The recent approval of the T-Mobile merger with Sprint boosts prospects for aggressive new competition, in a couple of years. And though T-Mobile has indicated it could capture 9.5 million fixed accounts by about 2024, for example. That alone would potentially reduce cable market share by nine to 10 percent, a huge shift.
Even if one believes that is an optimistic forecast, T-Mobile will not be the only contestant using fixed wireless. Add in competition from other providers and a nine-point shift in market share is a reasonable expectation. That might be enough to reverse a 20-year trend of cable operators taking market share from telcos.
Such a shift also would undermine the cable growth engine, which now clearly is internet access.
How much market share 5G fixed wireless might actually get in the United States is a highly-contentious matter. Incumbents say fixed wireless is not a threat to cabled network market share and revenue. Attackers believe 5G fixed wireless will be material. Some have called 5G fixed wireless an existential threat to cable operators.
Both sides could be right about the relatively small market share shift, and yet the impact could be quite substantial. There are several reasons. incremental sales--at the margin--that often provide a disproportionate share of profits. So fixed wireless could be highly relevant if it shifts accounts at the margin.
One example might be that fixed wireless slows cable operator revenue growth in the business or customer segments. Fixed wireless might capture enough share to slice incumbent growth rates or cap growth rates.
There are roughly 99 million fixed network internet access accounts active in the U.S. market. If fixed wireless manages to shift about 12 million accounts, that is a potential gain of 12 percent.
If 80 percent of that shift is from cable operators to telcos, implying a shift of 9.6 million accounts, that would mean a loss of 15 percent cable TV market share in internet access.
To the extent that internet access is the cable operator growth engine, that could have outsize financial and strategic impact.
Another potential issue is possible average revenue per account hits, as incumbents attack cable services on the price dimension. So it might not be only the lost direct revenue loss but the impact on overall ARPU that emerges.
In recent quarters, for example, U.S. fixed network internet access net additions net additions have totaled about six tenths of one percent of the installed base, with cable gaining eight tenths of one percent while telcos lost about two tenths of one percent.
In other words, a shift of about two-tenths of one percent per quarter halts the telco decline. A shift of perhaps six-tenths of one percent--from cable to telco--actually causes cable share to begin a decline.
That is what the stakes realistically are: a chance for telcos to halt, and perhaps reverse, the long-term decline of their market share in internet access.
Cable TV executives in the U.S. market naturally express as much skepticism about the dangers 5G fixed wireless services pose for their consumer broadband business as telco execs say they are optimistic. Basically, it will no scale, or will scale too slowly to keep up with cable’s own planned bandwidth plans, cable execs tend to say.
It is very subtle stuff. Verizon, for example, only has to gain about 7,000 5G fixed wireless accounts per quarter to halt its customer losses. T-Mobile US and Sprint have virtually zero fixed network market share, so even smallish gains represent new accounts with average revenue possibly double what they get from mobile internet access accounts.
The point is that skeptics and proponents alike can be right that 5G fixed wireless only shifts a small amount of market share. But it is precisely at the margin that fixed wireless could be significant. Fixed wireless could halt a 20-year decline in telco fixed network internet access share; choke off the cable operator growth engine and attack cable profit margins.
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