U.S. Cellular is the first big wireless carrier to acknowledge that Comcast's Xfinity Mobile, and other cable company MVNOs, are putting pressure on its business.
"What we saw particularly was more of a cable influence," Ken Meyers, U.S. Cellular's chief executive, said last Friday (August 2) during the company's quarterly conference call with investors, according to a Seeking Alpha transcript of the event. Meyers was responding to a question about the reasons behind the operator's relatively sluggish Q2 performance.
Meyers's acknowledgement did not go unnoticed. "U.S. Cellular called out cable MVNO competition, flooding in some of its larger market areas, the absence of a high-profile phone launch, and an industry-wide lengthening of upgrade cycles as reasons for the softness in activity," wrote the Wall Street research analysts at B. Riley FBR. "Somewhat concerning is that around 45% of U.S. Cellular's footprint overlaps with Charter, Comcast, or Altice, (mostly Charter) -- all of which have been ramping their wireless offerings. Both Charter and Comcast offer unlimited plans with a per-line price $20 below U.S. Cellular's main plan... We see the cable companies continuing to present formidable competition."
U.S. Cellular reported a loss of 26,000 mobile customers in Q2, a figure above analyst expectations and also above the 13,000 customers it lost in the same quarter a year ago. Meyers promised that the company plans to respond with new service offerings -- but not new promotions -- later this year to combat the trend.
Meyers's admission that U.S. Cellular is seeing increased competition from cable MVNOs is noteworthy considering executives from AT&T, Verizon and T-Mobile have steadfastly refused to admit they're seeing similar pressures.
"We're not feeling that major pressure from them," T-Mobile CEO John Legere said late last year. He previously referred to Comcast's Xfinity Mobile service as "irrelevant" and Charter's Spectrum Mobile offering as "irrelevant squared." (It's worth noting that T-Mobile, in its attempts to convince regulators to approve its pending merger with Sprint, has since argued that cable MVNOs do in fact create more competition in the market.)
Comcast and Charter both offer mobile services to their existing cable customers in their cable footprints through an MVNO agreement with Verizon. Comcast launched mobile services under its Xfinity Mobile brand in 2017; Charter followed with its own Spectrum Mobile brand last year. Comcast's Xfinity Mobile service gained 181,000 mobile lines in the second quarter, raising its total to nearly 1.6 million lines. Charter, meantime, reported adding 208,000 lines for its Spectrum Mobile business in the second quarter, up from 176,000 new lines in the first quarter. The latest gains boosted Spectrum Mobile's total lines to 518,000 after three full quarters of deployment.
Altice USA, for its part, plans to launch mobile services through its Sprint MVNO sometime this summer. The company is currently testing $25 per month pricing with its employees.