Author(s): Raghu Gopal
On 30 June, US cable operator Charter Communications officially announced its mobile service. In line with its other Spectrum-branded products, its wireless service is called Spectrum Mobile. Similar to Comcast with its Xfinity Mobile product, Charter is making its latest offering available only to existing and new subscribers to its Spectrum Internet service.
Charter is charging $45 per month for each mobile line of unlimited data. It also offers a By the Gig plan at a cost of $14 per GB of LTE data.
The launch of the service is in no way a surprise. Charter made its intentions in the mobile space clear shortly after acquiring Time Warner Cable and Bright House Networks in 2016 — companies that, along with Comcast, owned wireless spectrum through a consortium called SpectrumCo.
Those cable providers saw the need to enter the wireless business more than a decade ago, partnering to buy spectrum in an auction by the Federal Communications Commission. That spectrum was never directly used by the companies and was sold to Verizon in 2012 with the stipulation that Bright House Networks, Comcast and Time Warner Cable could resell Verizon wireless services under their own brands. Charter inherited this agreement when it acquired Bright House Networks and Time Warner Cable.
In addition to providing a wireless service, Charter's Spectrum Mobile carries a small portfolio of smartphones: several Samsung flagships and one lower-end LG device. Surprisingly, Charter doesn't yet sell iPhones. Almost two-thirds of US post-paid smartphone subscribers are iPhone users, meaning that Charter has a significant gap in its range. However, it does allow customers to bring their own smartphones, and we expect the company to address this hole in its device portfolio.
For other post-paid carriers in the US, primarily AT&T, Sprint, T-Mobile and Verizon, the entry of Charter and Comcast into their core business could have a major impact over the coming years. Together, these two companies serve about 50 million US households, which means they reach roughly 40 percent of the US population, around 130 million people. The only way for them to expand their new mobile ventures is by taking subscribers from wireless carriers.
We estimate that Comcast's Xfinity Mobile has about 700,000 subscribers. That's still a sliver of the post-paid market in the US, but the cable operator only launched its mobile service in 2017 and has a limited retail presence. Despite this, it's leaving a mark on the market, already surpassing much larger carriers in net additions (see The First Million Is Always the Hardest).
Xfinity Mobile and Spectrum Mobile have the potential to disrupt not only pricing, but also business models, fuelling concerns among rivals, which in turn could lead to more partnerships and acquisitions.
In the US, the cross pollination between the cable and wireless industries is only just beginning. This new environment is a win for consumers, providing them with more choice. Wireless carriers will need to find new, convincing ways to keep their subscribers from churning over to the cable guys.