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Rush Toward Unlimited Plans Complicates Cable’s Mobile Moves

A pivot to unlimited data plans by all of the nation’s largest cellular service providers is muddling the wireless plans being developed by Comcast and other U.S. MSOs.

AT&T and Verizon Communications, which recently joined Sprint and T-Mobile in offering unlimited mobile data plans, are undermining strategies that some cable operators were pursuing as they look to stitch their ever-expanding WiFi networks to mobile virtual network operator (MVNO) agreements.

Cable operators can put together unlimited plans of their own that use a WiFi-first stance that offloads traffic on metro and in-home WiFi networks and falls back on cellular connections.

“They’re scrambling internally” as other carriers launch and emphasize unlimited mobile plans of their own, an industry source with knowledge about those strategies said.

“The industry’s rush to unlimited certainly complicates things,” Craig Moffett, senior research analyst at MoffettNathanson, said in an emailed statement. “The cable operators will now have no choice but to make their own wireless plans unlimited as well. That’s a problem. Their revenues will be capped. Their costs will not.”

Still absent from the discussion are precise details about how cable operators intend to enter the wireless market, including how those offerings will be priced and packaged and how they will fit into their broader service offerings.

Comcast, which has created a mobile division and intends to launch a mobile offering of its own by midyear, has shed some light on its service, which will take advantage of the company’s MVNO deal with Verizon.

Speaking at an investor conference in late February, Comcast chairman and CEO Brian Roberts said company watchers can expect Comcast’s product to be profitible, but it will launch as part of a bundle.

“The product itself is going to save you money by taking our bundle,” Roberts said, and the wireless product will also help Comcast sell other products in its arsenal.

Last week, FierceWireless reported that the popular iPhone will factor into a service that will carry the Xfinity Mobile brand.

Charter Communications is also looking to take advantage of an MVNO deal it inherited from its merger with Time Warner Cable and Bright House Networks, but hasn’t revealed its go-to-market strategy.

Another person familiar with Comcast’s mobile ambitions said it would be incorrect to think that Comcast’s plan is to take the major mobile carriers head on. Amplifying Roberts’s point, the source said Comcast views the wireless business as additive, a way to enhance and build on its existing product portfolio. “That’s an important nuance,” the source said.

Another industry analyst believes that the surge of unlimited offerings from incumbent mobile giants won’t have a big impact on cable’s efforts to re-enter the market, despite past stumbles like the short-lived “Pivot” joint venture with Sprint.

“It’s another form of bundling,” Bruce Leichtman, president and principal analyst of Leichtman Research Group, said. “It doesn’t have to be differentiated from other wireless services. The differentiator, potentially, is the ability to bundle. That’s where the value lies, not in the mobile service itself.”

Plus, the latest unlimited craze is not occurring to counter what cable operators have in store, according to Jefferson Wang, senior partner, wireless, at IBB Consulting, a firm that works with a range of mobile and cable providers.

It all ties into competition among those carriers, which have no choice but to match up because the market is already saturated.

“A lot of that innovation is coming from the pricing and packaging side, which means unlimited becomes a very enticing offer to consumers,” Wang said.

He also said not to expect uniformity on how MSOs enter the market or how the move to unlimited models will affect them. How those operators jump in and the goals they set will be determined by whether they have a favorable MVNO agreement and what kind of other network assets they already have at their disposal, including fiber and WiFi infrastructure.

“To get into a consumer smartphone/wireless play is a very narrow definition of a very broad opportunity,” Wang said. “I view it more as a launching point.”

Cable operators have a lot of fiber in their networks, but it’s clear that their advantage in WiFi networking assets will be played aggressively.

Comcast, for example, has about 16 million WiFi hotspots deployed in metro and business locations and inside home gateways. At last check, the Cable WiFi roaming consortium, a group that includes Comcast, Cox Communications, Altice and Charter, has deployed about 500,000 hotspots that their respective customers can use.

The amount of data being offloaded on WiFi networks is expected to surge in the next few years.

As of 2016, 63% of all traffic from mobile-connected devices was being offloaded to fixed networks by means of WiFi devices and femtocells each month, according to Cisco Systems’s latest Visual Network Index: Global Mobile Data Traffic Forecast. The same report expects that half of IP traffic — fixed and mobile — will be WiFi by 2021, versus 30% on wired networks and 20% via mobile/cellular.

Wang of IBB Consulting said cable operators must be agile and be ready to make changes quickly in the hypercompetitive and ever-evolving mobile market.

“When you create an entry strategy, things can change,” he said. “You have to make sure you really think through your strategy, but make sure it’s flexible.”