The recent emergence of unlimited LTE wireless data plans poses only limited risk to Comcast, Charter and other wireline broadband providers, at least in the near term, said MoffettNathanson analyst Craig Moffett in a report released today.
“We conclude that the risk (to wired broadband providers) of wireless substitution from the wireless industry’s new unlimited LTE data plans is lower than intuition might suggest,” Moffett said. “The compromises one would have to make in order to go ‘wireless only’ simply aren’t economically compelling. Yet. Still, it is reasonable to expect at least some substitution around the edges from light users.”
According to Moffett, only around 6% to 7% of U.S. households rely solely on wireless broadband, a percentage that hasn’t changed for several years.
“It’s not hard to understand why,” the analyst said. “Cellular broadband typically offers lower speeds and weaker reliability than its wireline counterparts."
“More importantly,” Moffett added, “most wireless customers have been on metered data plans which penalize overages with heavy fees and/or dramatically reduced data speeds.”
But in the longer terms, wireline broadband does face the same cord-cutting threat that has aready imperiled cable operators’ pay-TV and telephone revenue streams.
“As wireless networks continue to improve in both reliability and capacity, and as the industry shifts away from plans with caps and overages to unlimited data, we would expect to see an increase in the number of households that cut the cord for broadband.
Moffett’s naval-gazing here has particular relevance to cable operators, who have been seizing wireline broadband market share by millions of customers annually, of late. According to Leichtman Research Group, cable operators controlled 63% of the U.S. wireline market at the end of 2016.