Cable rebounded from a failed mobile voice joint venture with Sprint-Nextel to form a new alliance with...Sprint-Nextel, which will merge its wireless assets in a new WiMax venture with Clearwire. Comcast, Time Warner and Brighthouse Networks are going to give mobile service another try even though reselling Sprint-Nextel's mobile service under the Pivot co-branded name proved to be a bust.
Our analysis shows that cable really has no choice but to keep trying in the wireless business because without a mobile option, cable could fall behind its telco rivals. During Q1 08, cable's subscription momentum, as measured by revenue generating units (basic video subscriptions plus telco subscriptions plus high-speed subscriptions), was strong, with the top nine companies adding 2.4 million subscriptions to reach a total of 105 million RGUs (not including digital tier subscriptions, which cable operators typically report in total RGU tallies -- we've excluded digital because telcos don't break out digital tier subscriptions separately).
The top four telcos, on the other hand, actually lost 68,000 consumer RGUs during Q1 08, with total combined RGUs dipping to 102.4 million due to ongoing loss in local access lines. But, include wireless subscriptions in the mix and the picture is completely different.
Throw mobile voice subscriptions (not all of which are consumer subscriptions) and phone company RGU's actually jumped by 2.7 million during Q1 08, on par with RGU gains made by cable. With wireless in the tally, telco RGUs topped 242 million by quarter's end.
This comparison may be lopsided precisely because we've excluded cable's digital tier subscriptions and included all of the telcos' mobile service subscriptions, even those that reflect corporate subscriptions. Be that as it may, it's clear that wireless will save the day for phone companies.
Without mobile services, the traditional phone business would be a weak competitor indeed, even though video services are the upswing and broadband subscriptions continue to rise, although growth in high-speed subscriptions is slowing for all network providers. If Verizon and AT&T, in particular, couldn't rely on their vibrant mobile businesses for growth, cable would have nothing to fear in the residential communications business.
Cable, on the other hand, doesn't have a wireless product in its quiver and can count only on video, voice and high-speed data for further growth, although a nascent enterprise business could help propel cable ahead. If cable operators want to keep pace with stiffening telco competition, wireless is obviously crucial to cable's competitive future.
Download the data we used in this RGU analysis, which breaks out the subscription unit data on a company-by-company basis, here. Downloads are free although registration is required.
Cynthia Brumfield at 6:10 PM|Comments(0)
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