade devices at any time during their contract, while also touting a new super-cheap $5-a-month device protection plan. 

Anytime Upgrade lets customers trade in their existing mobile device at any time, sans penalty fees, and no matter how far along the subscriber is in terms of paying off the gadget, provided it's working and not water-damaged. Customers need only be signed up for Unlimited Plus for one billing cycle. 

Meanwhile, Spectrum Mobile continues to undercut the wireless incumbents, offering device repair-and-replacement insurance at just $5 a month. That's far lower than incumbent wireless companies including AT&T, Verizon and T-Mobile price their device insurance.

Subscribers to Spectrum Mobile's more expensive legacy protection plan can switch to the new, cheaper insurance at any time. (Editor's note: We would have taken the insurance if it was $5 a month instead of $15 back in January when we signed up for Spectrum Mobile.)

Spectrum Mobile ended 2023 with 7.7 million wireless lines in service. Leasing wholesale usage o Verizon's wireless network via an MVNO deal has enabled cable insurgents into the wireless industry, Comcast as well, to practice a little arbitrage, offloading wireless traffic to is own resources, including Wi-Fi, in dense urban areas, while enjoying renters economics in expensive-to-build-out rural parts. 

In a note to investors back in November, equity analyst Craig Moffett suggested that these economics could yield margins for Comcast and Charter as high as 85%. These robust margins are allowing Charter to render its mobile customers offers that are hard to compete with for wireless incumbents. 

Also read: ‘Cable Wireless Might Ultimately Dominate the U.S. Wireless Market,’ Analyst Declares

“With the launch of Anytime Upgrade, we are providing Spectrum Mobile Unlimited Plus customers with straightforward and flexible access to the latest smartphone technology,” said Danny Bowman, executive VP of product for Charter, in a statement. “We understand the frustration of being locked into a device or contract. This offer, along with the new Spectrum Mobile Repair and Replacement Plan, allows our customers to have the newest devices with reliable protection, so they can maximize their wireless network experience and save money.”

Charter Communications has begun notifying its Spectrum Mobile customers that effective April 24, the wireless service will no longer support data roaming on airplanes, cruise ships and in certain foreign countries with high data rates. 

“You can still use your service to make calls and texts by connecting to public WiFi for internet access,” Charter said in the email, which also includes a link with the list of the banned foreign lands. 

Blocked terrain includes Ascension Island, British Indian Ocean Territories, Comoros, Cook Islands, Diego Garcia, Falkland Islands (Malvinas), Maldives, Federated States of Micronesia, New Caledonia, Saint Helena, Sao Tome and Principe, Somalia, South Sudan, St. Pierre/Miquelon, Turkmenistan and Yemen.

Spectrum Mobile doesn't seem to offer a solution beyond WiFi in these affected areas. Other wireless carriers do, but the fix isn't cheap. Verizon, for example, will charge users $20 a line per day for unlimited data and voice on planes, and $30 per day per line for 500 MB of usage on cruise ships. 

"This change will protect customers from unexpected charges while traveling internationally to locations with exorbitant data rates," a Charter rep told Next TV via email.

Spectrum Mobile said it still offers international long distance and international roaming service to more than 200 countries. 

 J.D. Power has named Spectrum Mobile as No. 1 in customer service among full-service mobile virtual network operators (MVNOs). 

The study measures the satisfaction of customers who had a customer-care experience with their carrier between July 2023 and December 2023.

Spectrum Mobile had a score of 847, according to J.D. Power, topping Cricket Wireless and Metro by T-Mobile.

Spectrum Mobile’s score also topped T-Mobile, which was ranked first among mobile network operators with a score of 834.

Spectrum Mobile launched in 2018. It finished 2023 with 7.5 million residential lines, up 47% from the end of 2022.

The high ranking was due to a focus on providing superior mobile connectivity with consumer-friendly plans and affordable prices, backed by exceptional service, including the My Spectrum App, Spectrum said.

“Our goal from day one has been to make mobile simple for customers by offering the best devices, reliability, security and speed at exceptional value — and this award recognizes that commitment,” said Danny Bowman, executive VP of product for Charter Communications, which operates the Spectrum brand of internet, TV, mobile and voice services. “We’re not slowing down, either; we continue to invest in our customer service while leveraging our extensive mobile, internet and wireless network to deliver the fastest speeds seamlessly everywhere and to save people money.”

With Spectrum Mobile a line with unlimited data costs $29.99 a month. All Spectrum Mobile data plans include nationwide 5G access at no extra cost; unlimited talk and texting; the flexibility to change rate plans as needed for free; interest-free monthly installment plans; and a robust bring-your-own-device program. 

Charter Communications has selected Nokia to provide key products needed in trial markets as the cable company looks to offload leased MVNO usage of Verizon Communications’s wireless network onto its own infrastructure using Citizens Broadband Radio Service (CBRS) technology. 

In its announcement Monday, Dallas-based Nokia didn't reveal the monetary value of its big customer win. But it did say that Charter is buying radio access network (RAN) technology from its AirScale equipment portfolio.

These products include strand-mounted radios for CBRS, baseband units, and a newly developed CBRS-based strand-mount small cells all-in-one portfolio. The strand-mounted small cells will leverage Charter's existing DOCSIS wireline infrastructure and negate the need for the MSO to build additional cell sites. 

According to a report issued last year by MoffettNathanson analyst Craig Moffett, the strand-mounted approach can save as much as 90% vs. traditional small cells because they can be hung between poles, nixing the need for permits, a separate power source, fiber backhaul and expensive labor costs for things such as fiber splicing.  

Charter spent $465 million nearly three years ago to purchase 21 CBRS priority access licenses. At the time, the company said that 80% of Spectrum Mobile traffic was being delivered over its Wi-Fi network. But the aim was to drive even more wireless traffic away from pricey leased Verizon network usage that eats into margins. 

Spectrum Mobile is currently the fastest-growing wireless service in the U.S. with nearly 6 million service lines. Moffett said he expects the wireless service to account for more than 7% of Charter's revenue by 2025. 

“Incorporating Nokia’s innovative 5G technology into our advanced wireless converged network will help us ensure that Spectrum customers in areas with a high concentration of mobile traffic continue to receive superior mobile connectivity, including the nation’s fastest wireless speeds,” Justin Colwell, executive VP of connectivity technology at Charter, said in a statement. 

“This news builds on our more than 20-year relationship working with Charter to enhance its network,” Shaun McCarthy, president of North America sales at Nokia, added. "We are excited to expand its current trial to additional select metropolitan markets in the U.S., enabling an enhanced user experience for Spectrum Mobile subscribers. This win strengthens Nokia’s leadership position in the MSO space for 5G wireless deployments.”

Charter Communications dramatically increased residential signups for Spectrum Mobile last October when it introduced its Spectrum One bundling promotion, which gave one mobile line free for a year to residential customers who signed up for a baseline of high-speed-internet services. 

Charter added a record 615,000 mobile lines in the fourth quarter, most of them for residential customers. Now, Charter wants to extend the momentum to the small and midsize business (SMB) market, announcing a similar promotion for small-business customers. 

Under the promotion, new customers who sign up for Spectrum Business Internet and Business Voice or Business Connect can get one free Spectrum Mobile line for one year (priced at $29.99 a month).

Current Charter customers can qualify for one free line of unlimited mobile when they add business internet or voice, or can get a second line for free when adding Spectrum Mobile service to their existing Internet service.

Spectrum One is available to customers who bundle Spectrum Mobile with home internet at 300 Megabits per second and above, along with Charter's premium Wi-Fi package, which includes its fancy new Wi-Fi 6 router. ■

Charter Communications said Spectrum Mobile will offer Samsung’s new line of Galaxy phones as it looks to maintain its momentum in adding subscribers.

The new phones are equipped to take advantage of Spectrum’s Speed Boost feature, which enables eligible customers to receive fasters speed on thor phones when connected to Spectrum’s Advanced WiFi. 

Charter added a record 615,000 mobile lines in the fourth quarter. 

“Speed Boost is part of our commitment to offering customers a fully converged connectivity experience so they can use their favorite mobile phones the way they want,” said Danny Bowman, Chief Mobile Officer for Charter. “By bringing together our Internet, Advanced WiFi and Mobile services, including Speed Boost, we are enabling our customers’ experience to be better, faster, secure and less expensive. And with Samsung’s Galaxy S23 series, Spectrum Mobile customers can take full advantage of our customer-friendly pricing and data plans while enjoying superior performance at home and on the go.”

Spectrum Mobile customers who preorder a new Galaxy S23 series device before February 16 can get a free storage upgrade. Customers who buy a new Galaxy phone and trade in an eligible device can also get $600 off – on top of the value of their trade-in. ■

Charter Communications' 4-year-old consumer wireless business Spectrum Mobile reported a record gain of 615,000 subscriber lines in the fourth quarter.

Touting 5.292 million total lines as of Dec. 31, Spectrum Mobile's girth has closed to within just a hair shy of the 5.31 million lines reported by Comcast Thursday during its Q4 earnings call. For its part, Comcast also touted a record growth quarter for Xfinity Mobile by adding 365,000 service lines. Comcast also said that it's Sky Mobile service has surpassed 3.1 million lines in Europe. 

Also read: Charter Q4 Earnings Fall Despite Gain of 92,000 Internet Subscribers

Notably, Xfinity Mobile beat Spectrum Mobile to market by about 14 months, launching in April 2017. Comcast and Charter both base their mobile platforms on mobile virtual network operator (MVNO) arrangements to use Verizon's national wireless network, offloading much of the traffic to their respective Wi-Fi networks. The cable operators also collaborate heavily on back-office operations for their mobile services. 

For both Comcast and Charter, these efforts have paid off with businesses that now are generating meaningful sales. 

According to analyst Craig Moffett, Spectrum Mobile has grown to account for 6.4% of Charter's Q4 revenue. (For all of 2022, Charter generated $54 billion in revenue, up 4.5% year over year. You can read the full earnings release here.)

"The growth in wireless is more than offsetting the declines in video and wired voice," Moffett said in an investor note published Friday shortly after Charter's earnings call. 

Charter's spike in Q4 wireless growth coincides with the launch of its new "Spectrum One" services bundle, with the No. 2 U.S. cable operator now packaging home internet services featuring its "Advanced Wi-Fi" product with a single Spectrum One mobile line for a starting price of $49.99. 

With Altice USA also in the U.S. wireless business since September 2019, U.S. cable companies controlled 31% of domestic wireless customer additions in the third quarter. 

Cable's market share seems likely to further increase in 2023. Cox Communications is making yet another try in the wireless business. Mediacom just trademarked the name "Mediacom Mobile." And the National Content & Technology Cooperative is now talking to its Tier 3 membership about MVNO deals, too. 

The ascendency of cable in a U.S. wireless business controlled by T-Mobile, Verizon and AT&T comes as the latter constituency begins to seriously eat into MSO's control of wireline broadband. 

Earlier this week, Verizon reported a quarterly record 379,000 customer additions for its Verizon Home Internet 5G fixed wireless access product. T-Mobile will likely tout similarly impressive FWA gains next week during its Q4 earnings report. 

This growth comes as No. 1 U.S. cable operator and broadband provider has seen its once explosively growing wireline internet business enter narrow recession, losing 26 million customers in Q4. 

For its part, Charter added 105,000 high-speed internet customers across residential and business channels. 

Craig Cowden, the most high-profile wireless engineering executive amid Charter Communication's emergence into the U.S. wireless business over the last seven years, will exit the company at the end of March, the cable operator confirmed.

LightReading, which first reported the news, quoted Cowden as describing the exit as amicable. He said simply that "it's time to do something different" after developing Spectrum Mobile and its MVNO offload strategy.

Cowden, who operates under the title of senior VP of wireless technology, joined Charter in 2016 when the cable operator closed its purchase of Bright House Networks. He had joined that MSO in 2009 after an eight-year stint with Sprint.

Cowden now sits on the board of Federated Wireless, a company that specializes in CBRS spectrum management and which is partly funded by Charter. A believer in the inevitability of private wireless networks, Cowden has been a key executive leader as Charter has developed use cases for the Citizens Band Radio Service (CBRS) spectrum.

As for Spectrum Mobile, it launched at the end of June 2018 and is now one of the fastest growing entities in the U.S. wireless business, touting 4.7 million lines of service as of the end of Q3 2022. ■

A handful of cable operators have made moves over the past few days to allow customers with friends and family impacted by the Ukraine conflict to contact loved ones in that war-torn country by landline and mobile phone free of charge.

Also: NAB Urges Broadcasters to Scrap Russian State-Sponsored Content 

Charter Communications, the second largest cable operator in the country with customers in 41 states, said Wednesday that it is waiving charges for all calls to Ukraine for Spectrum Voice and Spectrum Mobile subscribers through the end of March. According to Charter, standard SMS text messages to Ukraine already are included at no extra charge with Spectrum Mobile service. Charter said that customers don’t need to do anything; the fees will be automatically waived from their monthly bill.

Also: CPJ Disturbed by Russian Attach on Ukrainian TV Infrastructure 

Astound Broadband, the sixth largest cable operator in the country, said Wednesday that it is waiving customer fees associated with calling Ukraine from the United States. The company said international calling charges for Astound Broadband phone customers will be waived when calling Ukraine through March 31.

Also: NATPE Banning Russian Companies from Upcoming Sales Market 

Comcast said last month it will offer free calls to Ukraine for its Xfinity Voice, Xfinity Mobile, Comcast Business Voice and Comcast Business Mobile customers from February 20 to March 10.  SMS text messages are always included at no charge to domestic or international family members and friends, the company said. 

Also: DirecTV Drops Russia’s State-owned RT Channel 

Altice USA said its Optimum Mobile and Optimum and Suddenlink residential and business phone customers will be able to place calls from the United States to Ukraine at no additional cost through the end of March. Optimum Mobile customers will also be able to send free SMS and MMS messages to Ukraine.

Cable One said it began offering Sparklight residential phone customers free calls to Ukraine on February 25, adding that the offering lasts until March 12.

“During this time of unrest, we want to ensure our customers stay connected with what matters most - their loved ones in Ukraine,” Cable One CEO Julie Laulis said in a statement. Customers must visit www.sparklight.com/Ukraine and submit account information in order to have calls to Ukraine credited

Vyve Broadband, which offers service to customers in16 states, is broadening the scope of free long-distance calling to the countries of Moldova, Poland, Romania, Slovakia and Ukraine for the month of March. Additionally, Vyve has set up phones in each of its 38 local offices across the U.S. that both customers and non-customers can use to make free calls to these countries.

“At Vyve, we recognize that the war in Ukraine is a global concern that is impacting real human beings both abroad and at home,” Vyve president and chief operating officer Andy Parrott said in a press release. “By waiving charges for long-distance calls to the area, we want to support our customers as they seek to keep in touch with their friends, family members, and loved ones affected by this crisis.”  

Russia launched a full-scale military invasion of Ukraine on February 24, an attack that so far has caused nearly 1 million refugees to flee the country. According to the European Union, as many as 4 million people could be displaced and may are seeing shelter in neighboring countries like Poland, Romania, Slovakia, and Moldova. Several countries, including the U.S., have denounced the invasion and initiated economic sanctions against Russia to stop the attacks.

