Cable companies have quietly and steadily become a major force in the US wireless industry, but the new coronavirus pandemic may significantly slow their advance into the sector.

The relative importance of this particular situation is dwarfed by the wider ramifications of COVID-19, which is upending businesses and social lives all over the globe. Nonetheless, as the first quarter of 2020 slowly comes into focus, industry observers are working to suss out exactly how widespread stay-at-home orders might impact US operators ranging from AT&T to Verizon to Comcast to Charter Communications.

According to the analysts at Wall Street research firm Cowen, the coronavirus will undoubtedly have a major impact on mobile service providers' customer additions, given that thousands of cellphone retail stores around the country are closed. As a result, the firm reduced its net addition expectations for first quarter postpaid cellphone customers to 2.9 million, from 4.1 million, for the industry as a whole.

However, the analysts noted that the wireless industry is positioned to weather the coronavirus storm far better than other sectors like hospitality and tourism. "We expect the wireless sector to hold up relatively well in a COVID-19 impacted environment and view sector as defensive," they wrote to Wall Street investors.

Pressure on cable's mobile momentum
The Cowen analysts predict that a slowdown in wireless sales could have an outsized impact on cable companies like Comcast, Charter Communications and Altice USA by reducing the number of customers they're able to switch to their services. That's important given that US cable operators last year accounted for fully 29% of the US industry's 6.3 million total postpaid phone customer additions.

"That market share gain, which is almost certain to accelerate, has already been enough to alter the competitive dynamics of the wireless industry," wrote the Wall Street research analysts at MoffettNathanson in a December report to investors. The analysts specifically noted AT&T's newfound willingness to sell mobile access to cable companies in a challenge to Verizon and T-Mobile.

Altice USA's mobile service launched on Sprint's network, and has been migrated onto T-Mobile's network following the completion of the T-Mobile/Sprint merger. Comcast and Charter, meantime, piggyback on Verizon's wireless network with their respective MVNOs.

"We believe cable mobile could see net add pressure in 2Q/3Q20 from COVID-19, as consumers may hold off on switching providers amidst uncertainty (despite cheaper plans), though more so driven by the closure/lack of traffic in retail channels given the quarantine phenomenon," the Cowen analysts wrote last week.

And that, the analysts said, could well cut into the cable operators' profitability hopes. Comcast, Charter and Altice USA had all expected to reach the financial break-even mark on their mobile businesses by 2021 or so – but those targets were set before the outbreak of COVID-19.

The analysts speculated though that the cable companies will be able to quickly take advantage of any return to normalcy, as the pandemic recedes. They wrote that cable companies already sell close to 60% of their mobile subscriptions online, while traditional mobile providers like Verizon and AT&T only sell between 10% of 20% of theirs online.

"While COVID-19 does have some impact on cable mobile, we do not believe it changes the longer-term trajectory of the fundamental business, as we remain bullish on cable's mobile opportunity," the Cowen analysts wrote.

Mobile networks from cable operators
Further, that opportunity is expected to grow in the months and years to come as cable operators increasingly look at building their own wireless networks. Indeed, each of the cable companies in mobile has already made some moves in this area:

However, there are some indications that cable operators' early efforts to build their own wireless networks could be delayed by the spread of the coronavirus. For example, the FCC pushed back the start of the upcoming CBRS spectrum auction by a month due to the pandemic. Further, reports continue to trickle in of network installation projects stalled by virus-related delays in areas such as cell site permitting.

Finally, the Cowen analysts dangled one last tantalizing prospect in their report on the sector, theorizing that the recent close of the Sprint and T-Mobile merger could create another networking option for cable operators like Comcast and Charter. "With T-Mobile/Sprint approved, cable can pit the Big 3 [Verizon, AT&T and T-Mobile] against each other for a better MVNO deal," they wrote.

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