The titans of the wireless telecom world aren't facing an existential crisis. But the industry's powerhouses T-Mobile (TMUS -0.19%), Verizon (VZ -0.10%), and AT&T (T 0.18%) can't afford to keep their heads stuck in the sand any longer either.
The country's top two cable television companies -- already serving more than 66 million telco customers between them -- are making inroads with their wireless service efforts. In fact, both Comcast (CMCSA 0.86%) and Charter Communications (CHTR 1.50%) just saw their best-ever quarterly wireless customer additions, netting a collective total of 692,000 subscribers.
It sounds like an issue worth phoning home about.
Image source: Getty Images.
Cableco wireless is coming on strong
Apparently, the nation's top two broadband and cable TV names are no longer fringe wireless service providers. They're quickly becoming contenders. Charter's Spectrum brand now boasts 3.5 million customers, and Comcast's Xfinity has just under 4 million paying subscribers. That's a solid result for an effort Comcast began in 2017 and Charter began one year later.
Data source: Comcast Corp. and Charter Communications Inc. Chart by author.
While not shown on the chart (since it's not your typical cable company), DISH Network (DISH) is also chipping away at the mobile business. Its Boost Mobile serves nearly 8.8 million customers as of the end of its third quarter.
For perspective, AT&T handles around 100 million wirelessly connected devices. Verizon's got around 115 million customers. T-Mobile's in between there with 106 million wireless subscribers. Comcast and Charter aren't exactly in a position to destroy the wireless telecom industry's much bigger providers.
At the other end of the spectrum, though, none of the wireless industry's giants can afford to ignore Charter and Comcast any longer. Pew Research says 97% of Americans now own a mobile phone, meaning any meaningful market growth from the mostly saturated market is linked to population growth.
From that standpoint, the 7.5 million mobile phone consumers Charter and Comcast now serve are critically important. They could have been (and arguably should have been) someone else's customers.
Perhaps the most concerning aspect of the cable industry's foray into the world of wireless service is that their growth is still accelerating rather than decelerating. Last quarter was another record-breaker in terms of Charter and Comcast's wireless subscriber growth. Verizon, AT&T, and T-Mobile have been mostly unwilling or unable to stymie the budding competition.
Time for AT&T and Verizon to answer tough questions
There are natural stumbling blocks for both nascent wireless services. Spectrum Mobile is only offered to Spectrum internet customers. Likewise, Comcast's Xfinity Mobile is only available to Xfinity broadband subscribers. Both services rely on wholesale access to towers and infrastructure already operated by AT&T and Verizon. And both also rely on their own broadband infrastructure to handle the connection load when a customer is within reach of Spectrum and Xfinity networks -- a benefit DISH can't tap into. Neither would be able to offer ultra-low-price mobile plans without their existing broadband platforms. For that reason, don't look for either provider to venture into geographical markets where their TV and high-speed internet businesses aren't already entrenched.
On the other hand, with 66 million customers of at least one of their services, Comcast and Charter don't necessarily have to expand to make waves for AT&T, Verizon, or T-Mobile.
The opportunity here for Charter and Comcast is not enough (yet) to make these cable company stocks more of a buy than they would be without their budding mobile businesses. It's not even enough to make the mainstream wireless providers less ownable than they would be if they were not facing new competition. It is enough, however, for T-Mobile, AT&T, and Verizon investors to start asking questions about what these companies intend to do about this new threat. There's already very little room left for customer growth. The cable industry's entry into the market shrinks that small opportunity down to an even smaller size.
