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Joe Madden |
Astronomers report that when galaxies collide, they can see the dramatic explosion of energy. But in reality, when the two galaxies make first contact, there's not much visible impact. The initial "collision" is really two dispersed objects that overlap with each other, occupying a shared space without significant direct conflict.
The mobile market has started to collide with the cable market. Like a gravitational pull, they're both drawn into the same space as a next wave of growth will come from convergence of networks and services. We see companies in each area starting to anticipate the coming competition between fixed and wireless. Examples include:
- Cablevision launched a "Freewheel" smartphone service based on Wi-Fi first
- To a lesser degree, Google's Project Fi uses Wi-Fi networks to replicate a smartphone service (but using Sprint and T-Mobile as backup networks)
- Comcast, among other cable operators, will be bidding in the 600 MHz auction
- AT&T acquired DirecTV and then offered "unlimited" data to customers that subscribed to both mobile and video services
- Verizon launched its Go90 service with interesting content from some of the most popular YouTube channels and the NBA
With all of this action, it's hard to see cable and mobile as friends….they look more like competitors. Still, there are indications on the other side as well. Cable companies are now hosting small cells on their utility poles and small cells are using cable-company fiber for backhaul. Comcast is actively developing an MVNO service on the Verizon network. So maybe they can get along.
In personal discussions, I've noticed that the cable guys seem pretty open-minded about working with the mobile operators, supporting them with backhaul for the 4G or 5G network and collaborating on the best solutions for the end user. On the other hand, mobile operators in the U.S. are not as open-minded, and appear to be uninterested in cooperation. I asked one of the cable big-shots why he didn't collaborate with mobile operators with a Hotspot 2.0 roaming agreement and he told me he contacted them, but the two big U.S. mobile operators didn't call him back.
Maybe the different mindset of each group comes from their history. The cable market has been a country-club atmosphere where the players generally don't compete with each other, but work together on standards and other shared objectives. Mobile operators live in a dog-eat-dog world of constant churn between competitors. A mobile operator that fails to invest will quickly lose customers and drop out of the lead.
U.S. Government regulators have viewed these markets as totally separate in the evaluation of potential mergers. The Department of Justice was concerned about T-Mobile merging with AT&T or Sprint because it doesn't want the mobile market to consolidate to three nationwide competitors. Following an obscure formula, the DOJ determined that four players are better than three, even if two of the players lack the scale to compete effectively.
Government regulators in several countries should change their mindset, and look at mobile broadband and fixed broadband providers as competitors. They should allow Sprint and T-Mobile to make deals that can make them stronger. They should scrutinize a mega-deal between the biggest players in each area. These markets have already started to overlap with each other, and when 5G arrives we expect the competition to get much more deadly.
In astronomy, the real fireworks start when the core of one galaxy hits the core of another. I can't wait to watch this train wreck happen because it probably means cheaper and better broadband at my house and better content when I'm on the go.
Joe Madden is Principal Analyst at Mobile Experts LLC, a network of market and technology experts that analyze wireless markets. The team provides detailed research on Small Cell, Base Station, Carrier Wi-Fi, and IoT markets. Mr. Madden currently focuses on trends in 5G, IoT, and Enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of Digital Predistortion, Remote Radio Heads, Small Cells, and the rise of a Mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers to find the match between business models and technology. Mr. Madden holds a Physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.