Charter Communications’ strong Q4 mobile subscriber growth -- its best quarterly increase ever -- could be the thing that finally changes investor perception of cable wireless from mere “hobby” to “real business,” according to MoffettNathanson senior research analyst Craig Moffett. 

Both Charter and Comcast reported their highest quarterly wireless subscriber growth ever in Q4 -- Comcast also set a record for yearly growth -- and with aggressive pricing and rising profitability, mobile could become a strong second growth product behind broadband for the industry.

Charter launched Spectrum Mobile, a Mobile Virtual Network Operator (MVNO) offering in conjunction with Verizon Wireless in 2018.  Since then, Charter has grown Spectrum Mobile from 0 to 3.6 million customers. With aggressive pricing and plans to expand its reach to rural markets funded in part by federal Rural Digital Opportunity Fund (RDOF) money, it can only get better. 

Spectrum Mobile isn’t profitable yet, but it’s getting closer. According to Charter, the mobile business had negative EBITDA of $92 million in Q4, and for the year EBITDA was negative $311 million. But the deficits are getting better -- EBITDA was negative $401 million in 2020 and negative $520 million in 2019. According to Moffett, Charter could reach EBITDA break-even this year. 

That would put it on a profitability path akin to its MVNO partner and the largest cable operator in the country -- Comcast -- which already has reported four straight quarters of positive wireless EBITDA growth.

Moffett doesn’t expect wireless to replace broadband in investors’ hearts -- he still believes  high-speed internet is a better business. But he does believe that investors have to stop thinking of cable as “only” a broadband provider.

“Cable isn’t a broadband-only business,” Moffett wrote. “It is, as we have repeated so often over the past two decades, an infrastructure business, with multiple revenue streams – residential and commercial, wired and, yes, wireless – riding on that infrastructure.”

To drive that point home, Moffett pointed out that mobile is becoming a larger component of overall revenue -- wireless accounted for 4.8% of total Q4 revenue, up from 4.1% in Q3. 

Also: Analyst Says It’s Time to Take Cable Wireless Seriously  

“Up to now, investors have treated Cable wireless as something closer to a hobby than a real business,” Moffett wrote, adding that while growth numbers have been good, the service has been pooh-poohed as just an MVNO. Spectrum Mobile’s 380,000 subscriber additions in Q4 -- beating analysts’ consensus estimates by nearly 100,000 customers -- could “go a ways towards changing that perception.”

Comcast is no slouch on the wireless front either. Xfinity Mobile launched in 2017  -- about one year before Charter, using the same Verizon MVNO agreement -- and ended 2021 with 3.98 million subscribers. Xfinity Mobile added 312,000 subscribers in Q4 -- its best quarter ever -- and 1.12 million for the year -- its best annual growth ever.   

Adding to the optimism is that Charter plans to expand its broadband and mobile footprint substantially over the next five years. Charter was the largest recipient of federal Rural Digital Opportunity Fund money last year, and launched its first market -- El Paso, Texas -- this month. According to Charter, the plan is to expand its mobile and broadband reach by about 1 million homes in that five-year period. That’s on top of the 1 million homes passed it is adding each year via edge-out and network expansion programs. 

Also: Cable Knocks on Wireless Giants’ Door 

Last year Charter committed to spending $5 billion -- including $1.2 billion from RDOF -- over five years to bring broadband to more than 1 million customer locations in unserved areas of the country. In El Paso, Charter said it will offer broadband, mobile, TV and wireline voice service to more than 1,200 homes. 

Broadband expansion can only help mobile growth -- customers need high-speed data service to be mobile customers. And at least for now, as the pandemic has caused more and more consumers to stay put and stick with existing providers, much of Charter’s mobile growth is coming from existing broadband customers upgrading to mobile service and existing mobile customers adding lines. 

“I expect that through time, we’ll get more pull-through on the new customer creation side of it,” Charter chairman and CEO Tom Rutledge said on a conference call with analysts to discuss its Q4 results. “But just when you do the math in terms of where the opportunity is to grow mobile, given our existing broadband penetration --  just mathematically, we have more upside in upgrades.”

Rutledge added that Charter also is making inroads in offloading mobile traffic from the MVNO to its own WiFi network, which makes service more cost efficient. Charter also has a large block of CBRS spectrum, which Rutledge said the company could use to offload as much as 30% of its mobile traffic. 

“We also are already offloading enormous amounts of traffic on WiFi,” Rutledge said on the conference call. “And I think that we have the ability to take that up significantly, too.”

That could be key. According to Moffett, the biggest goal for both Comcast and Charter in cable wireless is to offload as much traffic as they can onto their own networks to become both a Mobile Network Operator (MNO) and an MVNO.  

“A hybrid MNO/MVNO combines the best of all outcomes,” Moffett wrote. “They will be facilities-based where the returns are high and an MVNO in the places where the returns on building would be low. Margins will likely grow over time, but the real appeal of the strategy isn’t EBITDA margin but instead return on invested capital.” ■

Charter Communications gained about 190,000 broadband customers in Q4, short of analysts’ consensus estimates of about 210,000 additions, but wireless well exceeded expectations, adding 380,000 customers for its best fourth quarter yet.

Charter’s results were in line with its closest competitor, No. 1 cable operator Comcast, which said yesterday it added 212,000 broadband subscribers in Q4. And while analysts were expecting Comcast’s additions to slow — it said so back in December — some believed Charter, which hadn’t offered Q4 guidance prior to Friday’s release, might do better. That wasn’t to be.

“Recall that while Comcast had officially lowered the Street during the December conference season, Charter had not,” Wells Fargo Securities media analyst Steven Cahall wrote in a note to clients. “As such, it remained possible their trends would diverge, but it appears that Comcast Cable and Charter remain highly correlated from a net add perspective.”

Also: Comcast Q4 Broadband Results Narrowly Miss Consensus; Dividend Upped

For the full year, Charter added 1.2 million broadband subscribers, below 2020’s 2.2 million additions and 2019’s 1.4 million additions. 

While broadband continued to slow in line with the rest of the industry, mobile subscribers increased by 380,000, soundly beating analysts’ estimates that ranged between 260,000 and 325,000 additions. Spectrum Mobile dropped its prices in October to $29.99 per month, per line for a minimum of two lines, which likely was a big part of the surge in customer additions.  

In the quarter, revenue rose 4.7% to $13.2 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) were up 7.7% to $5.4 billion. For the full year, revenue was up 7.5% to $51.7 billion and EBITDA increased 11.4% to $20.6 billion.

”In 2022, we remain focused on driving additional customer growth by offering better services while saving customers money on their total communications spend, driving EBITDA growth, free cash flow growth and shareholder value,“ Charter chairman and CEO Tom Rutledge said in a press release. ■  

Cable operators, already gearing up for a slowdown in broadband subscriber growth in the fourth quarter, are likely to see a slight overall deceleration of mobile phone customer additions in Q4, driven by lighter numbers at Charter Communications, according to J.P. Morgan media analyst Phil Cusick.

Cable operators have already warned that the expected slowdown in broadband customer growth could get steeper in Q4. Comcast Cable CEO Dave Watson told a virtual audience at the UBS TMT Virtual Conference in December that it would likely add about 1.3 million broadband customers in 2021, implying that Q4 additions would be about 185,000, its lowest quarterly growth since Q2 2017. Watson was echoed by other cable execs at the conference like Altice USA CEO Dexter Goei, who implied that Q4 broadband subscriber growth could be negative in Q4 and for the year. 

But mobile service was expected to continue its torrid growth pace. Comcast’s Watson predicted that his company would add a record number of mobile customers in the quarter, beating its previous best of 285,000 additions in Q3 2021.

Also: Comcast Q4 Broadband Results Narrowly Miss Consensus; Dividend Upped

In a research note Thursday, Cusick wrote that he expects Comcast to surpass that old mark, adding about 300,000 mobile customers in Q4, ending the year with 1.14 million additions. But he believes Charter will add about 260,000 mobile subscribers, below the 315,000 it added in Q4 2020. He estimated Altice USA would add about 2,000 mobile customers in the quarter, down from 7,000 in Q4 2020. 

Overall, Cusick expects cable to add about 562,000 mobile customers in Q4, implying a 20%  share of total growth for the sector in the period, compared to 23% in Q4 2020. For the full year, Cusick estimates that cable will add 2.23 million mobile customers, or about 24% of total ecosystem growth, compared to 35% in 2020. 

Cusick sees the slowdown continuing into 2022, forecasting that Comcast mobile subscriptions will be about 1.047 million next year, and Charter slipping to 1 million additions. Cusick predicted that Altice USA would grow mobile customers by 29,000 in 2022, up from 13,000 in 2021. 

Also: Charter Falls Short of Broadband Subscriber Targets, Wireless Soars

Other analysts have revised their Charter estimates as well. In a January 3 report, Bernstein media analyst Peter Supino pointed to a possible industry-wide mobile deflation risk, and revised his expectation for Spectrum Mobile subscriber additions to 252,000 from 277,000 in Q4.  

The answer should come in the next few weeks. Comcast is scheduled to report Q4 results on January 27, with Charter reporting on January 28. Altice USA has not said yet when it plans to release Q4 results, but usually does so in early February.   

Cable operators have been aggressively pricing mobile service in the past year — Comcast dropped monthly pricing to $30 per month per line for four lines minimum in April — and have added device promotions and discounts for customers that switch service.

According to Cusick, Comcast’s Xfinity Mobile now offers up to $400 in device credits for any iPhone 13 users that switch — double its prior offer. Cable companies also have benefitted from their ability to bundle wireless service with broadband, which has had a big impact on wireless customer growth. 

Also: Analyst Says It’s Time to Take Cable's Wireless Seriously  

Cusick added that his estimates for Charter could be a bit low, given the operator’s aggressive discounting in October, dropping monthly charges for two lines or more to $29.99 from $45 per month. And Charter CEO Tom Rutledge has said he sees the wireless business as a huge catalyst for the future.

Back in December at the UBS conference, Rutledge did not offer any future subscriber growth guidance but said that going forward, the biggest growth driver for the business overall is mobile. 

And both Charter and Comcast have seen the benefits of bundling broadband and mobile, with efforts to pair the two more aggressively beginning last year.  

At the same time, the Big Three (AT&T, Verizon and T-Mobile) wireless players are beginning to see their subscriber dominance wane. AT&T, which Cusick expects to more than triple its wireless subscriber additions in 2021 to 3.19 million from 1.46 million in 2021 — largely due to aggressive device promotions — will see that growth dip to 2.35 million additions in 2022. He predicted that Verizon, which should nearly double its mobile additions in 2021 to 1.101 million from 667,000 in the prior year, will fall back to about 875,000 additions in 2022. T-Mobile, which is expected to add 2.917 million mobile customers in 2021 — up from 1.87 million in 2020, will add 2.4 million in 2022 according to Cusick. ■

 Just weeks after Charter Communications slashed prices for its Spectrum Mobile offering to $29.99 per month, chairman and CEO Tom Rutledge said charges for wireless cable offerings could drop further as the cost to provide service continues to decline.

“I think the mobile opportunity is very similar to the wireline opportunity that existed 15 years ago,” Rutledge said at the virtual/in-person Liberty Media Investor Day in New York. “Look at what happened there — we had a high-priced wireline phone service — in the metro area here, it was about $72 a month. That product now is less than $15 a month. And the biggest wireline phone companies in America are Comcast and Charter. So, I think the opportunity in mobile is similar. It’s got its own complexities, but the opportunity is there to create value for consumers. Consumers actually save money and we make money. That’s a pretty attractive business model that is available to us. And yeah, I think it leads toward convergence.” 

Charter introduced its $29.99 price point — for a minimum of two lines each — in October, a big discount from its previous charge of $45 per month, per line. That price reduction came on the heels of Comcast introducing a $30 per line service (for a minimum of four lines) which took effect in April. 

In a research note, Bernstein media analyst Peter Supino wrote that Rutledge’s comments provided “a muscular reminder of Charter’s ambitions and competitive advantages.” 

“Charter will sell wireless as aggressively as necessary to ensure that it achieves growth of customers and EBITDA per customer,” Supino added.

Also: Analyst Says It’s Time to Take Cable Wireless Seriously

Liberty Media chairman John Malone said that while convergence of fixed and wireless assets is common in Europe, where Liberty, a major Charter shareholder, has substantial holdings, it hasn’t yet taken hold in the U.S. While European companies have made bigger strides in deploying fiber networks compared to their U.S. counterparts, Malone stressed that every company and every market is different. 

“I’d start by reminding everybody that Europe is largely converged, the broadband companies are also wireless companies,” Malone said at the Investor Day. “That’s been true in every market we’re still operating in. In terms of technology, existing network structure, the nature of technological upgrade, the pressure from competition, etc. Every market is different.”

Malone added that in the U.K. for example, Liberty overbuilt itself with fiber, initially to capture more B2B business and because it was relatively cheap to build. The U.K., he said, also is relatively underbuilt — there isn’t a lot of fiber capacity and areas will be built out as opportunities present themselves. In the U.S., Malone said the biggest area for growth could be in boosting upstream capacity. 

“That may be more of a political reality than a business reality in the near term,” Malone said.  “And the cable industry contemplated that, and does have the capability of vastly expanding the upstream capacity.”

Malone said outside of the U.S., there has been a movement toward collectively building networks.

“In some places there is only one fiber backbone network that will be built and everyone will share and use it. So the models vary and in each location it depends on capital efficiency, the current state of play, cooperation between multiple players. It’s not uncommon. For instance in the U.K. there are four meaningful cell phone providers but only two networks, and those four competitors share  those two 2 nets as a matter of capital efficiency.”

Liberty CEO Greg Maffei added that the path U.S. cable companies have taken by upgrading using DOCSIS and other technologies to boost capacity and efficiency gives them some leeway before having to decide whether to go deeper into fiber expansion.     

“It’s a long ride for U.S. cable,” Maffei said. ■ 

Cable wireless service is growing into its own.

In the four years since Comcast pulled the trigger on what was to be the fourth attempt by a cable company to crack the wireless nut, Xfinity Mobile has been a growth engine, accumulating 3.9 million customers since April 2017. In the first quarter of this year, Xfinity Mobile achieved cash flow break-even, setting the wireless business on a course well beyond the early notion that it would be a backup to plans from more established carriers. Analysts and executives alike are taking notice, predicting that wireless could be a strong competitor in the market, especially if paired with broadband.

“Cable wireless is ready for its star turn,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a research note. Moffett, whose earlier take was that cable wireless is more of a retention tool for other services, now sees the product as a potential profit center. 

Comcast is currently the cable industry’s largest wireless provider and Moffett expects its lead to grow over the next four years. Moffett expects Xfinity Mobile to be close to breakeven in 2021, generating about $12 million in negative cash flow, and to turn profitable in 2022.

Aggressive Pricing a Plus

Moffett’s enthusiasm comes primarily from Comcast’s decision earlier this year to aggressively price wireless service. Comcast now substantially undercuts Verizon Communications and AT&T for unlimited mobile data across all plan sizes, according to Moffett, making the product competitive for a vastly larger portion of the market. 

