With the caveat that cable TV companies generally have been underestimated by telco executives, and that T-Mobile US CEO John Legere is outspoken, Legere is blunt about cable prospects in mobility.
“II think they're incompetent and they don't belong in wireless without having owner economics,” Legere says. He says he is “astonished at the lack of success or ability to enter wireless in any scale by the cable players.”
To be fair, the way cable enters new markets is “gradualism.” Cable executives are aware of the business model limitations of a mobile virtual network operator approach. But they tend to want to walk before they run. What they do now is only a precursor of what they expect to do in the future.
So nothing about present efforts indicates what cable aspires to do. The larger question is the role of Wi-Fi and hotspot access in the broader strategy. Legere criticizes Wi-Fi-based access models. “Wi-Fi is not a way to play this game,” he argues.
That requires qualification. Cable execs see their hotspot assets in several ways. First, whether operating as a facilities-based provider or MVNO, offloading access to Wi-Fi limits mobile network capex or opex, or both.
Second, the distribution network creates wholesale access opportunities, precisely for customers such as T-Mobile US or Sprint that do not operate as fixed network retail providers.
And while “Wi-Fi only” has not worked, Wi-Fi augmentation has gained importance. That is what Licensed Assisted Access (LAA) and other forms of spectrum aggregation (licensed plus unlicensed) are all about.
Eventually, success at scale will require a facilities-based approach. But cable execs have been noticeably reticent about any strategy that simply competes directly with today’s mobile market leaders on their own terms, as that market is deemed saturated and ultra-competitive.
So, for the moment, mobility is seen a complement primarily to the economics of the fixed network revenue model. The value is more churn reduction than anything else. The intent is to do as little as possible, in that sense, which is why the immediate focus is on mobile services within existing fixed network footprints, and to support existing customers.
There is precedent for that approach. Wi-Fi hotspot networks have been valuable for many service providers not as a driver of incremental revenue, but as a churn reducer and value enhancer. In other words, the payback is lower churn and higher value for fixed network packages.
That is likely to change in the future, where cable is concerned. But Legere correctly notes that, historically, cable has had little obvious success with services not offered on its own networks.
For T-Mobile US, not much has to be adjusted, in terms of strategy, at the moment, Legere argues. “ We're just going to sit on our hands and decide what to do later.”
On the other hand, and not related directly to cable entry into mobility, T-Mobile US is joining the broader effort on the part of U.S. telcos to get into the video subscription business. “All content going the Internet, Internet is going mobile” is how Legere describes the trend.
And all things considered, more consolidation is coming. “It's not a matter of if, it's a matter of when,” Legere says.
If scale matters, then T-Mobile US and Sprint are most likely sellers, not buyers. That is even more the case when viewing broader ecosystem scale.
Media and telecom firm market value lags the value of internet app providers or Apple by quite some distance. Basically, any firm with a market cap in triple digits is a strategic buyer. Anybody with a cap in double digits is a strategic seller.
The point is that Comcast is likely a strategic acquirer, so its present mobility strategy will evolve. I still think Charter is a strategic seller, as big as it is. That opinion would change if, somehow, Charter makes a big move into ownership of content and app assets, which it historically has not done.
No comments:
Post a Comment