The home internet from T-Mobile and Verizon is a new threat to the cable | Panda Anku

For years, Comcast and other cable companies have relied on a simple strategy to offset the effects of cable cuts: they charge a high price for Internet service at home and enjoy blazing profits from little or no competition.

That strategy could now be in jeopardy. Comcast’s Internet subscriber growth was essentially flat last quarter, while Charter lost 21,000 Spectrum Internet subscribers. For both companies, it marks the first time they have failed to grow their home internet businesses in a given quarter.

The reason is no secret either: Across the country, T-Mobile and Verizon have rolled out cheap home internet service powered by their 5G networks, finally giving customers an alternative where none existed before. In an earnings call, Comcast CEO Brian Roberts pointed to these carriers as the reason broadband growth has hit a wall.

It’s a rude awakening for cable companies, whose broadband monopolies in many markets have allowed them to hike prices — and in the case of Comcast, impose data caps. While Comcast and Charter have tried to downplay the threat posed by wireless Internet at home, experts say the competition is here to stay.

“Across the country, ISPs of all kinds gained two new competitors,” says Kristen Hanich, research director at Parks Associates, referring to T-Mobile and Verizon. “They have to prepare accordingly.”

Wireless internet at home is cheaper

Both T-Mobile and Verizon undercut the cable companies on pricing. T-Mobile, for example, charges $50 per month for home internet, with typical download speeds between 33 and 182 Mbps. Verizon also charges $50 per month with download speeds between 85 Mbps, according to CNet. s and 300 Mbit/s and halves the price for customers who bundle the smartphone service.

In comparison, Comcast’s ad-free Internet pricing starts at $99 per month and Spectrum’s ad-free Internet service starts at $75 per month.

While the wireless offerings aren’t new, T-Mobile and Verizon have both expanded into more markets, increasing speeds with mid-band 5G and marketing their services more aggressively. T-Mobile even aired a home internet service commercial during the Super Bowl.

Subscriber growth has increased accordingly. T-Mobile now has more than one million home Internet subscribers, adding 560,000 in the last quarter alone. Verizon has 384,000 home wireless subscribers, two-thirds of which were added last quarter.

“That brings [T-Mobile] at about the 10th largest ISP in the United States, which basically came out of nothing about a year ago,” says Hanich.

Can it keep up?

T-Mobile and Verizon can’t cannibalize cable Internet overnight. People generally use a lot more data at home than they do on their phones when they’re on the go, and with carriers sending all that data over the same airwaves, they have to be more vigilant about network congestion.

That means either capping the number of new subscribers or preventing heavy usage through data caps. To that end, T-Mobile recently rolled out a version of its service with data caps in markets fearing congestion. (For now, Verizon has not capped data usage in any of its domestic Internet markets.)

All of this has led to some skepticism among analysts about airlines’ growth targets. T-Mobile hopes to have between seven and eight million home Internet subscribers by 2025, while Verizon hopes to have four to five million by then. Comcast and Charter currently have 32.2 million and 30 million Internet subscribers, respectively.

Peter Rysavy, the president of telecom analytics firm Rysavy Research, says that even if wireless carriers don’t completely supplant cable Internet, they should have enough capacity to support millions of subscribers.

“As a result, the market is becoming more competitive and cable operators are having to weigh the long-term implications,” he says.

Rysavy also believes that the current version of 5G home internet is just a stepping stone. In most markets, T-Mobile and Verizon rely on either low-band or mid-band 5G, but Rysavy is optimistic about the future promise of mmWave 5G networks that can match fiber internet service speeds be able.

Carriers have been slow to adopt mmWave due to its short range and limited ability to penetrate buildings, but Rysavy points to several technological improvements on the horizon that will make mmWave more viable. These include narrower radio beams that can reach more users simultaneously and wireless backhaul that facilitates the rollout of small cellular sites. The result, according to Rysavy, will be even greater competitive pressure on traditional internet providers.

“Really, I see the 2020s as an arms race between these two categories of companies,” he says.

what it means to you

How this new competitive reality will affect customers is difficult to predict.

For traditional ISPs, data has shown that when people have more choices, service improves. For example, an analysis conducted earlier this year by the Secretariat Economists found that Internet speeds increase by about 60 Mbps when a market moves from two to three providers. The Biden administration also claimed in an executive order last year that prices can be up to five times higher in areas with only one or two reliable high-speed internet providers.

But Pablo Varas, an assistant director at the Secretariat, says the same speed increases won’t apply when home wireless Internet comes to town. In fact, a study by the company found that traditional cable providers have improved their networks less in markets with home wireless Internet options.

“One possible explanation, not yet tested in data, is that the entry of lower-speed fixed-wireless ISPs into a local market shifts the competitive focus of traditional ISPs to price and away from quality,” says Varas per E -Mail.

But that in itself might not be such a bad thing. While companies like Comcast and Spectrum are aggressively pushing expensive gigabit internet service, those speeds tend to be overkill for most users. A single 4K HDR Netflix stream, for example, uses around 25 Mbps, meaning you can stream on around 40 screens simultaneously before running out of bandwidth.

The presence of cheap wireless internet at home may prompt ISPs to reconsider the lower end of the market if they’re looking for more growth, or at least some anti-consumer policies like steep off-contract price hikes or data caps.

“Cable companies are notorious for luring in customers and making things change,” says Rysavy. “Maybe they will be motivated to have more user-friendly contracts than in the past.”

Either way, people who want a cheaper alternative to cable Internet are finally starting to get them, and that should make companies like Comcast and Spectrum nervous.

“There are a lot of people who could only choose one Internet service provider, and regardless of their customer experience, if they wanted Internet, that’s what they needed to get,” says Hanich of Parks Associates. “And now you have a choice.”

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