Charter Communications followed Comcast, launching Spectrum Mobile wireless service in June 2018. That offering also is flirting with profitability, but chief financial officer Christopher Winfrey said Charter is more concerned with adding subscribers.

“Our goal isn’t to drive short-term EBITDA profitability,” Winfrey said on Charter’s Q1 earnings call. “Our goal is to drive as much growth as we can, because we know what the underlying profitability is and what it does for the overall business.”  

Spectrum added about 300,000 wireless lines in Q1, raising the total to about 2.7 million subscribers. 

Moffett estimated Charter’s mobile service would be profitable by 2024 as capital expenses decline. 

Charter said its wireless business is finally hitting stride, fueled by competitive pricing, reliable service and the ability to bundle mobile with broadband.  

According to researcher Parks Associates, about 19% of U.S. broadband households bundled high-speed data with wireless in Q1 2021. That’s up from about 15% in Q1 2020. With the number of broadband-only homes on the rise — Parks said 41% of households now take unbundled, standalone broadband service, up from 33% in 2018 -— the opportunity to sell mobile service to those households is increasing.   

At the JP Morgan Media & Communications conference in late May, Winfrey suggested wireless customers could eventually number about half the level of broadband subscribers, currently at 29.2 million. 

“I don’t think people took us seriously when we came into the voice market,” Winfrey said, adding that today, Comcast and Charter are the largest wireline phone service providers in the country. “And the way we did it is, because we weren’t the incumbent, we had the ability to save customers money, we had the ability to bundle it, and as a result we took down phone pricing dramatically across the entire industry and the entire U.S. 

“Over 20 years, we became the largest operators,” Winfrey continued. “At its peak, you could almost count as clockwork that voice subscribers would be about half of broadband and if it hadn’t been for mobile substitution, those numbers were continuing to increase. I think our opportunity is at least that.” 

Charter has been growing broadband at a 7% annual rate over the past three years and its wireless customers have doubled over the past two years. Continuing that pace, the wireless segment would reach about 15 million customers by mid-2023. 

That might be a bit optimistic, as Moffett predicted Charter would reach 7.2 million wireless customers by 2025. But many analysts anticipate Charter will add about 1.1 million mobile customers annually over the next few years. That pace would lead to nearly 15 million wireless customers by 2030.

At the JP Morgan conference, Winfrey said Charter does not view wireless as a standalone product but rather as an extension of broadband service. He said all Spectrum sales channels are required to sell wireless with other products.

While Charter won’t commit to a date when the wireless business will be profitable, Altice USA, which launched Altice Mobile service in September 2019 under a very aggressive pricing structure ($20 per, line per month for unlimited service for life), has since revamped that pricing. At the Credit Suisse conference, Altice USA chief financial officer Michael Grau said after a brief hiccup mainly around onboarding issues, the mobile product was beginning to hit stride in 2020 when the pandemic halted growth because retail stores shut down. The hiatus also forced Altice USA to take a hard look at the wireless business’s gross profit and churn metrics.

Altice Rethinks Pricing

“In the latter half of 2020, we offered 1 [Gigabyte] and 3 [GB] plans to supplement our unlimited plans, and we did right-size some of our pricing,” Grau said. “We’re starting to solve the gross profit problem; we’re no longer taking on customers that are generating negative gross profits.”

Altice USA now offers 1 GB data plans for $14 per month, 3GB data plans for $22 per month and unlimited data plans for $45 per month.   

Grau said take rates on the 1 GB and 3 GB products are between 60% and 70%, an encouraging sign. The new pricing also has helped dramatically reduce churn, he said. 

According to MoffettNathanson, Altice Mobile improved churn by 20% to 30% as it moved traffic to T-Mobile’s network in Q4. 

“At the same time a lot of our stores are reopening,” Grau said. “I think we’re very close to getting to the point where we’re saying, ‘I’m comfortable with the gross profit, I think we’ve solved for that; I’m comfortable with churn, I think we’ve solved for that.’ And that’s when we’ll turn up the sales and marketing machine again. I think you’ll see that somewhere in the back half of 2021.”

Because of a late start, Grau said the mobile unit probably won’t see break-even this year.

“We’d like to see it break-even on a run-rate basis as we exit 2022,” Grau said. “I think that’s more realistic.”

While cable wireless continues to hum along, one potential competitor — Dish Network’s Dish Wireless — lurks in the wings. With plans to launch the first market, Las Vegas, in the third quarter, Dish appears to be moving forward with plans for the state-of-the-art 5G wireless network, despite Wall Street skepticism. 

Dish appears to be branding the wireless offering under the “Project Gene5is” name, launching a website under that moniker in June that appears mostly to be a vehicle to gauge interest beyond Las Vegas. The website, which Dish confirmed as its own, promises to notify those who leave an email address and ZIP code when service will be available in their area. A Dish spokesperson confirmed Project Gene5is is from the company but declined further comment. 

“We’ll be communicating to customers as options are available in their area, with Vegas being our first market,” a Dish spokesperson said.

Dish has until June 2023 to make the service available to about 70% of its footprint under a federal mandate. Over the years, pundits have criticized the offering, which Dish has said  it can build for about $10 billion, on everything from time to market (too late) to expected cost (too little). 

Dish Plans Draw Skeptics

JP Morgan media analyst Philip Cusick was the latest analyst to cast aspersions on Dish wireless plans, downgrading the stock to “underweight” from “neutral” while raising his 12 month price target to $45 per share from $38. 

“We can’t find a way but to be skeptical on the Dish story,” Cusick wrote. He said while he has the highest respect for Dish chairman Charlie Ergen and the company, he remains stymied by three major issues: the inherent difficulty in launching a brand new wireless service, Dish’s spectrum disadvantage and the perception the company is too late to the 5G game.

Cusick noted the history of service and quality issues that have plagued wireless newcomers including Sprint, Leap Wireless and MetroPCS.

“Many times these were not issues of money to spend or desire, but simply that getting on the right cell sites can be very hard in areas and take years, if they are even possible,” Cusick wrote. While he noted that Dish has a leg up on previous new carriers by owning low-band spectrum and having a MVNO deal with T-Mobile, those aspects only reduce the challenge. 

Dish, according to Cusick, has about 114 Megahertz of spectrum, far less than its competition. While Dish could buy more licenses in future federal spectrum auctions, Cusick doesn’t believe the company has the money now. Finally, Cusick stated that he worries that Dish missed the boat on 5G, adding that other larger carriers that have already rolled out the technology will accelerate those plans and erase any differentiation Dish would have had by coming to market sooner. λ

Less than five years after first launching the latest iteration of cable wireless service, the major operators have finally got it right, according to influential media analyst Craig Moffett. 

Moffett, principal and senior analyst at MoffettNathanson, makes his case In a 44-page report issued Thursday, adding that he believes that annual revenue at Comcast Xfinity Mobile, which launched in 2017, could reach $5.1 billion in sales (more than twice the $2.3 billion expected in 2021) by 2025. Moffett also expects Xfinity Mobile to have 7.9 million subscribers by 2025, nearly double the 3.9 million customers estimated for this year.

Moffett expects Charter Communications, which launched its Spectrum Mobile service in 2018 and shares an MVNO agreement with Comcast, to also aggressively price its wireless service. As a result, he estimated that Spectrum Mobile revenue will double from $2.1 billion in 2021 to $4.2 billion by 2025 and that subscribers will double from 3.5 million to 7.2 million in the same time frame.

“Cable wireless is now ready for its star turn,” Moffett wrote, adding that the product “offers the potential for significant value creation for the MSOs and their investors.”

That’s a far cry from 20 years ago, when cable first ventured into the wireless business with Sprint, the first of three failed attempts at a wireless product with that company. Now Sprint is no more -- it was purchased by T-Mobile in 2020 in a $26 billion deal  -- and Comcast and Charter smartened up, reaching a mobile virtual network operator deal with Verizon in 2015 that has paid off in spades. 

Also Read: Comcast, Charter Eye Wireless-Broadband Double Play  

According to Moffett, in the four years since Xfinity Mobile launched, cable wireless has grown to 6 million subscribers, becoming the fastest growing segment in the industry and accounting for about 30% of new additions. The cable wireless segment, he added, represents about 2% of the total U.S. mobile phone market.    

Because cable operators are regional players -- they only market service in their respective service territories, their wireless success is even more impressive. Moffett estimated that assuming each home has 2.5 people, Comcast and Charter have reached 4% penetration among their existing customers. 

Also Read: Cable Knocks on Wireless Giants’ Door 

Comcast said in Q1 that Xfinity Mobile reached break-even, a milestone that was helped by the restructuring of its MVNO agreement with Verizon last year. With the mobile service no longer losing money and a new, more economical MVNO deal in hand, Moffett said that encouraged Comcast to aggressively price its unlimited wireless data plans.  

“With more aggressive family plan pricing, they have a much longer runway,” Moffett wrote of Comcast’s wireless business. “And while their new pricing will mean a step backwards in near term profitability, their ability to offload traffic in the future means that they can eventually achieve at least adequate margins on what is now likely to be a much larger revenue base than we had anticipated.”   

Charter Communications chief financial officer Chris Winfrey, citing the company ‘s past success with wireline phone service, said its wireless service could have a similar trajectory over time, growing mobile subscribers as much as four-fold over the next several years.

At the JP Morgan Media & Communications conference Monday, Winfrey said that Charter’s approach to the wireless business has helped it grow that product significantly since it launched in 2018. Pointing to the company’s success in the wireline phone business, it’s not much of a stretch to assume the same growth path could be ahead for wireless. 

Charter launched Spectrum Mobile in June 2018, part of an MVNO agreement the company has with Verizon Communications. In Q1, Spectrum Mobile had 2.7 million residential and business subscribers, nearly double the 1.4 million in the prior year period. Wireline phone customers peaked around 2016 at about 11.5 million and were at 10.4 million residential and business customers in Q1.

Also Read: Cable Knocks on Wireless Giants’ Door 

Wireline penetration rates have been about half of broadband penetration over the years. As more and more cable companies begin to bundle wireless with broadband service, those penetration rates are expected to climb. 

“I don't think people took us seriously when we came into the voice market,” Winfrey said, adding that today, Comcast and Charter are the largest wireline phone service providers in the country. “And the way we did it is because we weren't the incumbent, we had the ability to save customers money, we had the ability to bundle it, and as a result we took down phone pricing dramatically across the entire industry and the entire US. Over 20 years we became the largest operators. At its peak you could almost count as clockwork that voice subscribers would be about half of broadband and if it hadn’t been for mobile substitution, those numbers were continuing to increase. I think our opportunity is at least that.” 

Charter finished the first quarter with 29.2 million broadband subscribers and has been growing at a 7% annual rate over the past 3 years. Charter’s wireless customers have doubled over the past two years, and if it were to continue that pace, would reach about 15 million customers by mid-2023. While that may be a bit optimistic, many analysts predict that Charter will add about 1.1 million mobile customers annually over the next few years, even at that pace it could have nearly 15 million wireless customers by 2030.

At the JP Morgan conference, Winfrey said Charter does not view wireless as a standalone product, but rather as an extension of its broadband service. He added that all of its sales channels are required to sell wireless with its other products.

“We ask that mobile is part of every single selling opportunity we have, whether that's in inbound sales, whether that’s in the stores, whether that’s in direct sales,” Winfrey said. “Every single one of our sales channels, including online, is required to have that conversation.”

Cable operators may not be an imminent threat to the Big Three wireless carriers, Verizon, AT&T and T-Mobile. After four years of tapping on the front door, though, they may be closer than ever to knocking it down, with help from Citizens Band Radio Service (CBRS) and 5G mobile spectrum.    

Since Comcast launched its Xfinity Mobile service in 2017, via a mobile virtual network operator (MVNO) agreement with Verizon Communications, cable wireless amassed nearly 6 million subscribers, making it the industry’s fastest growth product in terms of percentages. Cable’s biggest wireless rise was in 2020, when top cable operators Comcast, Charter and Altice USA, fueled in part by pandemic-
driven increases in broadband, grew their wireless customers at a 68% clip. That momentum continued into Q1 2021, with those three operators growing their total wireless lines to 5.9 million, a 9% increase. 

Comcast broke records in the wireless business in Q1, adding 278,000 lines — its most ever in a quarter — while the Xfinity Mobile unit reached cash flow breakeven (it didn’t lose money) for the first time since its launch. Wireless revenue rose nearly 50% in the quarter to $513 million, further solidifying the company’s wireless commitment.  

The news was just as good for Charter, which added 300,000 wireless customers in Q1. Altice USA added about 5,000 wireless customers in Q1.

Comcast still leads the pack with 3.1 million mobile subscribers, followed by Charter — which also has a MVNO agreement with Verizon — with 2.6 million and Altice USA with 174,000. Altice USA was the last to launch a mobile service (Altice Mobile) through an MVNO pact with T-Mobile, in September 2019. 

Those cable companies are still a long way from being an immediate threat to wireless’ Big Three: AT&T leads with 164 million postpaid wireless customers, followed by Verizon with 117 million and T-Mobile, which completed its $26 billion purchase of Sprint in 2019, has 67 million. But as pricing continues to be one of the biggest deciding factors in selecting a mobile service, and many cable wireless customers are also hardwire broadband subscribers, the gap is poised to close rapidly. Add in the potential of 5G mobile service — which depends greatly on fiber interconnections between towers, a cable strong suit — and the notion that cable wireless could become a major player isn’t that much of a stretch. 

Skeptics need look no further than the dominant position cable has carved out in broadband service. In the beginning, telcos ruled the day with copper wire digital subscriber line service, offering 1.5 Mbps speeds that in the 1990s were a major upgrade from dial-up. But as cable continued to deploy fiber deep into its network, and speed requirements vaulted into the hundreds of megabits per second, cable broadband quickly overtook its DSL competition. Today, cable accounts for about 70% of the U.S. broadband market, a number expected to grow as operators push fiber out to the edges of their footprints. 

Broadband Sets Precedent 

Cable operators have been edging out their footprints at an accelerated pace over the past few years. In 2020, Comcast added about 1 million homes passed to its footprint, with Charter adding about 1.1 million homes. Even at 30% penetration rates, that could translate into about 300,000 more broadband customers. And increasingly, cable operators seem anxious to add wireless to that bundle, which could drive those numbers as well.  

As many as 90% of cable wireless customers are also cable broadband customers, said Evercore ISI media analyst Vijay Jayant. Extending that broadband reach can only help the cause for wireless.

In its Q4 conference call with analysts, Comcast chief financial officer Mike Cavanagh said mobile is a “strategic priority” for the company and has been “fully integrated” into the core business. Xfinity Mobile added 774,000 wireless customers in 2020, slightly behind the 816,000 added in 2019, all during a period where most of its retail stores were closed because of the pandemic. Those outlets were fully open this year and as a result expected to have a positive impact on sales.  

Did they ever. Xfinity Mobile reported its best quarterly subscriber additions yet in Q1: 278,000 versus 216,000 adds in Q1 2020.

Many analysts are beginning to see wireless as a replacement for video in the overall cable bundle. As video subscribers continue to cut the cord for streaming services but keep their cable broadband connection, adding wireless service could keep the price of broadband more manageable. According to Bernstein, penetration for the video/broadband double-play has fallen from about 63% in 2018 to 51% in 2020.  

