Some researchers believe the U.S. mobile virtual network operator business will grow in coming years, while others suspect it will decline. It might be argued that the biggest influences will be cable operator entry into mobility and the level of competition within the U.S. industry, which seems to encourage former MVNO customers who are price conscious to switch to one of the leading four national service providers.
Global MVNOs seem to be losing accounts, overall, though growth continues in some markets.
Most can agree that MVNO accounts peaked in the U.S. market about 2012, and in 2018 represented less than five percent of all U.S. mobile accounts. One supplier, Tracfone has perhaps 65 percent market share of MVNO accounts.
With the caveat that Comcast says it has no intention of trying to compete with the likes of AT&T and Verizon nationally, all observers seem to agree, as Comcast reports its results, that the Xfinity mobile service is not profitable at the moment. Of course, initial losses are not uncommon for any service provider launching new services of any type in the telecom business.
Some of that arguably is due to scale. Profits are hard to come by whenever a mobile service provider has a small subscriber base, and Comcast says its mobile service is not yet profitable.
And though Comcast might be growing its gross additions at up to a 20-percent rate per quarter (Comcast has not reported net gains), it had something more than 1.2 million accounts at the end of 2018.
Though some estimate cable operators might by perhaps 2020 be getting half of all industry net account additions, that is a ways off.
Startup costs likely also are an issue (marketing, phone installment plans, wholesale capacity purchases and operations).
But scale might not be the chief initial issue. Actual acquisition costs might be running between $1600 and $1800 per new account, even if Comcast has reported acquisition costs of about $1260 per new account, according to one analysis by BTIG.
Consider that Tracfone, which also operates an a mobile virtual network operator, with perhaps 21.7 million subscribers, generates earnings (cash flow) of about 10 percent on that base of customers.
Not everyone might agree that Comcast has no intention of ever competing with AT&T and Verizon. Cable has used a “crawl, walk, run” approach to new services, ranging from voice to business services.
Eventually, owner’s economics are going to look more appealing.
No comments:
Post a Comment