For most of us in the wireless business, it is common knowledge that “the first handheld cellular phone call was made on April 3, 1973, by Motorola engineer Martin Cooper from Sixth Avenue in New York while walking between 53rd and 54th streets. Cooper hoisted the 2 1/2-pound prototype to his ear and called a rival, Joel Engel of Bell Laboratories at AT&T, to declare that his Motorola team had devised a functional portable phone.”
What is surprising to many is that the traditional way to purchase wireless services has been turned on its head by the cable industry. Record numbers of new activations were achieved in the first quarter of 2022 by Charter, Comcast, and Altice. These are not your father’s cable companies!
Who would have thought that almost 700,000 new wireless customers in only 90 days would have come through cable operators when only a few years ago the landscape was dominated by carrier owned company stores, an indirect dealer distribution, and of course, the sales teams of AT&T, Sprint, T-Mobile and Verizon?
But that’s what happened. But did you know that “it is claimed that the first cable television system in the United States was created in 1948 in Mahanoy City, Pennsylvania by John Walson to provide television signals to people whose reception was poor because of tall mountains and buildings blocking TV signals.” Cable television in the United States – Wikipedia
Weren’t people still sitting by their radios listening to their favorite programs in 1948? Well, in America the first television program was broadcast in 1941. After World War II the important television stations in the United States emerged: ABC, NBC, and CBS which operated out of New York City.
So, twenty-five years before the first cellular call was made, cable was invented. It only took another 70 years for cable operators to offer wireless service in 2018 and begin to provide a fourth service to their subscribers (along with traditional cable TV, internet, and home wireline phone service). And put on wireless customers they did! Now, almost 8.4 million wireless customers pay these three traditional cable operators for wireless service (8.2 million of those to Charter and Comcast alone as Altice has only recently joined the party).
So, What Exactly Was Cable?
Let’s do a quick history lesson on the cable industry and then look at why they have been so successful utilizing the MVNO model to deliver a combined $1.5 billion in revenue last year.
The Federal Communications Commission first established rules in 1965 for cable systems which received signals by microwave antennas. In 1966, the Commission established rules for all cable systems (whether or not served by microwave).
In October 1984, the U.S. Congress amended the Communications Act of 1934 by adopting the Cable Communications Policy Act of 1984. The 1984 Cable Act established policies in the areas of ownership, channel usage, franchise provisions and renewals, subscriber rates and privacy, obscenity and lockboxes, unauthorized reception of services, equal employment opportunity, and pole attachments. The new law also defined jurisdictional boundaries among federal, state and local authorities for regulating cable television systems.
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Following the 1984 Cable Act, the number of households subscribing to cable television systems increased, as did the channel capacity of many cable systems. However, competition among distributors of cable services did not increase, and, in many communities, the rates for cable services far outpaced inflation. Responding to these problems, Congress enacted the Cable Television Consumer Protection and Competition Act of 1992. The 1992 Cable Act mandated a number of changes in the manner in which cable television is regulated.
In adopting the Telecommunications Act of 1996, Congress noted that it wanted to provide a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition. Cable Television | Federal Communications Commission (fcc.gov)
In 2017, Comcast signed an MVNO agreement with Verizon. Charter followed in 2012 and they began operating under the brand names of Xfinity Mobile and Spectrum Mobile respectively. Soon, the airwaves were flooded with advertising offering low cost wireless service with unlimited data at prices lower than the Tier 1 Carriers, Altice signed an MVNO agreement with Sprint, which later transferred to T-Mobile post merger.
And now, almost 8.5 million subscribers get their wireless service from their cable provider. Really……. What happened?
I wrote in this space in March of the growth of cable companies now offering wireless and mobile services, specifically of “rumors of Cox Cable jumping in and WOW Cable announcing an MVNO agreement with Reach Mobile has put most people in the industry on notice that blurred lines will continue and “bleed over” from traditional stand-alone mobile or cable carriers is a thing of the past. Comcast stated that bundling is no longer about packaging cable with the internet; it’s now about cable and mobile. But Comcast and Charter, and probably most cable operators, have a distinct advantage in the customer acquisition game; the people that they are marketing wireless services to are already their customers!” The New MVNO Model – BestMVNO
But Don’t Take it From Me….. Here’s What Other Experts Have to Say!
I spoke with two industry executives about the how and why of this success. First, Anthony Montoya, President of fivexfive , (www.fivexfive.net) a company focused on providing consulting and telecom reseller services and network buildout to both the federal government and telecom & cable entities. Anthony’s company has consulted with Comcast and Charter through their launch periods and Cox Cable through their planning and implementation phases. When asked about the incredible success story, Anthony related to me, “MSOs have been masterful in their pricing – simple, clear and affordable. They have expertly leveraged their brand in the marketplace.”
I also had the pleasure of connecting with Danny Bowman, Chief Mobile Officer at Charter Communications, a long time friend and former co-worker when we were both at Nextel. I asked Danny why has Charter been so successful in the wireless business? “We are focused on providing customers with a fully converged connectivity experience that gives them the freedom to use their favorite devices the way they want, while saving them money. By combining our internet, WiFi and cellular we are able to offer customers a superior level of performance, security and value that differentiates us in the marketplace.”
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And Charter Communications Chairman and CEO Tom Rutledge spoke extensively about the performance of Spectrum Mobile in their Q1, 2022 earnings call, specifically that “Ultimately, with our mobile product, we’re offering to consumers a unique and superior fully converged connectivity service package while saving customers hundreds or thousands of dollars per year” and “our fundamental strategy is to use our network effectively and provide a high-quality, best-in-class service better than anyone else … and sell that for a lower price.”
So I asked Danny Bowman what does your success in wireless mean to the overall performance and/or future for Spectrum?
“Our strategy is to continue to use our network effectively so customers are consistently experiencing the best speeds, security and reliable connectivity at home and on the go, while continuing to drive customer growth, market share, and penetration relative to our internet or mobile competitors in Charter’s footprint.”
Okay, so what does this mean for you?
If I were an MVNO operator, I would be asking myself how the heck did these three new entrants to “our” business grab eight and a half million customers in four years? The answers, as our friends said above, are simple:
Simple, clear, and affordable pricing
Leveraging your brand
Freedom to use their favorite devices the way they want to
Value differentiation (there is THAT WORD again!)
Best in class service
Is your MVNO checking all of these boxes? Remember, many of you are selling on the same network as Spectrum, Xfinity and Altice. If you need help with any of these success factors, let’s talk. Atrium Unlimited Consulting (https://atriumunlimited.com/) can get you on the right path to satisfy your customers just like the “cable guys” do.