On its Q1 earnings conference call April 28, Comcast Cable president and CEO Dave Watson said that bundling broadband and wireless is something the company has done in the past and will continue to do. 

 “We think it’s good for broadband, it’s helping broadband, we’ve seen the results in terms of churn, and it’s just a growth engine for us, period,” Watson said of the wireless product. “We’re focusing on every sales channel. We’re going to be consistent with our approach.  You’ll probably see a bit more packaging with broadband and mobile, but that’s not really different than anything that we’ve been doing.”

Lose Some, Win More

In a research note, Bernstein media analyst Peter Supino called the practice of shedding low-margin video service for higher-margin broadband the industry’s “losing to win” strategy.

“The downside is the potential loss of ‘stickiness’ as a result of moving to a single offering,” he wrote. “Mobile is the potential cure.”  

Supino added in other client notes that wireless is “far stickier” than video because the decision to switch internet/video providers is about a single item. It’s much harder to try to persuade every household member to change cellphone providers at the same time. 

Wells Fargo Securities media analyst Steven Cahall estimated Comcast would add about 225,000 wireless customers in Q1 and 935,000 for the full year. That compares to his estimates of an increase of about 400,000 broadband subscribers in Q1 and 1.3 million for the full year.  

Earlier this year, Comcast revised its Verizon MVNO agreement. It said in April it would drastically reduce pricing for its Xfinity Mobile service, offering four lines with unlimited data for $120 per month. That price lines up with T-Mobile’s flagship Magenta service ($140 per month with Netflix and taxes included) and severely undercuts comparable offerings from Verizon and AT&T that are priced above $160 per month. Charter, which has an identical MVNO arrangement with Verizon, is expected to follow suit.

While the price reductions are likely to attract some additional customer interest, Bernstein’s Supino wrote, they don’t include phone discounts so they’re unlikely to have a huge impact on subscribers. But once Comcast achieves scale in phone equipment — which Supino predicted will occur in 2023 — and achieves even greater economies by shifting the bulk of traffic onto its CBRS spectrum, all bets are off. 

“We expect Comcast (and Charter) to continue to reinvest wireless economies of scale in subscribers in order to drive total cable customer lifetime value,” Supino wrote. “By 2023, when we forecast that Comcast and Charter will have deployed enough phones and small cells to make use of their recently acquired CBRS spectrum, we expect operating cost savings to fund more competitive phone promotions. ”

Betting on CBRS

The cable companies have invested heavily in CBRS spectrum: Charter spent about $465 million for 210 CBRS priority access licenses in the recent federal auction, while Comcast spent about $459 million for 830 licenses, Supino said. 

“CBRS spectrum and low-cost, strand-mounted small cells allow cable operators to build out their own facilities in dense areas,” Moffett wrote. “As much as 70% of all wireless traffic is handled by just 10% of cell sites. Cable will attempt to build out these dense areas (high ROI) with CBRS, leaving the less dense areas to the Verizon MVNO agreement, effectively arbitraging the wireless industry.

“Everything hinges on how much traffic can be offloaded onto CBRS,” Moffett said.

During the Q1 conference call, Comcast chairman and CEO Brian Roberts acknowledged the spectrum will be used to offload some traffic from the MVNO, adding that the ability to do so requires a strong wireless partner.

“Yes, we bought some spectrum and we’ll be doing some trials to see how we can offload, and that really will prove to be a cost savings if we get it right in dense areas,” Roberts said on the call. “That whole relationship requires a healthy partnership with a wireless [mobile network operator]. And in the case of Verizon, we were really pleased with the partnership.” 

For 5G, Moffett wrote as networks get more dense, key to their success will be the fiber connections between towers, which are spaced much closer together in 5G architectures. 

“As wireless networks densify, underlying wires will become the single most important part of the cost structure,” Moffett added. “As wires begin to dominate the cost structure, he who has the densest wired network will win. Cable has the densest network. Therefore, cable infrastructure will ultimately win in wireless. Just as it has already won in broadband.” 

As video subscriber losses continue to rise across the board in the pay TV segment, Comcast Cable CEO Dave Watson and Charter Communications chairman and CEO Tom Rutledge told a virtual industry audience Wednesday that a new double play that ties wireless and broadband is beginning to emerge. 

Comcast lost about 491,000 video subscribers in the first quarter, up from the 409,000 it lost in the prior year and a trend that Watson said would likely continue. While the cable operator will continue to focus on high-end video subscribers who want a full package of video, at Wednesday’s MoffettNathanson Virtual Media & Communications Summit, Watson said the company is not ignoring the growth at its wireless unit.

Comcast launched Xfinity Mobile in 2017, part of its MVNO agreement with Verizon Communications, and has grown the business to about 3.1 million customers. The mobile unit had its best quarter ever in Q1, adding about 278,000 customers (its highest quarterly number) and becoming profitable for the first time.

Watson said the mobile product has “energized our sales channels,” including digital, call center agents and retail. 

“I think there’s definitely an opportunity to combine an elegant and seamless broadband- mobile offering. We’ve done it in a whole bunch of our go-to-market approaches and for the right segment, it's a great way to start the relationship,” Watson said. He added that tacking on the Xfinity Flex product to that double play could make it even more attractive. 

“That is a really unique proposition that we have that no one else has,” Watson continued.  “Over time, look for us to do more of that.”

Later on in the conference, Rutledge said that wireless is an integral part of the company’s connectivity strategy, adding that that ultimate goal is to converge wireless and broadband.

Charter, which also has an MVNO agreement with Verizon for its Spectrum Mobile service, added about 300,000 wireless customers in Q1. It ended the quarter with 2.7 million wireless customers. 

“I look at our opportunity to create customers that buy mobile services, and create those customers along with the capabilities that we have added through our broadband network, which are vast, and to converge the product itself into a single product,” Rutledge said. "If you look at the total prices that people pay for these products today, I think we could gain significant market share at much lower pieces than people are currently paying. I think mobile represents the opportunity for us to save people money and give them better products than they have today. .... The combination of the product is bigger than the component pieces.”  

Rutledge added that profitability for Spectrum Mobile isn’t that far off. 

“They [Comcast] reached a point that we will reach,” Rutledge said. “From a break even perspective, we said previously that about 2 million customers is all we needed to make the business profitable. That’s true and that proved out to be true. The difference between us and Comcast at the moment, I believe, is where we are in the cycle and how much new growth we have versus how much base.” 

Rutledge added that he expects mobile to be a real contributor to profitability going forward.

“To the extent  you create a customer that raises your ARPU but saves the customer money on their household spend and creates additional EBITDA per customer for you, that both allows your existing base to be more profitable and your incremental growth opportunities to be greater because you more valuable, that’s a really attractive model,” Rutledge said. “I think that’s what mobile does for us.”

On the flip side, some have complained that the emergence of streaming apps and the trend toward content companies shifting content -- like sports -- to their direct-to-consumer products, adds more pressure to carriage negotiations.   

“Obviously it changes the dynamic,” Rutledge said, adding that in the current climate, content distributors would be “much better off not blowing up the existing model just now," mainly because it generates much more revenue than its streaming counterpart. 

The dilemma, he continued, for content companies is in deciding whether to keep raising linear prices while premium content is available on streaming apps and risk being dropped by traditional distributors, or maintaining or lowering rates to preserve that distribution relationship. 

Rutledge guessed that content companies would choose the second route, which would mean less money “but it’s still better than the alternative.”  

And despite continued pay TV subscriber losses -- MoffettNathanson estimates that pay TV is losing about 7% of its video customer base per year -- Rutledge believes there is still some life left in the traditional linear video business.

“It’s hard for me to believe that there won't be linear TV at all in the near term,” Rutledge said. “I think the model is under pressure, it's been under pressure for a  long time. I don’t think it’s about to collapse, but I do think it's shrinking rapidly. I think the most likely scenario is that rate changes will moderate and you’ll still have a pretty expensive linear model. I don’t see it just collapsing.”  

Charter Communications kept up the pace of Q1 broadband and wireless customers additions set by Comcast, reporting 355,000 high-speed data and 300,000 mobile subscriber adds in the period.

Both Comcast and Charter had cautioned investors not to expect the same growth the companies experienced in 2020, when pandemic-fueled stay at home orders drew record broadband growth. Better to compare this year to 2019, they said, and so far, that has proven to be a prudent choice.

Charter’s 355,000 data additions were behind the 582,000 it added in Q1 2020, but were closer to the 428,000 additions in the same period in 2019. Wireless customer adds of 300,000 were higher than the 298,000 customers added in Q1 2020, and nearly double the 176,000 additions in Q1 2019. Video subscribers declined by 138,000, more than the 70,000 lost in Q12020, but inline with the 145,000 shed in 2019. 

Also Read: Charter's 'Giffen Good'

Charter’s 355,000 data additions were behind the 582,000 it added in Q1 2020, but were closer to the 428,000 additions in the same period in 2019. Wireless customer adds of 300,000 were higher than the 298,000 customers added in Q1 2020, and nearly double the 176,000 additions in Q1 2019. Video subscribers declined by 138,000, more than the 70,000 lost in Q12020, but inline with the 145,000 shed in 2019.  

The broadband and wireless gains drove a 6.7% increase in total revenue to $12.5 billion, and a 12.5% increase in adjusted EBITDA to $4.9 billion.

“We continue to execute well in a market environment that has not yet returned to normal,” Charter chairman and CEO Tom Rutledge said in a press release. “We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3%. "Our value-driven operating strategy of providing multiple high-quality products at lower prices than sold individually continues to drive our growth.”

While Charter Communications continues to aggressively move to accumulate wireless spectrum, chairman and CEO Tom Rutledge said ultimately its mobile motivations are tied to supporting the overall business. 

Charter has been keen on building up its spectrum holdings -- the Federal Communications Commission said Monday the cable operator wins the most locations in its Rural Digital Opportunities Fund (RDOF) auctions.  At the UBS Virtual TMT conference Monday, Rutledge said that the company’s wireless spectrum plays -- including participating in the CBRS auctions and “edging out” its existing footprint -- are parts of the overall strategy to reach as many customers as possible. 

Rutledge said he couldn’t speak directly about the RDOF auction -- he is still in a quiet period -- but said in general, its edge-out program, its wireless network and working with local, state and federal governments for rights of way are all moves to increase the size of its customer base as well as the communities it serves. 

“We think it’s smart to do that, and if it can be done in an economically efficient way, we’ve embraced that,” Rutledge said. “If we do that, we end up with more customers and a happier customer.”

Rutledge added that wireless doesn’t only mean mobile phone service -- Charter customers have connected about 400 million wireless devices to its network. And the wireless product has had a tangible effect on how Charter sells its flagship product, broadband.

Charter added about 363,000 wireless lines in Q3, bringing its total Spectrum Mobile customers to about 2.1 million. 

“The overall value of the relationship is improved by wireless,” Rutledge said. “As a standalone business it’s still a good business. We’ve actually crossed the threshold where every incremental customer becomes profitable in mobile. We’ve covered our fixed costs, with the customer base we’ve already creed, so incrementally the wind is at our back financially. But it’s also a positive driver of our overall ability to have a good relationship with customers that improves the whole value proposition of a customer’s telecom bill.”

Charter made headlines with its positive video customer growth over the past two quarters -- 102,000 additions in Q2 and 67,000 in Q3 -- and Rutledge said some of those increases were due to satellite TV customers that dropped that service after buying broadband from Charter. In doing that, many also bought video service, too.

“We’ve pulled bb growth from all sorts of places, and shifted share toward us. Some of that share had satellite customers in it, and when they made the conversion to us, they bought video from us.”

Charter also has developed additional products, some over the top, and some related to skinnier packages of traditional cable, which has helped. 

“Through time we will have to mix the mixture of those services so we can maximize our growth potential,” Rutledge said, adding that video growth is still hampered by price pressures associated with the business. “It’s still a highly desired product though, people want it. To the extent there is less cost pressure, you can get more demand.”

While cord-cutting and SVOD services like Netflix and Amazon Prime Video have helped pare traditional pay TV subscribers, Rutledge said it hasn’t had a big effect on programming costs. He added that while cable companies have paid less in affiliate fees recently, it’s more a factor of fewer video customers, not lower prices.   

“What’s happening is the mix of viewers is changing  because of the packages we’re selling,” Rutledge said. “That’s been the reason that content prices in aggregate have moderated for us. It hasn’t moderated on a price per viewer basis. That’s an important thought because it shows how much money is flowing from customers to content companies through us. In terms of how a linear bundle works in an environment where the same companies that provide content in a linear bundle also sell a premium direct-to-consumer product is a question of, if you cannibalize one, do you put us in a position where we would be willing to drop you or your bundled package, because customers can get your product directly, there is no need for us to pay for that as part of the bundle. Or do you have a dual content strategy where you have good content in your linear product, but different content in your direct-to-consumer products? It’s yet to be determined whether owners of content are going to try to support both worlds or not.”

Charter Communications’ Spectrum Mobile unit has created a new service tier, Unlimited Plus, that allows 30 gigabytes of usage before users are throttled at speeds of 600 kilobits per second.

The plan, which runs $55 a month plus taxes and fees, and includes both 4G and 5G network access, also enables HD-quality video. Spectrum Mobile’s $45-a-month incumbent “unlimited” services only delivers 5G data usage before throttling, with video quality at a standard-definition level of 480p.

Like Comcast’s Xfinity Mobile, Spectrum Mobile uses Verizon’s national wireless network as part of a mobile virtual network operator (MVNO) agreement. Spectrum Mobile grew by an impressive 325,000 subscribers in the second quarter and now has 1.69 million wireless subscribers. The Q2 growth was faster than that of either of the other U.S. cable companies with a mobile product — Comcast (with 126,000 mobile customer additions) or Altice USA (which gained 34,000 subscribers).

Charter is now advertising Spectrum Mobile as the “fastest-growing” U.S. wireless service.

For its part, Comcast’s unlimited wireless plan allows for 20 GB of usage before speeds are slowed. Xfinity Mobile users can pay $20 a month for 720p streaming via an add-on called HD Pass.

Charter’s press release didn’t define what it means by “HD-quality” video. Technically, 720p meets the bar. And since Comcast and Charter are joined at the hip in terms of how they execute their respective mobile businesses, even sharing technical and business information, it seems likely that 720p is what Unlimited Plus is offering.

Charter is billing Unlimited Plus as a “third option” for wireless customers, joining standard unlimited and the company’s $14-per-GB “by the gig” plan.

“With Unlimited Plus, Spectrum Mobile customers now have three simple and easy-to-understand data plans to choose from to fit their needs and budget, with no taxes and fees,” Charter chief mobile officer Danny Bowman said. “As our new top-tier data plan option, Unlimited Plus combined with Spectrum Mobile’s fastest overall speeds is the ideal choice for those customers who watch HD-quality video on the go.”

Charter Communications Spectrum Mobile unit has announced a new service tier, Unlimited Plus, that allows 30 gigabytes of usage before users are throttled 600 kbps speeds.

