How Big Can Cable MVNO Become?

If you are paying attention to US mobile wireless market growth dynamics, you know that remarkably, Cable MVNO, despite occupying only 5% of US mobile postpaid phone market, consistently accounts for roughly half of all “Net Adds” quarter after quarter. To take a deeper look at why and how it is happening, please check out my recent blog post on "The Case for Cable MVNO - Why This Business Makes Sense". If you prefer visuals, you may find the following decision tree useful-

(Talking about “visuals”, in this blog post, I will use a lot of them.)

So, let’s begin with Cable MVNO’s historical performance starting from Comcast’s Xfinity Mobile launch in April 2017. Analysts at MoffettNathanson have tracked Cable MVNO Net Adds within the US mobile sector. For context, almost all of this is driven by Xfinity Mobile and Charter’s Spectrum Mobile (launched in September 2018). More recently, Altice’s Optimum Mobile (launched in September 2019) and Cox Communications’ Cox Mobile (pilot launched in August 2022) joined the party. ?

For a quick spot check, this is how Q4 2023 panned out -

By the way, if Cable MVNO is winning, then who is losing (or at least not winning as big)? Late last year, New Street Research (with inputs from Recon Analytics) showed that cable’s gains are coming at the expense of AT&T and Verizon, to a large extent. This was significant as it went against the conventional wisdom that Cable MVNO is popular only among prepaid aka less attractive segments of the market.

Now, the all-important question is, after winning the low hanging (!) fruits (relatively speaking), how long and how far can Cable MVNO grow? To answer that question, let’s look at some recent survey results. ??

YouGov, A British market research and data analytics company conducted a poll in late January 2024. They asked 1,072 US adults (who own a cell phone) their opinion about MVNOs. When asked how likely they would be to consider switching to an MVNO for their mobile service needs, a striking 29% said they were likely to switch.

For those considering a switch to MVNOs, cost emerged as the most significant motivator. On the contrary, among those unlikely to consider MVNOs, the primary deterrent was satisfaction with their current provider.

By the way, this result is an improvement in Cable MVNO’s favor. In an earlier survey reported in April 2022, analysts at Cowen revealed that 23.5% of postpaid wireless customers would consider switching from their current provider to a Cable MVNO.

Importantly, Cable MVNO may have quite a few more years of impressive growth ahead of it. Comcast Cable CEO Dave Watson said the company is only at 11% penetration of wireless within its broadband base, so it has “a lot of runway ahead”. For Charter, that number stands at 13%, ?according to its CEO Chris Winfrey.

If you are wondering how Cable MVNO is demonstrating such an impressive run, below goes a qualitative assessment showing which factors are helping “Cases For” to outweigh “Cases Against”. ?

So, where does it lead us from here?

There are ample indications that Cable MVNO has the potential to double its subscriber base in about 3 years from now - from 15M today to ~31M by end of 2026. For that to happen, essentially it has to keep taking ~50% share of all annual Net Adds (~10M) of the US mobile market. For sure that will be a daunting task. But, the appeal of fixed mobile convergence (FMC) may work more in favor of cable than of MNOs, whose fixed wireless access (FWA) growth should flatten soon in the wake of spectrum constraints.

Do these numbers really make sense? Are they too good to be true?

Let’s look at it (Cable MVNO subscriber base by end of 2026) from a different angle-

Today, Comcast and Charter account for more than two-thirds (~63M out of over 82M) of all cable fixed broadband households. And, both of them are very aggressively playing in the mobility sector. We also know that, Cox Communications and Altice USA have followed suit. Cox, for instance, made it clear at CES 2024. Then, we have the deal between NCTC and Reach (and by extension, also AT&T as the host MNO) to facilitate the cable MVNO launch of mid-tier cable operators starting from this year. Therefore, looping in at least 15% of all US cable broadband households under the MVNO subscriptions seems to be a fairly achievable goal for the cable industry. ???

2024 should be an interesting year to watch whether Cable MVNO is on track to live up to its potential of surpassing 30M mobile subscribers within the next 3 years. ?