Please ensure Javascript is enabled for purposes of website accessibility

The Triple-Play Bundle Is Dead, But This Surprisingly Popular Bundle Just Might Stop Cable Companies' Bleeding

By James Brumley - Jun 27, 2021 at 9:51AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Consumers are slowly but steadily signing up for mobile phone plans offered by brands best known for their cable television services.

To say the so-called "triple play" package was a good promotional tool for the nation's cable television providers would be a serious understatement. Being able to package cable TV, broadband, and phone service into one single bundle is what made names like Charter Communications (CHTR -1.55%) and Comcast (CMCSA -1.66%) the outright powerhouses they've become since the late-90s.

It's all imploding now, of course. Only about half of all U.S. homes still pay for landline phone service, while streaming services are viable alternatives to traditional cable. The number of cable households in the U.S. has fallen from more than 100 million in 2014 to less than 74 million now, according to eMarketer, en route to a projected 63 million paying cable television households by 2024. Consumers have more high-speed internet choices than they've ever had before, too, with wireless broadband service now an option for millions.

Point being, the triple-play offer is becoming increasingly irrelevant.

Business people reassembling puzzle pieces.

Image source: Getty Images.

There's a new, surprisingly marketable bundle cable titans are finding success with, however. As it turns out, consumers are digging mobile phone services from their cable television provider. This combination just might offset cord-cutting's adverse impact on the cable television business.

Surprising market penetration

Market research outfit Parks Associates offers up a glimpse of the bundle's penetration: As of the end of the first quarter of this year, 19% of U.S. broadband subscribers also enjoy wireless/mobile service offered by the same provider.

It's not a lot, admittedly. But put it in perspective. Charter's Spectrum only began offering mobile phone service in mid-2018. It now serves nearly 2.7 million mobile customers. Comcast's Xfinity Mobile platform only launched in mid-2017, and it's already signed up 3.1 million wireless subscribers. The portion of domestic broadband customers who have bundled their high-speed internet service with a mobile plan has grown from only around 11% in early 2019, according to Parks Associates' data, to the aforementioned current figure of 19%. 

Cable companies Charter and Comcast are building surprisingly robust mobile phone businesses.

Data source: Comcast and Charter Communications. Chart by author. 

Perhaps most noteworthy is that this penetration is taking shape despite the fact that these mobile services are limited to cable companies' existing broadband customers.

Don't sweat the relatively small scale we see right now. The growth trend is the key. It's simply incredible.

Making broadband more marketable

If you think this all spells doom for more traditional wireless names like AT&T (T 0.05%) and Verizon (VZ -2.54%), think again.

While both Comcast and Charter are partially leaning on their broadband infrastructure to power their mobile networks, Charter's paying for wholesale access to Verizon's network when it can't handle the mobile service internally. Comcast is heavily plugged into Verizon's network as well, though AT&T also offers similar access to third-party wireless service providers. This movement is still a revenue opportunity for the two titans of the wireless world, offloading the headaches -- and cost -- of handling each and every retail customer utilizing these networks.

Cable TV names handling the front-end work for mobile network operators, however, are hardly on the losing end of a bad deal. At the very least, the addition of mobile service to the mix is a customer-attraction and retention tool, and it may eventually be a key profit center.

Parks Associates indicates the average cost of a broadband/mobile combo is $128 per month. With stand-alone broadband service costing an average of $64 per month, the other $64 of the combo's total cost is on par with a typical wireless service plan's monthly cost. Although the mobile service arena is highly competitive, at least we know that all the major names in the mobile telecom business are profitable. Given how the cable television industry has been on the defensive for years, conversely, it's not always clear if there's still any real profit to be gleaned by being in the business.

Bottom line

For shareholders of Charter and Comcast, it's a much-needed glimmer of hope. Although both continued to add broadband customers last quarter, both also added to their ongoing cable television customer losses. Mobile is quickly becoming a meaningful way to offset that attrition.

Though Charter and Comcast continue to lose cable television customers, they're adding wireless customers in droves thanks to a broadband bundle.

Data source: Comcast and Charter Communications. Chart by author.

Still, while the mobile/broadband bundle's growth may be steady, it's also slow thus far. It is also limited by Charter's and Comcast's infrastructure capabilities, and one has to figure that Verizon sooner or later will respond to the threat being posed by its wholesale customers. This is a long-term project, to be sure.

It's certainly a shift all investors would be wise to put on their radars, all the same.

James Brumley owns shares of AT&T. The Motley Fool recommends Comcast and Verizon Communications. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Comcast Corporation Stock Quote
Comcast Corporation
$38.61 (-1.66%) $0.65
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
$44.19 (-2.54%) $-1.15
AT&T Inc. Stock Quote
AT&T Inc.
$18.43 (0.05%) $0.01
Charter Communications, Inc. Stock Quote
Charter Communications, Inc.
$458.07 (-1.55%) $-7.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.