The plan, which runs $55 a month plus taxes and fees, and includes both 4G and 5G network access, also enables HD-quality video. Spectrum Mobile’s $45-a-month incumbent “unlimited” services only delivers 5G of data usage before throttling with video quality coming in at a standard-def 480p level.

Like Comcast’s Xfinity Mobile, Spectrum Mobile uses Verizon’s national wireless network as part of a mobile virtual network operator (MVNO) agreement. Spectrum Mobile grew by an impressive 325,000 subscribers in the second quarter, and it now has 1.69 million wireless subscribers. The Q2 growth was faster than either of the other two U.S. cable companies that are into mobile—Comcast (126,000 mobile customer additions) or Altice USA (gained 34,000).

Charter is now advertising Spectrum Mobile as the “fastest growing” U.S. wireless service.

For its part, Comcast’s unlimited wireless plan allows for 20GB of usage before speeds are slowed. Xfinity Mobile users can pay $20 a month for 720p streaming via an add-on called HD Pass.

In its press release, Charter didn’t define who it means by “HD-quality” video. Technically, 720p meets the bar. And since Comcast and Charter are tied to the hip in terms of how they execute their respective mobile businesses, even sharing technical and business information, it seems likely that 720p is what Unlimited Plus is offering.

Charter is billing Unlimited Plus as a “third option” for its wireless customers, joining standard unlimited and the company’s $14-per-GB “by the gig” plan.

“With Unlimited Plus, Spectrum Mobile customers now have three simple and easy-to-understand data plans to choose from to fit their needs and budget, with no taxes and fees,” said Danny Bowman, chief mobile officer for Charter. “As our new top-tier data plan option, Unlimited Plus combined with Spectrum Mobile’s fastest overall speeds is the ideal choice for those customers who watch HD-quality video on the go.”

Charter Communications Spectrum Mobile unit has announced a new service tier, Unlimited Plus, that allows 30 gigabytes of usage before users are throttled 600 kbps speeds.

The plan, which runs $55 a month plus taxes and fees, and includes both 4G and 5G network access, also enables HD-quality video. Spectrum Mobile’s $45-a-month incumbent “unlimited” services only delivers 5G of data usage before throttling with video quality coming in at a standard-def 480p level. 

Like Comcast’s Xfinity Mobile, Spectrum Mobile uses Verizon’s national wireless network as part of a mobile virtual network operator (MVNO) agreement. Spectrum Mobile grew by an impressive 325,000 subscribers in the second quarter, and it now has 1.69 million wireless subscribers. The Q2 growth was faster than either of the other two U.S. cable companies that are into mobile—Comcast (126,000 mobile customer additions) or Altice USA (gained 34,000). 

Charter is now advertising Spectrum Mobile as the “fastest growing” U.S. wireless service.

For its part, Comcast’s unlimited wireless plan allows for 20GB of usage before speeds are slowed. Xfinity Mobile users can pay $20 a month for 720p streaming via an add-on called HD Pass. 

In its press release, Charter didn’t define who it means by “HD-quality” video. Technically, 720p meets the bar. And since Comcast and Charter are tied to the hip in terms of how they execute their respective mobile businesses, even sharing technical and business information, it seems likely that 720p is what Unlimited Plus is offering. 

Charter is billing Unlimited Plus as a “third option” for its wireless customers, joining standard unlimited and the company’s $14-per-GB “by the gig” plan. 

“With Unlimited Plus, Spectrum Mobile customers now have three simple and easy-to-understand data plans to choose from to fit their needs and budget, with no taxes and fees,” said Danny Bowman, chief mobile officer for Charter. “As our new top-tier data plan option, Unlimited Plus combined with Spectrum Mobile’s fastest overall speeds is the ideal choice for those customers who watch HD-quality video on the go.”

Count the consumer wireless industry as among the legions of sectors being transformed amid the pandemic.

With consumers locked at home amid the recessionary environment, aggressive price promotion by cable operators with MVNO-based mobile services grew their customer bases by 547,000 users in the first quarter. This was at a time when the incumbent wireless carriers saw their subscriber bases shrink 1.3% year over year. It was the worst customer growth quarter for the retail wireless industry since 2014.

According to numbers assembled by MoffettNathanson, Comcast, Charter Communications and Altice USA accounted for nearly 130% of wireless customer additions in Q1.

The cable trio now have more than 3.7 million wireless customers combined.

Like Verizon, AT&T and T-Mobile, the cable operators have found themselves hindered by the closure of retail touch points. But the cable companies have managed to keep growing with aggressive price promotions, including a $20-per-line campaign instituted recently by Altice USA.

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” MoffettNathanson principal analyst Craig Moffett noted.

The analyst believes these mobile industry trends will be even more pronounced in the second quarter.

As we headed into a COVID-19 environment, our broad expectations for the carriers were they would see record-low activity levels (lower gross additions, lower upgrade rates and lower churn) as retail stores closed down and people began to stay home, with the brunt of the impact being felt in Q2 2020,” he added … “But it is also the case that cable seems to be using the crisis to push even harder for subscriber gains.”

Count the consumer wireless industry as among the legions of sectors being transformed amid the pandemic. 

With consumers locked at home amid the recessionary environment, aggressive price promotion by cable operators with MVNO-based mobile services grew their customer bases by 547,000 users in the first quarter. This was at a time when the incumbent wireless carriers saw their subscriber bases shrink 1.3% year over year. It was the worst customer growth quarter for the retail wireless industry since 2014. 

According to numbers assembled by MoffettNathanson, Comcast, Charter Communications and Altice USA accounted for nearly 130% of wireless customer additions in Q1.

The cable trio now have more than 3.7 million wireless customers combined. 

Like Verizon, AT&T and T-Mobile, the cable operators have found themselves hindered by the closure of retail touch points. But the cable companies have managed to keep growing with aggressive price promotions, including a $20-per-line campaign instituted recently by Altice USA. 

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” MoffettNathanson principal analyst Craig Moffett noted. 

The analyst believes these mobile industry trends will be even more pronounced in the second quarter.

As we headed into a COVID-19 environment, our broad expectations for the carriers were they would see record-low activity levels (lower gross additions, lower upgrade rates and lower churn) as retail stores closed down and people began to stay home, with the brunt of the impact being felt in Q2 2020,” he added … “But it is also the case that cable seems to be using the crisis to push even harder for subscriber gains.”

Charter Communications has switched on access to Verizon 5G for subscribers to its Spectrum Mobile unlimited plan.

Charter said its unlimited wireless tier users, who pay $45 per line, will be able to access Verizon’s millimeter wave-based 5G service in the limited number of urban areas in which it is available at no additional cost.

Spectrum Mobile users who are on the by-the-gig pricing plan will remain locked into 4G LTE service. Charter’s 5G marketing page for Spectrum Mobile users can be found here.

Also read: Verizon Set to Double 5G Millimeter Wave Deployments to 60 Cities

Last month, Verizon, No. 1 U.S. wireless operator, said it will nearly double its number of millimeter wave cities from a current count of 31 to 60 this year. The Verizon 5G service is currently available in limited areas of New York, Los Angeles, Dallas and several other cities.

Millimeter-wave spectrum is made up of ultra-high frequency radio waves in the 24 Gigahertz to 100 GHz range, which can hold and deliver gobs more data. Early 5G networks using millimeter-wave technology promise speeds as high as 6 Gigabits per second, evolving one day to as high as 20 Gbps. Latency is also vastly improved, too, going from 20-70 milliseconds with 4G to as low as the ultra-responsive sub-1 millisecond range.

However, establishing ubiquitous 5G coverage is no small engineering feat. The ultra-high frequencies require signals to broadcast at very short range — around 600 to 800 feet — meaning Verizon must festoon every street in each city where it deploys 5G with gobs of “small cell” devices. These short-throw, ultra-high frequencies are also prone to all sorts of interference, falling leaves included. And they don’t penetrate walls or buildings.

Spectrum Mobile has a bring-your-own-device option. But it now is offering monthly financing plans on Samsung S20 series 5G smart phones.

Charter said it added 288,000 Spectrum Mobile subscriber lines in the fourth quarter, upping its total to 1.08 million. It doesn’t break down how many of its users are on unlimited plans, however.

Charter is pursuing new technologies including CBRS to establish more owner’s economics in terms of its wireless network use. But for now, Spectrum Mobile remains almost entirely reliant on its MVNO wholesale agreement with Verizon. 

Charter Communications has switched on access to Verizon 5G for subscribers to its Spectrum Mobile unlimited plan. 

Charter said its unlimited wireless tier users, who pay $45 per line, will be able to access Verizon’s millimeter wave-based 5G service in the limited number of urban areas in which it is available at no additional cost. 

Spectrum Mobile users who are on the by-the-gig pricing plan will remain locked into 4G LTE service. Charter’s 5G marketing page for Spectrum Mobile users can be found here. 

Also read: Verizon Set to Double 5G Millimeter Wave Deployments to 60 Cities

Last month, Verizon, No. 1 U.S. wireless operator, said it will nearly double its number of millimeter wave cities from a current count of 31 to 60 this year. The Verizon 5G service is currently available in limited areas of New York, Los Angeles, Dallas and several other cities. 

Millimeter-wave spectrum is made up of ultra-high frequency radio waves in the 24 Gigahertz to 100 GHz range, which can hold and deliver gobs more data. Early 5G networks using millimeter-wave technology promise speeds as high as 6 Gigabits per second, evolving one day to as high as 20 Gbps. Latency is also vastly improved, too, going from 20-70 milliseconds with 4G to as low as the ultra-responsive sub-1 millisecond range.

However, establishing ubiquitous 5G coverage is no small engineering feat. The ultra-high frequencies require signals to broadcast at very short range — around 600 to 800 feet — meaning Verizon must festoon every street in each city where it deploys 5G with gobs of “small cell” devices. These short-throw, ultra-high frequencies are also prone to all sorts of interference, falling leaves included. And they don’t penetrate walls or buildings.

Spectrum Mobile has a bring-your-own-device option. But it now is offering monthly financing plans on Samsung S20 series 5G smart phones. 

Charter said it added 288,000 Spectrum Mobile subscriber lines in the fourth quarter, upping its total to 1.08 million. It doesn’t break down how many of its users are on unlimited plans, however. 

Charter is pursuing new technologies including CBRS to establish more owner’s economics in terms of its wireless network use. But for now, Spectrum Mobile remains almost entirely reliant on its MVNO wholesale agreement with Verizon. 

April 1 will be no joke for the telecom industry. That’s the day T-Mobile-Sprint is scheduled to complete a two-year odyssey to get its $26 billion merger across the finish line, creating a more competitive and deeper-pocketed No. 3 wireless carrier. But just as the New T-Mobile, as the combined company is tentatively called, bulks up to an estimated 100 million wireless customers, other players are beginning to emerge.

Dish Network is poised to become the fourth-largest U.S. wireless carrier, based on the asset it has agreed to buy from T-Mobile-Sprint as a condition of federal regulatory approval of the latter’s merger. Shortly after T-Mobile-Sprint closes its deal, Dish will buy 9.3 million former Boost Mobile and Virgin Mobile prepaid wireless subscribers. Dish will also gain access to the new T-Mobile network via a seven-year mobile virtual network operator (MVNO) deal, and will spend another $3.4 billion to purchase spectrum from the new entity over three years.

On the sidelines sits cable, which after three failed attempts to break into the wireless business over the past two decades seems to have found the right elements within the past two years. Comcast’s Xfinity Mobile, launched in 2017, crossed 2.05 million subscribers in 2019 and, according to some analysts, is on a path to more than double that base in the next four years. Typically conservative Comcast said it expects wireless to become cash-flow positive by the end of 2021.

Charter Communications, which launched Spectrum Mobile in September 2018, added more than 1 million customers in the past 18 months and expects to be cash-flow positive in 2021.

Those new and stronger players will all have to compete with wireless industry behemoths AT&T (166 million wireless subscribers) and Verizon Communications (120 million wireless customers). Here’s a closer look at how they are expected to stack up.

New T-Mobile

T-Mobile proposed its merger with Sprint in April 2018, a deal it said would allow it to better compete with AT&T and Verizon and introduce new products and services to underserved markets. Along the way, the companies had to clear hurdles set up by a group of state attorneys general, which claimed the merger would result in higher prices for consumers. T-Mobile-Sprint was cleared for takeoff in February, after a federal judge ruled the combination was in the public interest. While other states have said they won’t appeal, including New York state, California Attorney General Xavier Becerra has said he would keep his options open. Most observers believe T-Mobile-Sprint can go through with the closing no matter what Becerra decides.

Just what the new T-Mobile will do after the close is anyone’s guess. But the company has made at least one thing clear: It’s going after cable.

“We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition,” T-Mobile CEO John Legere said in a press release shortly after the federal court decision was announced. “The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond. Look out Dumb and Dumber [AT&T and Verizon] and Big Cable — we are coming for you … and you haven’t seen anything yet!”

Whatever T-Mobile does in the video space will likely involve its 2018 purchase of Layer3 TV. T-Mobile spent about $325 million for over-the-top multichannel video programming distributor (MVPD) Layer3 TV and launched TVision Home in eight markets in April of 2019. Layer3 has high programming costs (20% to 30% higher than its peers, T-Mobile has said in federal filings) which has made launching the video service difficult.

Legere has said he will step down as CEO in May, after the deal closes, replaced by T-Mobile chief operating officer Mike Sievert. With the merger behind it, Sievert said the new T-Mobile will be able to focus on providing stronger service and expanding its 5G footprint.

T-Mobile-Sprint has pledged to spend about $40 billion over three years on 5G deployment and to expand its rural wireless service to reach 59.4 million homes. It has also promised to deploy a new in-home broadband option to more than 52% of U.S. ZIP codes, with a plan to obtain 9.5 million U.S. households by 2024, with 20% of those homes in underserved areas. The new T-Mobile also expects to build 600 additional retail outlets.

Dish Network

Dish has agreed to purchase T-Mobile-Sprint’s prepaid wireless businesses (Boost Mobile and Virgin Mobile) for $1.4 billion, adding about 9.3 million subscribers shortly after the larger merger closes. Dish will also spend another $3.6 billion on T-Mobile-owned 800 MHz wireless spectrum over the next three years, and will have its own MVNO agreement with the combined company for seven years.

Dish has been relatively quiet about its plans for the wireless service — it needs to build a 5G-capable network available to 20% of the country by 2022, expanding to 70% of the U.S. by June 2023, as per federal mandate. In the past, Dish has spoken of using its wireless capability to accelerate the Internet of Things, but lately the focus has been more on 5G, especially the ability to bring that technology to rural America. Dish has said it expects to spend about $10 billion to build out the 5G network, a figure some analysts have said is too low.

The biggest short-term benefit of the deal for Dish is that it gives it more time to build out its wireless network with its existing spectrum. It had been facing a March 2020 deadline for its network to reach 20% of the country. Now, it has two more years to reach that milestone. The addition of the Boost Mobile and Virgin Mobile subscribers also provides a pool of potential customers for its postpaid business. While prepaid customers churn at a 5% rate, Dish has said migrating those customers over to a more reliable Dish-operated network — both via the T-Mobile MVNO and whatever it builds out — should reduce that churn substantially.

