Aug 02, 2023

The calculations behind cable's free line of mobile service

According to the results of one survey, cable companies like Charter Communications and Comcast don't have much to fear from their recent mobile promotions offering "free" lines of service.

A survey conducted by the financial analysts at Cowen found that just 15 percent of cable MVNO customers in the US reported having a free line of service that they didn't use. But that percentage is lower when compared with the market's big providers: AT&T (22 percent), T-Mobile (22 percent) and Verizon (17 percent).

That, the analysts wrote in a note to investors, is a "surprise." The firm's survey covered around 1,300 respondents in June.

Into the debate

The figures are important considering there remains a significant amount of discussion among players in the space about the overall value of the cable industry's MVNO customers. After all, if the companies offer free mobile services, will they lose those customers when they start trying to charge for those lines in the future?

That's certainly how T-Mobile CEO Mike Sievert sees the situation. Earlier this year, he described such customers as "low calorie" additions because they may not ever contribute much to the cable companies' bottom line. Instead, he said such customers might simply seek service elsewhere when their initial 12-month promotional pricing ends.

The executives at Charter � which currently offers a free line of service with its $50 per month Spectrum One bundle � take a different stance. Chris Winfrey, the company's CEO, said the majority of Charter's mobile customers are "high-quality" and that the overall profitability of Charter's mobile business is "very good."

Setting expectations

According to the Cowen analysts, roughly 50 percent of Charter's gross net customer additions are signing up for free lines of service. The analysts wrote that they expect around 150,000 customers to disconnect their service in the fourth quarter of this year when their promotional pricing ends and they see Charter's $30 per month price tag.

However, 150,000 disconnects may not be much of a concern considering Charter managed to sign up a whopping 648,000 mobile lines of service during the second quarter.

"We remain watchful over the impact of Charter's promo roll-offs in the fourth quarter of 2023," wrote the Cowen analysts. "But our survey results provide cautious optimism and support cable management's view."

The analysts also noted that Altice managed to convert roughly 60 percent of its customers from a free line of service to a paid line of service when its own promotional period ended.

Regardless, T-Mobile is looking for any leverage it can get. The company's latest: An advertising campaign that offers "to help Spectrum and Xfinity customers cover their exploding cable wireless bills."

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� Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

Into the debateSetting expectations