- Broadband in the US is a great, high-margin business with limited competition.
- But now the telco companies are trying to grab a piece of it via “fixed wireless.”
- You can tell the broadband guys are worried about it by watching their TV ads.
There are some people who really, really like Super Bowl ads. I’m meh about them because I’m usually up getting a drink or some chili or something.
But this one eventually caught my eye — after I saw it several days in a row after the game. It only ran in some places in the US, so it may be completely new to you:
To spell it out: This is from Spectrum, also known as Charter — the biggest cable TV provider in the US, and the second-largest broadband internet provider in the US. And it’s specifically targeting a rival program from T-Mobile — the third-biggest wireless carrier in the US, which has started selling its own broadband service.
Which, I vaguely knew about? Because I’m supposed to know about this stuff professionally. And not because T-Mobile has spent a ton of money advertising this on places like … the Super Bowl. (Again, I really tune out these things.)
But it really did take a minute or two for the penny to drop: Spectrum, which hadn’t advertised on the Super Bowl for years, decided to do it again … so it could insult a rival service.
Which means that service … must be a threat.
Is that right?
I’ve heard for years about the idea that wireless carriers would eventually take on the big broadband companies by selling “fixed wireless” broadband — broadband you can get via 5G airwaves using a box you put in your window instead of relying on cables buried in the ground.
Which sounds great to me. Because, per the Biden White House, more than 200 million Americans are stuck between choosing from two broadband providers, max. And I like the idea of having more options for my internet.
That’s why I used to be really interested in Google’s plans to sell its own broadband, which it has basically bailed on. And why in 2016, I was walking around rooftops in Boston to see how startup Starry Internet planned to beam wireless into homes around the country.
But Starry never caught on — in fact, it filed for Chapter 11 last year — and I figured that if it was really happening at scale, and I could get the internet beamed into my house, I would know about it at this point.
Turns out, I am not a top-notch broadband reporter. If I were, I would know that competition from fixed wireless has been keeping the broadband guys up at night for some time.
“It has been absolutely the key controversy for cable investors for the last four years,” analyst Craig Moffett, of MoffettNathanson, told me Wednesday.
And with good reason: Right now, the wireless guys (mostly T-Mobile and Verizon) have 7 million fixed wireless customers, per MoffettNathanson. And T-Mobile alone has been adding about 500,000 more every quarter. (The broadband guys, for now, have 113 million subs.)
Most of those new wireless subs have to be coming from the former customers of the broadband cable guys — who have basically stopped describing themselves as cable guys because cable TV is falling off a cliff. They’re now calling themselves broadband companies because that’s a great, high-margin business that isn’t going anywhere.
The broadband guys are happy to tell you why they think their internet is better than the wireless internet the telco guys are selling. And it turns out they’ve been doing it in ads for the last couple of years. Here’s another one from Spectrum, telling you that T-Mobile won’t give you enough bandwidth to keep your family happy. And here’s one from Comcast, telling you the same thing. Comcast also has a webpage dedicated to its anti-T-Mobile sales pitch.
But spending Super Bowl ad money to do that? That’s pretty telling.
By the way: Moffett says there are legitimate questions about fixed wireless’ capacity to serve lots of people at scale. And whether it really makes economic sense for the wireless guys to sell it in the first place. So maybe all this growth caps out at some point.
But for the moment, we know the cable guys — that is, the broadband guys — are no longer taking the fixed wireless guys for granted. And are worried about them eating into their core business.
And also that maybe I should pay more attention to TV commercials.