On Dish’s Q4 earnings conference call, founder and chairman Charlie Ergen was reluctant to reveal too much of the company’s wireless strategy, but said the build for 5G service will be on a city-by-city basis.

“There’s obviously going to be some cities that are more interested in getting 5G quickly,” Ergen said. “And those cities that want to work with us will probably get first priority. And then, obviously, when we build out a city, we can have owner economics there. So we don’t have to build — we’re probably not going to build two towers in every city. We’ll build that city by city, and complete a city before we move to the next city.”

Xfinity Mobile

Comcast launched Xfinity Mobile in 2017. Two years later, the mobile service has 2.05 million customers and is evolving from its initial purpose as a retention tool for broadband to becoming a profit center. Comcast chief financial officer Michael Cavanagh has said wireless is expected to be profitable by 2021.

The success of the wireless product can be traced to one tenet: Keep it simple, Comcast senior VP of innovation and customer value proposition Rui Costa said.

“The starting point has always been our connectivity business,” Costa said. “The success attributed to wireless is how well we position it as an additional benefit of our connectivity value proposition. The way we’ve introduced this, as the missing piece of our broadband, has been paramount to the success of this.”

The way Comcast has introduced wireless this time around also is different, Costa said, in that the focus is on the overall customer experience.

“Our product is the experience and the experience is our product,” he said, adding that Comcast has purposefully kept the mobile product as simple as possible, whether it be flexible pricing plans, different data options and even a pay-as-you-go option. The idea is to offer consumers choice without bombarding them with options that are difficult to understand.

Wireless has also proven to be an incentive for customers to keep their broadband service. Like its cable peer Charter Communications, Comcast wireless customers are required to subscribe to broadband.

In 2019, Comcast Cable added 1.4 million broadband customers, its best performance in 12 years. While there are other factors associated with that growth, including the speedy demise of telco digital subscriber line service, at least some of it can be traced to wireless stickiness.

Costa didn’t want to take credit for the rise of broadband, saying there are a lot of factors that could be attributed to its success. But wireless is becoming an increasingly important component of the overall connectivity value proposition, he said.

“The success has been the proof of how well we’re telling the story to consumers and how valuable that has become to them,” Costa said.

Those subscriber increases have helped substantially reduce the mobile unit’s EBITDA, or cash flow, losses. Comcast cut its wireless EBITDA losses by nearly half in 2019, to $402 million from $746 million in the prior year. In Q4 alone, the unit’s EBITDA losses improved by 40%, prompting Cavanagh to predict wireless would be cash-flow positive for the full year of 2021.

Analysts see strong growth ahead for the wireless product: Moffett has estimated that Xfinity Mobile will more than double its subscribers to 5.7 million by 2024.

“The strategy has been, and is and will be, how can we use mobile as a benefit back to our broadband and connectivity business?” Costa said. “It is working because we see a benefit translated in many ways — churn, and attachment of other products. The other is the halo that has been created on the back of this new way of doing business with us.”

Spectrum Mobile

Charter launched Spectrum Mobile in September 2018 and in a little more than a year grew its wireless customer base from virtually nothing to 1.1 million. According to chief mobile officer Danny Bowman, Charter’s recipe for wireless success can be summed up in two words: simplicity and speed.

“We’ve integrated mobile into our core business,” Bowman said. “We introduce mobile into every possible transaction, whether that’s inbound sales or someone walking into our stores. The channels themselves have built a lot of mobile muscle memory and it’s just become part of what we do.”

Charter was also expected on March 6 to launch 5G in 14 cities via its Verizon MVNO. (Comcast also has said it would begin offering 5G handsets on March 6.) Speeds of the service will range from 700 Megabits per second to 1 Gigabit per second. According to Bowman, 5G will be included at no extra charge to Spectrum Mobile’s $45 per month unlimited data customers.

“We already provide the fastest mobile experience from coast to coast,” Bowman said. “This is just another proof point that we’re always going to have the fastest mobile experience for our customers. We’re keeping it super simple. We’re not creating some high premium rate plan that you have to buy. I think it’ll be easy for our channels to sell. You pick a 5G device, you get a $45 rate plan; you pick a 4G device, you get a $45 rate plan.”

Also helping with sales of the 5G product, as well Charter’s other offerings, are the more than 350 Spectrum retail stores with mobile service across the country. More are planned, Bowman said, adding the stores have played a key role in mobile’s success.

The stores are just another choice on a long list of options customers have for buying mobile service, including online, or by making a phone call and having a device or a SIM card shipped to their home.

“We’ve made it really easy for a customer to do business with us,” Bowman said. “Whether you want to say, call, click or visit, we’ve made it very simple and we can be very disruptive because of how we support our customers and what channel they want to use.”

Altice Mobile

Altice USA, the newest cable player on the wireless block, launched its mobile service in September 2019 and finished the year with about 69,000 customers, an initial pace the company claimed was twice that of its peers. The smallest of the three cable players, Altice — with about 4.2 million broadband customers, compared to 28.6 million for Comcast and 25 million for Charter — also has the most aggressive offering. Altice Mobile launched at a price point of $20 per line for life, less than half the $45 per line Comcast and Charter were charging. Altice Mobile has since said it ended that $20 promotion in March, increasing the price to $30 per line for new customers (legacy customers will still pay $20 for as long as they have the service). Still, even at the higher price point, Altice Mobile is cable’s best wireless bargain.

Altice’s ability to keep its prices so low is tied in part to its MVNO deal with Sprint (now T-Mobile). Altice USA CEO Dexter Goei has said its original MVNO deal will remain intact after the merger.

Analysts have pointed to Altice USA’s MVNO as the gold standard for such deals among cable operators. Based on the structure of that agreement, Altice pays less as more and more traffic moves off the MVNO to Altice’s network. Given the architecture of the Altice network, that won’t be as hard as it seems.

Under Altice’s deal, Sprint is allowed to build small cells on Altice’s network. Sprint pays nothing to Altice aside from construction costs. In turn, the cable company gets to ride on those small cells for free. The more cells there are, the lower the cost of the MVNO.

After the T-Mobile-Sprint close, Altice will have access to what Moffett called “a best-in-class network at a disruptively low price. It seems a foregone conclusion that they will attract subscribers. They already believe they can offload enough traffic from the network that they will be profitable even at super-low prices.”

Altice USA added about 69,000 mobile customers in Q4 — about twice the quarterly pace of its peers’ initial offerings — and is expected to end 2024 with 876,000 customers, according to MoffettNathanson, or about 17% of its total broadband base, inline with its larger peers.

At the Morgan Stanley Technology, Media and Telecom conference on March 3, Goei said Altice counts about 100,000 wireless customers, a signup pace about 2.5 times faster than its peers at launch.

Altice USA also will have access to 5G tech through its T-Mobile-Sprint MVNO, Goei added. While 5G could be perceived as a threat to Altice’s own wireless business, Goei said he views it more as an opportunity, especially since the technology is expected to be deployed over time.

“There’s obviously different strategies amongst different operators, but by and large, it’s an opportunity for MVPDs to work with wireless operators, particularly those who want a small cell,” Goei said. “And for those who want to go deep into the residential neighborhoods with fiber, good luck, have fun.”

After several failed tries at the wireless business in the past few decades, cable operators appear to have found the right formula, adding customers at a record clip and evolving the offerings from a retention tool to one that could start turning a profit.

Two years after launching Xfinity Mobile, Comcast has about 2 million wireless customers, generating $1.2 billion in annual revenue. Charter Communications, which launched wireless product Spectrum Mobile in July 2018, crossed the 1 million subscriber milestone in 2019.

Neither offering is expected to be a threat to the Big Three wireless carriers, Verizon Communications, AT&T or T-Mobile/Sprint, which each have well more than 100 million mobile customers. But for cable, a business that was once believed to be an afterthought is now being considered alongside broadband as a possible profit center.

No Drag Anymore

“Wireless, within the next few years, will be a contributor rather than a drag,” MoffettNathanson principal and senior analyst Craig Moffett wrote.

Cable’s forays into wireless are legendary. The first joint venture between cable and wireless can be traced back to the Sprint PCS partnership in the 1990s, in which the cable partners cashed out at a considerable profit. But the next two attempts to create a quad play — the Pivot joint venture with Sprint and a wireless broadband JV with WiMax pioneer Clearwire — failed miserably.

Cable operators, mainly Comcast and Time Warner Cable (now part of Charter), continued to accumulate wireless spectrum in various federal auctions, selling those licenses to Verizon Communications in 2015 for $3.6 billion. As part of that deal, the cable operators retained the right to form a mobile virtual network operator (MVNO) agreement with Verizon, that would allow them to offer wireless service in their respective footprints.

Comcast was the first to launch its MVNO, Xfinity Mobile, in April 2017. Charter’s Spectrum Mobile followed about 18 months later. Both companies saw the services as mainly retention tools for their broadband and video offerings, not as standalone services or as cogs in a larger quad-play wheel of video, voice, data and wireless. Now that attitude seems to be changing.

In 2019, Comcast grew mobile revenue by 31.2% to $1.167 billion, ending the year with just over 2 million customers, compared to 1.2 million in the prior year. On its conference call with analysts to discuss Q4 results, Comcast chief financial officer Mike Cavanagh, who, like the overall company, had been cautious about wireless predictions in the past, seemed more than optimistic about the service, adding that he expected the wireless subscriber momentum to continue into 2020.

“Our results to date indicate that adding mobile improves broadband customer retention and increases prospective customers’ consideration,” Cavanagh said on the call. “And importantly, we continue to see a significant improvement in the financial performance at Xfinity Mobile. We reduced our quarterly adjusted EBITDA losses at Xfinity Mobile to $116 million, a 40% improvement compared to last year’s fourth quarter, and we expect Xfinity Mobile to be EBITDA positive for the full year in 2021.”

Charter, which launched Spectrum Mobile about a year after Comcast, did even better. It added 288,000 wireless subscribers in Q4, ahead of bullish consensus estimates of 260,000 additions. Management appears to be taking a more aggressive stance concerning mobile, with predictions of meaningful profitability by 2021.

On a conference call with analysts, Charter chief financial officer Christopher Winfrey said the company expects mobile service revenue to “exceed all operating costs” in 2021, adding that by that time, mobile capex should “decline meaningfully.”

Charter Changes the Narrative

Sanford Bernstein media analyst Peter Supino wrote that the wireless performance, coupled with stronger-than-expected results in just about every metric — revenue was up 5% and cash flow rose 8% in the quarter — have helped change Wall Street’s perception of Charter and its $80 billion purchase of Time Warner Cable in 2015.

“Thirteen months ago, we perceived that the market assessed the Time Warner Cable merger as a failure and heard rumors of risk to Charter CEO Tom Rutledge’s job,” Supino wrote. “Today, 81% higher on the stock, that consensus is a skeleton in some closets, and investors are happily adding risk while scrutinizing Charter’s outlook in search of the next thing that ‘we know for sure that just ain’t so.’ To be clear, we still see more to hope for than to fear.”

MoffettNathanson analyst Craig Moffett has declared cable operators relevant in the U.S. wireless industry.

Titling his quarterly Wireless Q3 2019 report “Cable Starts to Matter,” Moffett noted that Comcast and Charter Communications have added about 2.5 million mobile subscribers since launching their respective services. Factoring in the nascent Altice Mobile service, cable has accounted for 31% of total U.S. pre- and post-paid additions in each of the last two quarters.

“That market-share gain, which is almost certain to accelerate, has already been enough to alter the competitive dynamics of the wireless industry,” Moffett wrote.

Noting that the interjection of the cable as a competitive dynamic has already started to impact Verizon, AT&T, T-Mobile and Sprint, “AT&T has signaled its willingness to at last become an arms dealer,” the analyst said.

Indeed, AT&T chairman and CEO Randall Stephenson indicated on a recent conference call that his company may become a mobile virtual network supplier, ushering other cable operators into wireless in the same way that Verizon has enabled Comcast and Charter.

Giving Comcast and Charter choice beyond Verizon in the MVNO market would change the game.

Paying Verizon around $3.50 a Gigabyte to use its network, the top two U.S. cable operators are currently constrained in terms of just how aggressive and disruptive they can be. But as other MVNO options enter the market — and Comcast and Charter build out their own infrastructure — the Verizon MVNO deal looks like only a “beginning” for the two companies, Moffett said.

MoffettNathanson analyst Craig Moffett said cable operators are relevant in the U.S. wireless industry.

Titling his quarterly “Wireless Q3 2019” report, released Thursday, “Cable Starts to Matter,” Moffett noted that Comcast and Charter have acquired around 2.5 million wireless users since launching their respective mobile services. And notably, adding in the contribution of Altice USA’s nascent service, cable has accounted for 31% of total U.S. pre- and post-paid additions in each of the last two quarters.

“That market share gain, which is almost certain to accelerate, has already been enough to alter the competitive dynamics of the wireless industry,” Moffett wrote. “Total phone growth for the carriers is now unmistakably slowing. It is unclear whether consensus expectations for the Big Four will accommodate the combination of slowing market growth and falling market share.”

Notably, as the interjection of the cable competitive dynamic begins to impact Verizon, AT&T, T-Mobile and Sprint, “AT&T has signaled its willingness to at last become an arms dealer,” the analyst added.

Indeed, AT&T CEO Randall Stephenson indicated on a recent conference call that his company might enter the MVNO market, ushering other cable operators into the wireless business in the same way, say, Verizon has enabled Comcast and Charter.

Paying Verizon around $3.50 a gigabyte to use its network, the top two U.S. cable operators are currently constrained in terms of just how aggressive and disruptive they can be. But as other MVNO options enter the market—and Comcast and Charter build out their own infrastructure—the Verizon MVNO deal looks like only a “beginning” for the two companies, Moffett said. 

Charter Communications’ top wireless executive, Craig Cowden, said the cable operator is looking to follow Comcast’s model of dual-purposing residential customer modems as WiFi hotspots.

“We see a benefit of doing that,” Cowden said, speaking last week at FierceWireless’ Next Gen Wireless Networks Summit in Dallas.

Like Comcast does with Xfinity Mobile, Charter offloads expensive MVNO cellular traffic on the Verizon network by using its network of WiFi hotspots. But Comcast’s public hotspot reach is much bigger, with much of 19 million hotspots across its footprint coming from residential customer routers which offer dual-purpose public WiFi support.

“We already offload significant traffic onto WiFi,” Cowden said. “Comcast has 19 million hotspots that are called home-as-a-hotspot, using the existing router in the home.

He added, “We’re always looking at how we can optimize the cost structure of our products.”

Cowden also spoke about Charter’s plan to use Citizens Broadband Radio Service (CBRS) spectrum to create its own pockets of cellular access, from which it could offload MVNO traffic to customers who are equipped with dual-SIM phones.

Charter is currently testing that model in New York and Los Angeles.

“We have done a lot of testing with small cells using dual SIM,” Cowden said. “We tested CBRS in 2017 in Tampa and Charlotte. We had eight different vendors just to test how CBRS would work. At end of 2018 and through now, we’ve done the next phase of dual SIM testing in New York and Los Angeles, where we have prototype devices to test the seamless switching between small cells and the macro domain.”

