T-Mobile and AT&T respond to the cable threat

Mike Sievert and John Stankey – heated rivals in the US wireless industry – share at least one belief: They can handle the impact from cable.

"It's tough to be a price leader forever," said Stankey, the CEO of AT&T, during a recent investor event. Stankey was responding to a question about the inexpensive mobile offerings – including a free line of service – from some US cable companies.

"Just giving away a line for free isn't necessarily going to be sustainable," he said.

Figure 1:



AT&T CEO John Stankey
(Source: Reuters/Alamy Stock Photo)

Sievert, the CEO of T-Mobile, offered a similar take in his own comments at the investor event. "Yes, it's more competitive now," he said about the wireless industry. But that's partly due to T-Mobile's merger with Sprint, he added, arguing that T-Mobile is somewhat "insulated" from that competition because of the expansive 5G network the company now operates.

Neither executive indicated any major changes to their overall financial outlooks for the second half of 2023.

"I feel very comfortable with where the business is right now, and comfortable that those [customer] volumes and what we're seeing are going to be supportive of what we've guided to," Stankey said.

Said Sievert: "It's a stable environment where we're performing really well."

The cable wave

The telco executives' outlooks are noteworthy, considering cable companies like Charter Communications and Comcast accounted for almost half of all new wireless customers during the second quarter. Further, analysts have agreed that the number of new wireless customers is beginning to shrink from historically high levels.

"A shrinking phone pool, 5G competition, plus cable disruptors with no mandate for profit (broadband churn play) makes for a challenged backdrop," wrote the financial analysts at TD Cowen in their recent assessment of the US wireless industry.

And the cable companies aren't standing still. For example, Comcast is preparing to begin operating its own wireless network in Philadelphia, Light Reading reported. The company purchased 3.5GHz CBRS spectrum licenses in 2020 and last year said it would build a network using equipment from Samsung.

Other cable companies like Cox and Altice are starting to offer smartphone services too. The latest development: service bundles. Companies like Charter and Cox are offering discounts to customers who subscribe to both their wired Internet offerings and smartphone services.

Wireless companies, including T-Mobile and Verizon, are similarly providing inexpensive deals that pair their mobile services with their fixed wireless access (FWA) Internet offerings.

A path toward convergence

Wireless and cable operators challenging each other with FWA and mobile raises the possibility of telecom convergence.

"The first version of convergence ... typically ends up being some kind of a bundling dynamic, but ultimately it morphs into product evolution," Stankey said in response to a question about his view on convergence. "And I think we're about ready to start seeing that dynamic occur. Networks, when they're managed on a cohesive level, meaning both fixed and wireless come together, allow you to do things around security and privacy that you can't do when you don't own and operate your own network."

Stankey argued that AT&T is in a good position because it operates a broad fiber network and offers 5G on top of it.

"There's a fallacy that there's fixed networks and wireless networks," he said. "There are only fiber networks with different access technologies on the end of it. That's where this is all going."

For his part, Sievert said discounted service bundles aren't necessarily the end state of convergence, but he suggested that T-Mobile is still looking at how network and service convergence might develop. "We'll have to see where it goes," he said.

Sievert acknowledged that T-Mobile's current fixed wireless service won't grow into a massive operation, simply because the company won't have enough network capacity to handle massive numbers of customers. He said the company is still researching how to expand its home Internet business, whether through new technologies or new fiber partnerships.

Related posts:

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