Cable jumps into the mobile subsidy game

After sitting on the sidelines for years, it appears that some of the nation's top cable operators have begun to ramp up promotions focused on smartphone subsidies.

While these cable-led promotions aren't as rich and attractive as those being offered by AT&T, T-Mobile and Verizon, they are "at least somewhat competitive" and, more generally, mark a shift in the dynamics of the US mobile market, according to MoffettNathanson.

(Source: Comcast)

New iPhone drop 'requires' cable response

MoffettNathanson analyst Craig Moffett said this new wave of mobile promotional offers from operators such as Comcast, Charter Communication and Cox Communications aren't a huge surprise, but illustrate that they're indeed needed in today's competitive market.

"Cable's emergence as a promotional discounter was entirely predictable, notwithstanding their early protests to the contrary," Craig Moffett explained in a new report (registration required) on the recent wave of promotional activity in the mobile market following the introduction of Apple's new iPhone 15. "Their early BYOD (bring your own device) offers were enormously successful, but even customers who came in on BYOD plans eventually demand new phones, and acquiring customers, particularly around the time of a new iPhone drop, requires a credible promotional offer."

Related:Dish, AT&T unveil aggressive iPhone promotions

Among the promotions, Moffett notes that Comcast is offering as much as $830 off iPhone devices in the form of 24 monthly bill credits. But there are some catches in the promotion, which is set to end on October 12. Comcast's offer, for both new and existing customers, requires an eligible device trade-in (an iPhone 12 Pro Max or better). Per the fine print, the trade-in offer excludes SE models and the iPhone 12 Mini.

Device subsidies aside, Comcast is also offering $100 back (in the form of a prepaid Visa debit card) on any new line of Xfinity Mobile through September 21.

Cox, which launched mobile services in January, is offering promotional discounts of up to $500 on the iPhone 15 Pro – in the form of a $500 prepaid gift card.

Charter, meanwhile, is offering up to $100 over the fair value of the customer's trade-in device. But to qualify, customers must add a new line.

Those offers are taking shape as US cable operators continue to grab postpaid share in the mobile market. Charter and Comcast added a collective 964,000 mobile lines in Q2 2023, extending their combined grand total to more than 12.62 million lines. Privately held Cox has not disclosed its mobile lines tally.

Moffett tempered predictions on how well cable's wave of mobile offers will perform in the market. For now, the promos aren't impacting his forecasts for cable's ongoing move into mobile.

Related:Wireless a 'discounting mechanism' for cable, AT&T CFO says

"What impact Cable's emergence will have on the Big Three remains to be seen," he wrote. "Cable's promotional discounts are still meaningfully smaller than those offered by Verizon, AT&T, and T-Mobile (although their monthly service plan prices are lower, as well). They will presumably skim at least some share from the Big Three, leaving a reduced gross additions pool for the Big Three in their wake."

Still, cable's "arrival as a meaningful subsidizer" does mark a big change in the US mobile market, Moffett explained.

Sizing up the Big Three's promos

Moffett also analyzed other recent promos from Verizon, T-Mobile and AT&T. Verizon and T-Mobile are both offering a free iPhone 15 Pro (or up to $1,000 off the iPhone 15 Pro Max) with some variances on how the credits are distributed.

Verizon's offer limits availability to new lines and a trade-in for phones in "any condition." T-Mobile's trade-in is limited to an iPhone 11 Pro or better in good working condition. AT&T is also offering a free iPhone 15 Pro (or $1,000 off the iPhone 15 Pro Max), with trade-in values varying by model and condition of the device being traded in, starting with an iPhone 12 Pro Max or better in good working condition.

Moffett analyzed those offers with help from Navi, a research company that aggregates service plan info and new phone deals to help consumers navigate their differences and intricacies.

With all of that data factored in, Moffett noted that AT&T's promotional values are higher year-over-year for both switchers and upgrades, while Verizon's promotional values are higher for switchers and (slightly) lower for upgraders and T-Mobile's are lower for both switchers and upgraders.

"Broadly speaking, the promotions from the Big Three's new iPhone promotions are certainly very aggressive, but not meaningfully more so than last year," Moffett surmised.