While cable operators continue to 'laugh off' slower and less reliable wireless broadband networks, BTIG analyst Walter Piecyk said they need to wake up and realize that the declining prices of wireless data is making it an increasingly compelling alternative.
In a Friday blog posting for investors, Piecyk conceded that wireless companies haven't marketed their networks as a replacement for wired broadband yet. But that could change fast.
"We believe telcos will feel increased pressure to identify new services to bolster revenue growth as early OTT offerings stumble and as a result of the diminishing marginal impact of customer migrations to higher wireless data buckets," Piecyk said. "We are still bullish on the opportunity for wireless operators to monetize data growth but Q4 was not encouraging as most companies reported lower than expected ARPU."
Citing Sandvine research noting that a typical household uses around 22 GB of broadband data a month, Piecyk said consumers could be enticed to ditch their wired broadband services by adding, say, 15 GB a month to their wireless data plan.
"The drop in price of larger data buckets to [incentivize] customers to migrate up to larger data buckets has been effective," the analyst said. "More than half of AT&T data share customers are on 10 GB plans and more than one third are on 15 GB plans or higher. These larger buckets make wireless an increasingly compelling alternative to wired broadband."
This dynamic is occurring as the cost of wired broadband and associated cable services keep increasing, he noted.
"It can be startling to add up the cost of pay TV, broadband, wireless and telephone bills," the analyst said. "Nearly all of these bills are on the rise, driving consumers to look for cheaper alternatives. Switching service providers, when an option, can reduce a bill but the elimination of services is be a more meaningful solution.
Meanwhile, Piecyk calls LTE a "game changer' technology that is enabling this switch
"Aggregation of larger spectrum blocks will increase LTE speeds and densification of the cell sites will help to improve coverage and capacity," he added. "We believe these changes position wireless operators to target a material portion of the broadband market, offering a $15 billion incremental revenue opportunity" for wireless operators.
- read this BTIG Research post
Media pundit takes down analyst for 'anti-cable-and-broadcast and pro-disruption agenda'
Analysts question Verizon's prospects following positive earnings