Moody’s Investor Service estimated that 5G wireless service, if adopted as widely as most pundits expect, could put a big dent in cable’s broadband’s subscriber base, resulting in diminished pricing power.

Moody‘s used Charter Communications as an example for its report, but it may have just as well used any major cable operator. And while most of those operators have already launched successful -- if money-losing for the moment -- wireless services, it may not be enough to stem the 5G tide.

Most of the major wireless carriers have announced plans to offer 5G services, all in various stages of completion. But if the technology lives up to the hype -- promising improved speed, capacity, and reliability -- and becomes a viable alternative to wireline broadband, Moody’s fears that cable operators will have to respond.

“If 5G becomes a viable substitute for wireline internet, by delivering the right combination of these features and becomes accessible at a motivational price point, Charter's base of wireline internet primary service units (PSU's) could be at risk if consumers view wireline internet and wireless broadband as overlapping services, eliminating wireline internet to consolidate their broadband spend,” Moody ‘s wrote. “If this happens, we expect Charter (and other cable operators) to lower prices to retain customers, on what is currently very high-margin wireline internet services.”

Charter’s wireline broadband customer base is about 1.5 times larger than that of video customers, according to Moody’s, and represents the biggest growth area in the business. While wireless service could be an effective hedge, it too could come under pricing pressure if 5G takes hold.

Related: Dish to Become Fourth National Wireless Carrier 

Moody’s noted that Charter could participate in Verizon’s 5G product through its MVNO agreement, but “steady-state wireless services could pressure margins.” Charter is moving toward offering 10Gbps wireline speeds in the future, which Moody’s added could take up some of the slack.

But mobile services have high costs which press on margins -- Moody’s estimated that MVNO agreements like the one Charter has with Verizon, usually produce cash flow margins of between 15% and 20%, substantially lower than 30% consolidated margins it says Charter now enjoys.

The solution may lie in renegotiating a better MVNO agreement -- which MoffettNathanson principal and senior analyst Craig Moffett advocated months ago -- or strike another deal with T-Mobile/Sprint, if that mega-merger materializes.

Many analysts have pointed to Altice USA’s MVNO deal with Sprint as a model. According to that deal, Sprint is allowed to build small cells on Altice’s network. Sprint pays nothing to Altice — other than construction costs — and in turn the cable company gets to ride on those small cells for free.

The result has been Altice USA’s ability to price the service at $20 per month for existing customers (less than half what Comcast and Charter charge) and claims that the service will be profitable in 12 months. Comcast, which launched XFinity Mobile in 2017 and Charter, which launched Spectrum Mobile in 2018, have yet to turn a profit on the service.

“To the extent Charter can improve the economics of its MVNO, with better pricing or taking more ownership and control over the network infrastructure, profitability could improve which will drive incremental EBITDA at scale,” Moody’s wrote.

Moody’s added that Charter also could buy and deploy wireless infrastructure assets -- it already has said it plans to use its WiFi network in conjunction with additional unlicensed or licensed spectrum to better performance and expand capacity.

Charter has approximately 250 million WiFi hotspots in the U.S., according to Moody’s, but also is part of the CableWifi consortium -- with Comcast, Cox, and Altice USA -- which provides access to nearly 500 million hotspots. Charter also has experimental wireless licenses it is using to test next-generation mobile services around the country,” Moody’s said.

Redoing its MVNO relationship so that it owns more of the network would pay off for Charter and other cable operators. Moody’s pointed to Verizon -- which has facilities-based cash flow margins near 39% -- and Canadian companies like Bell Canada, Rogers Communications, TELUS, Shaw Communications and Quebecor Media, which have wireless margins near or above 40%.

While not ideal comparisons to Charter -- they have different geographies, demographics and markets -- “they do provide another relevant data point to consider the directional potential,” Moody’s said.

Count Cowen as being particularly bullish about Comcast and Charter’s respective and fledgling consumer wireless services.

Declaring cable-wireless convergence a “‘when' and not ‘if’ story,” the equity research firm sketched out in a note to investors this morning all the different approaches the two companies could take to slowly build out their wireless infrastructure, as they continue to steadily grow the respective Xfinity Mobile and Spectrum Mobile leveraging the continuing economics of their Verizon MVNO wholesale network lease deals.

Cowen’s modeling, based on a variety of data sources, yielded some interesting snapshots and projections of the two mobile businesses.

> Comcast’s Xfinity Mobile, which currently has 1.6 million subscribers, will control around 6% of the U.S. wireless market by 2023 and generate $266 million in earnings before interest, taxes, depreciation and amortization (EBITDA), Cowen predicted.

> Charter’s Spectrum Mobile will generated $201 million in EBITDA by 2023.

> Xfinity Mobile Unlimited subscribers use, on average, 8.75 gigabytes of cellular data each month

> Comcast is currently paying $3.09 per GB of cellular data used on Verizon’s network, Cowen said.

> Around 80% of data used on Xfinity Mobile comes over Wi-Fi.

“We believe that there is a distinct possibility that the MVNO model could be a springboard for cable to build out their own in-footprint networks,” reads the Cowen report, which was lead authored by analyst Gregory Williams. “Cable can lean on the MVNO agreement and build out at a more measured pace, deploying pockets of network, starting with the denser/urban markets with an ‘inside out’ strategy, migrating to a hybrid roaming/facilities-based model (somewhat similar to what Dish could do with New T-Mobile).

“Furthermore, cable could build an SDN/cloud-native network and leverage plant rooftops or MDU’s to deploy cheaply,” the reported added. “We especially find the Comcast set-up as compelling, acquiring 5x5 600 MHz spectrum in 72 markets. We envision Comcast cheaply deploying the 600 on head-end/plant/MDU rooftops for coverage, then add CBRS and Wi-Fi access points on poles and strand mounts for capacity, all backhauled on DOCSIS 3.1 cable plant. If Comcast links networks with Charter at some point, and/or brings Dish into the mix (depending on the T-Mobile/Sprint outcome), even better.”

Williams pointed to Altice USA, which has been steadily building out wireless network infrastructure as it launches Altice Mobile.

“We believe Comcast and Charter are looking at the Altice model, and if proven successful, could also look to migrate to an infrastructure-based strategy and lower their roaming costs,” the report said. 

Amdocs says it has been contracted by Comcast and Charter to provide ordering, billing and monetization software support for the cable operators’ respective mobile services, Xfinity Mobile and Spectrum Mobile.

Amdocs will supply systems spanning multi-channel sales, ordering, care and monetization. Amdocs did not disclose the terms of these multi-year deals. The vendor also didn't say how long it's already been working with these mobile services. 

Comcast and Charter, which both base their consumer wireless businesses on wholesale network usage agreements with Verizon, collaborate closely on issues related to technology and business systems.

Amdocs made its announcement in the form of two distinct press releases.

For Xfinity Mobile, it said that “the Comcast and Amdocs DevOps teams work collaboratively to launch new mobile offers and service enhancements via agile methodologies that drive increased business value and economics and provide a simpler and more consistent digital customer experience.”

As far as Charter is concerned, Amdocs said that it’s “suite of integrated and modular solutions will help Charter increase time to market of new Spectrum Mobile service offers and bundles that enhance the consumer experience.”

Comcast said Xfinity Mobile added 181,000 service lines in the second quarter, bringing its total to 1.5 million lines after a little more than two years on the market.

Charter said Spectrum Mobile added 208,000 lines in the second quarter, bringing it to 518,000 lines since launching at the end of June of last year.

Charter Communications said Friday that its new consumer wireless service, Spectrum Mobile, added 208,000 lines in the second quarter, bringing it to 518,000 lines since launching at the end of June of last year.

The service also generated $158 million in revenue in Q2, up from $140 million in the first quarter. Spectrum Mobile is on track to generate at least $600 million in revenue this year, Charter said.

Expenses from the mobile operation totaled $277 million in Q2, slightly up over $260 million in the first quarter as Charter ramps up marketing for the service. The adjusted EBITDA loss for mobile was $119 million during the quarter. 

(Seeking Alpha has Charter’s complete Q2 slide deck here.)

Spectrum Mobile wasn’t in the market in the second quarter of 2018, so there’s no direct year-over-year figure to compare that loss to.

Notably, however, Comcast, which partners its Xfinity Mobile service with Spectrum Mobile for key operations, and also bases its platform on a very similar MVNO agreement with Verizon, reported an EBITDA loss on mobile of $185 million in Q2 2018—that was also just under a year after launch.

Both Comcast and Charter have said their respective mobile services will reach profitability when the percentage of their customers taking mobile service reaches mid to high single digits.

MoffettNathanson analyst Craig Moffett said in his report on Charter Friday that he remains “skeptical” that Comcast and Charter’s Verizon MVNO model will ever be profitable.

However, with Comcast revealing narrowing Xfinity Mobile losses in its own Q2 earnings report Thursday, “the worst of the losses will be felt this year, and then should begin to moderate as the business reaches something closer to steady state.” 

Charter Communications lost about 150,000 residential video customers in the second quarter, more than double the 73,000 subscribers it lost in the prior year, as broadband additions were flat and wireless growth outpaced expectations.

Charter ended the quarter with 15.8 million video customers, down about 2.5% from the prior year in what is typically a seasonally weak period as students go home for the summer and some customers leave for summer residences.

Broadband growth was slightly better in the period -- Charter added about 221,000 high speed data customers, up from the 218,000 it added in Q2 2018. Spectrum Mobile, the wireless service the company introduced about a year ago as part of its MVNO agreement with Verizon, added 208,000 lines in the period, compared to 176,000 lines in the prior year and outpacing analysts estimates of around 150,000 additions.

Those additions helped boost revenue by 4.5% to $11.3 billion and cash flow 3.3% to $4.2 billion.

"We are realizing the benefits of consolidating three large cable operators under one centralized operating strategy, with lower customer churn, fewer service transactions per customer and improving customer satisfaction resulting in growth of over 1 million customer relationships year-over-year," Charter chairman and CEO Tom Rutledge said in a statement. "In the second quarter, free cash flow grew nearly 40% year-over-year. Our core business is strong and we are positioned to be the network of choice today and in the future."

In a research note, Evercore IS Group media analyst Vijay Jayant said Charter missed his subscriber and financial estimates, and expected that to weigh on shares Friday -- they were down about 5% in pre-market trading to $383.85 each July 26. But he said there is still upside to the stock.

“With the stock up 42% [tear-to-date], we’d expect some profit taking here, but continue to find the underlying leveraged equity growth story attractive, and retain our Outperform rating and $450 price target,” Jayant wrote. 

Comcast’s wireless service Xfinity Mobile added 181,000 service lines in the second quarter, bringing its total to 1.5 million lines after a little more than two years on the market.

Notably, Comcast reported an $88 million EBITDA loss for the service in the second quarter, a big improvement over the $185 million loss reported in Q2 2018.

“We’re really pleased with the wireless, Xfinity Mobile, the first several years we've been in business,” said Comcast Chairman and CEO Brian Roberts, speaking to investment analysts this morning.

“We're offering a great suite of products with value to our best broadband customers. It's got a strategic focus for how we're operating the company. And now it's beginning to have real volume and scale and getting us closer to that point where, economically, it's not a drag and it's a contributor,” Roberts added.

Related: Comcast Lost $743 Million on Xfinity Mobile in 2018

Comcast leverages a mobile network virtual user agreement with Verizon to support Xfinity Mobile. From launch, the cable operator has said that it will drive Xfinity Mobile users to its public Wi-Fi network in order to limit the unprofitable wholesale usage of Verizon’s wireless network.

Analyts, most notably MoffettNathanson’s Craig Moffett, have cast doubts on that strategy, which is also deployed by Charter Communications for Spectrum Mobile.

"It should be clear by this point that the current [MVNO] deal is a money loser for the cable operators; it's not profitable and it likely never will be," Moffett wrote in April.

The analysts based his claim on what he believes is the failed premise that Wi-Fi is a significant option for offloading.

However, according to new research published by Tutela, 69.2% of Xfinity Mobile usage is through private Wi-Fi, even if only 6.6% is based on public Wi-Fi. Only 24.2% of Xfinity Mobile usage leverages the Verizon network. For the younger Spectrum Mobile, only 26.8% of usage comes from the Verizon MVNO.

There has been very recent speculation that, given the perceived poor economics of their respective Verizon MVNO deals, either Comcast or Charter—or both—might move in and buy Dish Network, once the satellite TV operator is set-up by T-Mobile to replace Sprint as the No. 4 U.S. wireless operator.

Related: Comcast and/or Charter Will Buy MVNO-Infused Dish, T-Mobile Frets

For his part, however, Roberts seemed to indicate today that Comcast is pretty happy with the wireless status quo.

“I don't know why we would change direction,” he said. 

Charter Communications lost about 145,000 residential and business video customers in Q1, a slight increase over the 111,000 subscribers it shed in the prior year, but the cable operator saw strong growth in broadband and its new wireless offering during the period.

Related: Charter, Comcast Form Mobile Platform Partnership 

Charter added about 428,000 residential and business broadband customers in the quarter, up from 367,000 additions in the previous year. The company also added 176,000 mobile lines in Q1, up from the 113,000 lines it added in the prior year. Charter launched its mobile service -- Spectrum Mobile -- in June, part of a Mobile Virtual Network Operator (MVNO) agreement with Verizon Communications.

Overall revenue increased 5.1% to $11.2 billion in the period, while cash flow rose 4.2% to $4.1 billion. Charter added about 321,000 customer relationships, up from the 231,000 it added in Q1 2018. As of March 31, 2019, Charter had 26.6 million residential customer relationships and 50.0 million residential PSUs. 

Related: Moffett: Cable Needs a Better MVNO Deal 

"With the most customer-impacting elements of our integration behind us, we are now focused on growing our business," Charter chairman and CEO Tom Rutledge said in a press release. "We are doing that by driving high quality subscriptions, reducing transactions and churn, and maintaining and creating product superiority with a value proposition that our competitors don't provide. In the first quarter, we accelerated our customer relationship growth and grew our cable free cash flow by nearly $1 billion year-over-year. We are pleased with our progress and our operating model is designed to drive continuous improvement, and long- 2 term growth, in a way that works for customers, our employees, the communities we serve, and our shareholders." 

Comcast and Charter Communications lose money on their fledgling mobile services based on MVNO deals with Verizon.

Verizon, meanwhile, faces massive buildout challenges in terms of making millimeter wave distribution of fixed 5G services a reality.

But what if the three companies truly worked together, beyond a mere MVNO leasing deal, and shared wireless infrastructure?

That is the scenario put forth in a paper published late last week by equity research company Moffett Nathanson. The analysts point to the model of Altice USA and Sprint, which they say have created an “elegant solution” for sharing network resources.

Within Altice’s northeast Optimum footprint, the cable operator is allowing Sprint to add strand-mounted small cells onto its fiber network. The wireless operator has a pathway to the densification it needs to make millimeter wave 5G a reality. Altice, meanwhile, can leverage a greater and greater share of small cells for free as the buildout continues, thus decreasing the MVNO cost of its wireless service over time.

The Challenges

Moffett Nathanson estimates that Comcast and Charter, which collaborate on their wireless services and have similar MVNO deals, pay around $5 to Verizon for every gigabyte a mobile customer uses on the Verizon wireless network. The cable companies thus lose money on every wireless subscription.

