US cable captured 75% of mobile net adds in Q1 – study

The US cable industry notched big wireless gains in the first quarter of 2023, effectively "crowding out the growth available to the Big Three" – AT&T, T-Mobile and Verizon – MoffettNathanson analyst Craig Moffett noted in his latest report on the US mobile industry.

Based on US operators that report their mobile figures, the cable industry added about 1.05 million mobile lines in Q1 2023, ending the period with almost 12 million. Charter Communications led the way with a record 686,000 mobile line additions in the quarter, followed by Comcast (+355,000) and Altice USA (+7,600). WideOpenWest introduced its mobile service in partnership with Reach nearly a year ago, but has yet to report its mobile line count. Privately held Cox Communications launched mobile services earlier this year, but likewise hasn't announced any subscriber totals. A new mobile option for hundreds of cable operator members of the National Content & Television Cooperative is just getting off the ground.

On a net basis, the US cable industry accounted for nearly 75% of total industry phone net additions in Q1 2023, Moffett noted in the report (registration required).

Figure 1: Click here for a larger version of this image.

Cable's current mobile line count represents just 5% of the US postpaid phone market, making it "little more than a rounding error in the US wireless industry," Moffett pointed out. But it's US cable – not Dish Network – that has emerged as the significant fourth player in the US mobile market following the T-Mobile-Sprint merger.

And, as an indicator of just how large cable wireless could become, the analyst also notes that cable is now taking nearly 17% of post-paid gross additions, and roughly 9% of total industry gross adds (US cable currently doesn't participate in the prepaid mobile market). That 17% number "shows no sign of reaching a plateau," as cable's share of gross additions was 12% a year ago, Moffett noted.

"Cable's share of gross additions is still accelerating. Rapidly," he added. "Cable's high and rising share of gross additions creates an obvious problem for the incumbent operators. Cable is crowding out the growth available to the Big Three."

On an as-reported basis, net wireless adds for the Big Three dipped 54.5% in Q1 2023 versus the year-ago period, Moffett said. That, he added, has caused them to seek growth via home broadband initiatives, including AT&T's focus on fiber buildouts and T-Mobile's and Verizon's aggressive use of fixed wireless access (FWA).

Promotional power

Charter and Comcast could see more mobile line growth as they continue to focus on relatively low-cost (and no-frills) mobile service options alongside the use of home broadband/mobile convergence promotions. Altice USA is also getting more aggressive with mobile following the recent launch of its Optimum Complete package.

"These plans put enormous pressure on the incumbents," forcing them to employ promotions of their own, Moffett wrote.

AT&T, he said, has responded with "aggressive handset subsidies" for new and existing customers, while T-Mobile returns to a subsidy model and a more aggressive switcher offer. Additionally, Verizon has introduced a new pricing structure that includes the same introductory $30 per line price point that some US cable operators are offering.

A drawback to that, Moffett explained, is pressure on average revenue per user (ARPU), which slowed to +0.6% for the Big Three in Q1 2023. That, he stressed, leads to lower free cash flow that could cut down capital spending on other projects, including fiber network expansions.

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— Jeff Baumgartner, Senior Editor, Light Reading