The US cable mobile virtual network operators (MVNOs) kept their shoulders to the wheel in Q2 2023, maintaining both their recent run of success and valuable momentum picked up in the US consumer telecom space’s hastening turn toward fixed-mobile convergence (FMC).
After notching over a million mobile line additions in the previous quarter, Q2 2023 saw the cable MVNOs net another 980,000 new lines, with Charter once again doing the heaviest lifting.
Retention challenges for MVNOs
Moreover, given the retention challenges the early summer typically presents incumbent wireline operators – with both seniors and students severing connections before migrating for the summer – any mobile gains during Q2 2023 represented a small uptick in home broadband stickiness during a time when the operators tend to lose traction.
Charter keeps Spectrum One winds at its back
Charter enjoyed another banner quarter from Spectrum Mobile in Q2 2023, reporting 648,000 mobile line additions to trail only T-Mobile among US mobile carriers. The free-line promotion tied to the Spectrum One FMC offering continues to be the engine behind Charter’s mobile spurt, aided by its decision to drop the single-line price for unlimited mobile service to $30/month.
Yet, while that promotion is adding considerable juice to Charter’s mobile line additions, free lines can cut both ways. The hefty line counts make for superb headline fodder, but free lines also don’t contribute revenue. Consequently, Charter’s mobile revenue growth rate has dipped despite all the line adds. The Q2 2023 rate (i.e., 29.8%) was down a full 10 percentage points from the previous year, carrying on a trend from Q1 2023 – i.e., the first full quarter with Spectrum One and the free-line promo situated at the tip of the spear.
Spectrum One has juiced Charter’s quarterly mobile line additions; doing likewise to its revenue will demand retaining those subscribers after the promo period expires and free-line customers start paying full freight.
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Comcast holds the mobile course with laudable consistency
Not to be lost among the Spectrum One hubbub is Comcast ringing up its seventh consecutive quarter with over 300,000 mobile lines additions. While the US MSOs don’t tend to diverge for too long on pricing, Comcast continues to resist any urge to follow Charter further down the mobile service discounting rabbit hole, with Xfinity Mobile sticking to the $45/month price for single-line customers and veering clear of free-line promotions akin to Charter’s offer with Spectrum One.
However, not following suit here is in keeping with Comcast’s current laser focus on subscriber ARPU as its be-all metric, a focus stemming from the home broadband side of the house that likely obviates the chance of a free-line promotion on the MVNO side. Furthermore, Comcast may have greater incentive to maintain its sweetheart wireless margins. While all the cable operators are haemorrhaging higher-ARPU video subscribers, Comcast outpaced Charter in those losses by more than a two-to-one clip in Q2 2023.
Altice USA aims to get back on the good foot with FMC
Altice USA operates on a vastly different scale than its largest contemporaries. Thus, to the legion of regional US wireline operators slated to launch mobile operations over 2023, Altice’s herky-jerky progress in the wireless space could be a sobering reminder that success is far from assured.
While Altice’s Optimum Mobile showed improved form in Q2 2023 after stalling out in recent quarters, its quarterly mobile line yield (i.e., 16,000 additions) was still less than half the tally posted a year earlier. However, Altice took some long strides toward unifying its go-to-market approach for converged services with the May 2023 launch of Optimum Complete, where Altice looks to replicate its larger brethren’s recent MVNO success with its own FMC offering.
Hard scrabble for smaller MVNOs
Scale and margin considerations will probably prevent most of those smaller, upstart MVNOs looking to take flight over 2023, from veering beyond the bread-and-butter price points and multiline discounts established by the US cable MVNOs before Charter ratcheted the disruption with Spectrum One. Of course, given the success the cable MVNOs’ $30/month multiline pricing was seeing at the time, the result could still be myriad tiny cuts for the big three US wireless operators.