While introducing their services, both cable companies touted the ability to offload usage to their own public Wi-Fi networks. But scheme hasn’t worked as planned. “Cable’s out-of-home Wi-Fi network is a bust,” Moffett Nathanson said. “The industry stopped expanding it years ago after it became clear that it was never going to provide a robust out-of-home user experience.”

Worse, it’s Verizon—and not Comcast or Charter—which determines when a customer switches from cellular to Wi-Fi. “Why would Verizon want to help Comcast and Charter divert money away from its own network?” the research firmed noted.

Meanwhile, as Moffett Nathanson pointed out in detail in an earlier report, Verizon—and the other three major U.S. wireless network operators—face a seemingly impossible task in creating enough small-cell density to achieve ubiquitous millimeter wave coverage of fixed 5G services.

As the the company’s report on Verizon’s early deployment of fixed 5G services in Sacramento shows (see graphic below), “even a 100-fold improvement in their current coverage and penetration wouldn’t be enough to make their existing architecture economically interesting.”

Pondering the solutions to all of these problems associated with cable-wireless convergence, Moffett Nathanson doesn’t see M&A as a feasible path to circumventing arduous infrastructural buildout needs. Not only is it not enticing to the stakeholders, it would not be appealing to regulators, either.

So what of the idea that the companies working together on infrastructure? Well, it was the 2011 arrangement that led to Comcast and Charter’s current MVNO deal with Verizon that supplies the blueprint, the research company noted.

Under that deal, Comcast, Time Warner Cable and Bright House Networks entered into negotiations with Verizon over the sale of the cable consortium’s AWS-1 spectrum.

“What started as a simple spectrum sale ended with a strategic alliance that didn’t just create the cable MVNO we know today, it also envisioned a future where Verizon would resell cable broadband across their footprint (astonishingly, even in markets where Verizon was selling FiOS service). The latter initiative never fully materialized for a variety of reasons,” Moffett Nathanson wrote. “But the companies, even then, evidenced a clear understanding that they would be better off together than apart.”

Reporting subscriber numbers for its new mobile service for the first time, Charter Communications said it ended the third quarter with 21,000 Spectrum Mobile users.

Charter launched its mobile service in July, leveraging an MVNO agreement to use Verizon’s LTE network, its own network of WiFi hotspots, as well as a technology partnership with Comcast, which has a similar MVNO agreement with the No. 1 U.S. wireless operator.

Charter, however, pegs the official launch for Spectrum Mobile on Sept. 4—when it started promoting the service.

Related: Charter Launches Spectrum Mobile

Charter made its disclosure during its third-quarter earnings report, a day after Comcast revealed that its similarly priced and packaged Xfinity Mobile service had reached the one million lines served benchmark. Much of the pricing and strategy for Charter’s mobile service was borrowed from Xfinity Mobile, which launched in early 2017.

Related: Charter Stock Dips 9% as Dow Falls 400 Points

Charter revealed that it had spent about $94 million in the third quarter launching Spectrum Mobile, generating around $17 million in revenue for the service. The company defined the “break-even” point for the platform at around two million users.

Related: ARRIS IDs CBRS As An Opportunity 'Right Now'

Speaking to analysts Friday, Charter chair and CEO Tom Rutledge lamented the lack of “owner’s economics” offered by the Verizon MVNO agreement. With Charter currently expiring business opportunities in the Citizens Broadband Radio Service (CBRS) spectrum, Rutledge pondered the possibility of Spectrum Mobile users one day deploying a new dual SIM technologies that would let users simultaneously use Verizon and Charter networks.

Rutledge once again declared Charter interested in acquiring CBRS spectrum, but said he doesn’t believe that the FCC will get around to auctioning off that spectrum until at least 2020. 

Charter Communications CFO Chris Winfrey is not in the camp that suggests that upcoming fixed 5G services from wireless operators represent an “existential threat” to the cable industry.

“I don’t see anything about 5G that ever makes it comparable to DOCSIS 3.1 or DOCSIS 3.1 Full Duplex, or any capability we have through fixed line service,” Winfrey said, speaking at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference Thursday.

“When I look at 5G and what it takes to deliver 5G, when it finally becomes real … we have it,” Winfrey added, noting that cable companies have vital infrastructure that wireless operators will need to fully deploy the technology.

In order for 5G to work, he added, "you have to be relatively close to the home with fiber, and you need to have power. And to replicate that without cable infrastructure, you really need to be a cable over-builder…I don’t see any rationale for someone to do that.”

Speaking on a wide variety of subjects, Winfrey said the summer launch of Charter’s new mobile service, Spectrum Mobile, was really just a soft launch.

“The marketing machine didn’t get turned on until Tuesday,” he said, noting that the bulk of activations in the third quarter will have come after Labor Day, when the wireless service finally got deployed across Charter's footprint.

Winfrey reiterated Charter’s position that mobile, first and foremost, fills the role of helping Charter more effectively bundle and sell fixed-line broadband services. “We think it’ll result in more internet and more connectivity going into the home,” he said.

Winfrey conceded Charter’s desire for “core control” of its MVNO deal with Verizon, which is the foundation of Spectrum Mobile. But he said that 80% of the traffic for the service occurs over Wi-Fi. Over time, he explained, a portion of the 20% of traffic that is handled by leasing network services from Charter will be handled by services enabled through licensed and unlicensed spectrum.

Meanwhile, while also addressing the topic of video, Winfrey also described an existential theme that relates to connectivity.

“Video does matter to what we do in internet and mobile and overall package of connectivity services,” he said. “It doesn’t really matter if we lose or grow video subscribers. I can’t name one mobile operator not trying to get into the video space.”

Charter Communications launched its much-awaited Spectrum Mobile wireless services on June 30, offering customers flexible data pricing plans similar to Comcast’s Xfinity Mobile.

That makes sense given the Charter service stems from the same Verizon Mobile Virtual Network Operator (MVNO) agreement that is the basis for Comcast’s Xfinity Mobile service, which was launched last year. 

The 4G LTE Spectrum Mobile service is connected to the cable operator’s WiFi hotspots across the country, according to Charter.

Related: Charter Eyes June 30 Debut for Spectrum Mobile Launch: Report

Charter and Comcast formed a joint venture in April to develop and design backend systems for both mobile products. 

Related: Comcast, Charter Form Mobile Platform Partnership 

Customers can pay for data in two ways – a flat $45 per month, per line fee for unlimited data; or they can pay by usage. The "By the Gig" plan is the only area Spectrum Mobile differs from the XFinity Mobile product – Charter charges $14/GB per month on that plan, while Comcast charges $12/GB. Both Spectrum Mobile plans include free nationwide talk and text.

Like XFinity Mobile, customers can switch data plans during the month, so they only pay for the data they need. Charter claims Spectrum Mobile customers can save as much as 40% over competing wireless services.

Spectrum Mobile also offers mobile devices via interest-free installment plans. Devices from Samsung and LG are available today, with other devices available soon. For more information, visit Spectrum Mobile here. 

Spectrum Mobile, Charter Communications's coming mobile service, reportedly will focus on plans and pricing that are in lock-step with Comcast's Xfinity Mobile service. 

Citing details from a consumer survey about Spectrum Mobile, The Boy Genius Report said that Charter plans to offer two plans – a $12 By The Gig option, and an Unlimited plan, with free talk and text, for $45 per line. Per the report, Charter’s materials also show how Spectrum Mobile will stack up against services from Verizon, AT&T and T-Mobile.

If Charter moved ahead with pricing shown in the BGR report, they will essentially mimic those of Xfinity Mobile. Comcast announced in April that it ended Q1 2018 with 577,000 Xfinity Mobile customer lines, and has previously said that most of them have opted for Comcast’s By The Gig plan.

Both Comcast and Charter are both leaning on MVNO deals with Verizon Wireless for their mobile services, and complementing them with their respective WiFi networks. Comcast and Charter are also eyeing the emerging, shared CBRS band to help them offload a chunk of their MVNO costs.

RELATED: Cable’s Latest, Greatest Wireless Opportunity (subscription required)

Charter hasn’t announced pricing or a launch date for Spectrum Mobile. However, DSL Reports said last month that Charter is eyeing a June 30 commercial launch, along with pricing that will “largely mirror” that of Xfinity Mobile. Charter and Comcast have also formed a 50/50 joint venture focused on a common backoffice and operations platform that, they believe, will drive critical scale their mobile offerings even as the branding, sales and marketing of those services remain separate.

RELATED: Charter Eyes June 30 Debut for Spectrum Mobile: Report

Charter Communications is shooting for a June 30 commercial launch of Spectrum Mobile, though the timing could change should complications arise, DSL Reports said.

DSL Reports, citing a source familiar with Charter’s plan, said it’s also expected that Charter’s initial pricing on Spectrum Mobile will “largely mirror” that of Xfinity Mobile, which currently offers unlimited and by-the-Gig options. Comcast launched Xfinity Mobile about a year ago, and ended Q1 2018 with 577,000 Xfinity Mobile customer lines.

RELATED: Comcast Adds 197K Xfinity Mobile Customer Lines in Q1

Charter isn’t commenting on the report, noting only that it will announce details as it gets closer to the launch of Spectrum Mobile.

However, the reported timing of Charter’s Spectrum Mobile launch fits with the stated plan by the MSO to launch the service by mid-year. Like Comcast’s Xfinity Mobile service, Charter’s offering will lean on an MVNO deal with Verizon Wireless.

RELATED: Small Cells to Play Big Role in Charter’s Mobile Future

Speaking on the company’s Q1 call in late April, Charter chairman and CEO noted that Charter has kicked off a field trial with 5,000 employees ahead of the anticipated commercial launch, and is already modifying retail stores and prepping call centers for Spectrum Mobile.

RELATED: Charter Testing Mobile Product with 5K Employees

Charter and Comcast have also formed a 50/50 joint venture focused on a common backoffice platform and operations platform that should help both MSOs scale up their mobile offerings. Charter and Comcast will be branding, selling and marketing their respective mobile services separately, however.

RELATED: Comcast, Charter Form Mobile Platform Partnership

In anticipation of the commercial launch of its mobile product, Charter Communications recently kicked off a field trial with 5,000 employees, with plans to have them go through the end-to-end sales activation and service process in May, Charter chairman and CEO Tom Rutledge said Friday on the company’s Q1 call.

Charter is also in the process of building out its sales channels and service capabilities for the coming product, a project that includes modifying several hundred of its retail stores and preparing its call centers.

Rutledge said Charter is likewise on track to launch the offering, which will be called Spectrum Mobile and lean on an MVNO deal with Verizon Wireless, around mid-2018.

Charter has not announced specifics on how it will price and sell its new mobile product, which will also take advantage of Charter’s WiFi infrastructure.

“Ultimately, the goal is to use our mobile service to attract and retain cable bundled, multi-product customers,” he said.

Rutledge also said the 50/50 joint venture with Comcast focused on the mobile backoffice platform and operations will help Charter accelerate its ability to scale its mobile offering.

RELATED: Comcast, Charter Form Mobile Platform Partnership

He also reiterated Charter’s plan to underpin the company’s wireless/mobile effort using a mix of licensed and unlicensed spectrum, including millimeter wave spectrum in the neighborhood of 28 GHz as well as the emerging shared spectrum CBRS 3.5 GHz band.

RELATED: Charter Sees Potential Compromise on CBRS License Areas

Rutledge estimated that Charter has about 250 million authenticated wireless devices connected to its network of 25 million small cells.

RELATED: Small Cells to Play Big Role in Charter’s Mobile Future

Charter didn’t outline specific EBITA losses it will absorb from the mobile services rollout, but using those at Comcast is “as a proxy as good as any at this point,” Charter CFO Chris Winfrey, said.

Comcast’s Xfinity Mobile business generated an EBIDTA loss of $189 million in Q1.

RELATED: Comcast Adds 197K Xfinity Mobile Customer Lines in Q1

“The biggest driver there is the level of subscriber acquisition…there’s a lot of upfront subscriber acquisition costs,” Winfrey said. “Once you get to a steady year state growth the business not only has a positive EBIDTA, but a positive free cash flow contribution on a stand-alone basis. So the faster we grow, the more short-term pressure we put onto EBITDA and free cash flow."

Though pricing and packaging and marketing of their respective mobile products will differ, Charter also sees the J.V. with Comcast as a reducer of operating costs.

“The impact is driven by the speed at which we roll the business out and how successful we are in the market,” Rutledge added.

Moving to broadband, about 25% of Charter’s customer base gets minimum downstream speeds of 200 Mbps, and DOCSIS 3.1, along with 1-Gig services, is deployed to about 43% of that footprint. Charter expects to wrap its network deployment of D3.1 by year end.

RELATED: Charter Brings Spectrum Internet Gig Service to 14M More Homes

Charter capex spending rose $628 million year-over-year, to $2.18 billion, driven by an all-digital transition that requires the purchase and rollout of new two-way set-tops and other consumer premises equipment. Just $17 million of capex in Q1 was mobile-related. Charter expects cable capital intensity this year to be a bit lower than 2017, however.

Rutledge said Charter expects to be wholly-digitized by year and as it completes the process in legacy Time Warner Cable and Bright House Network areas. 

Filling a key role as it looks to launch mobile services later this year, Charter Communications has hired Danny Bowman to the post of chief mobile officer.

Bowman, who fills a newly created role at Charter, reports to Rich DiGeronimo, Charter’s EVP of product and strategy, and be based out of the Charter headquarters in Stamford.

A vet of the mobile industry, Bowman most recently was chief revenue officer of LeEco North America, and, prior to that, was chief sales and operations officer for Samsung Telecommunications of America. He also spent 17 years at Sprint and Nextel (they merged in 2014) and is also late of Cellular One.

Bowman comes on board as Charter prepares to launch a mobile service later this year that will be branded Spectrum Mobile and lean on the MSO’s own WiFi network and its MVNO agreement with Verizon.

The plan, which Charter bills as an inside-out strategy that will provide linkages from home wireless networks to macro mobile network, also includes the rollout of a small cell network and a utilization of both licensed and unlicensed spectrum.

RELATED: Small Cells to Play Big Role in Charter’s Mobile Future

Charter will also be looking at a wide range of frequencies, including those as 600 MHz as well as millimeter wave. Charter is also interested using the Citizens Broadband Radio Service (CBRS) 3.5 GHz band, which is being set up as a shared environment for incumbents users and new entrants and the use of licensed and unlicensed capacity.

RELATED: Charter Puts Wireless Broadband to the Test (subscription required)

"Danny possesses deep mobile expertise and will be an invaluable asset to Charter and its growing team of experienced professionals dedicated to successfully designing, developing, launching, and growing Spectrum Mobile," DiGeronimo, said in a statement. "As the Chief Mobile Officer for the company, Danny and his team will run the mobile business and forge strong partnerships with key suppliers and leverage Charter's superior network assets to deliver a transformative integrated mobile, wireless connectivity and entertainment experience."

Bowman holds a bachelor of business administration in Management from Evangel College and a Leadership Certificate from the McDonough School of Business at Georgetown University, as well as an Executive MBA from Washington University.