Cable operators Charter and Comcast are finally taking a chunk of the lucrative US postpaid market. The trend started in the second quarter of 2019, representing the first time these companies’ wireless MVNO plays registered such an impact. And despite the crisis surrounding COVID-19, the trend continues to accelerate. So what is their secret weapon and what’s giving them this edge?
Traditionally, MVNOs carved out niche plays in lower-income consumers or specific market segments after purchasing wholesale access to operator’s networks and then reselling it. Many MVNOs have come and gone in the US over the years for a variety of reasons. However, multi-operator MVNOs can now compete on user quality of experience, in addition to price and customer service.
For example, cable-backed MVNOs Xfinity Mobile (Comcast) and Spectrum Mobile (Charter Communications) started making shockwaves in the second quarter of 2019 when they captured nearly 50% of the postpaid subscriber growth. Between the two companies, they added nearly as many postpaid subscribers as their host network, Verizon. Indeed, independent crowdsourced data company firm Tutela wrote that their findings suggest, “Xfinity Mobile has already succeeded in offloading over 6% of smartphone data traffic onto its Wi-Fi network – far more than any other network.”
It’s therefore no coincidence that both Charter and Comcast use software services provider Amdocs to help, and have recently signed more extensive deals that will continue to modernize their respective back-end systems for a better digital customer experience.
The partnership with Comcast includes a multi-year managed services agreement for hosted operations for its Xfinity mobile brand. It involves Amdocs bringing its DevOps teams and expertise to collaborate on launching new mobile offers and service enhancements, while providing a more efficient, simplified and streamlined digital customer experience.
Similarly, Charter’s Spectrum Brand is seeing tremendous benefits from Amdocs’ provisioning of multiple systems, spanning multi-channel sales, ordering, customer service and modernization capabilities to modernize huge swathes of its business operations. In both of these example, Amdocs’ scale and global presence ensures stability, enhanced time to market for new offerings, fraud and collections expertise and platform data integrity.
U.S. Cellular was the first major wireless carrier to acknowledge that Comcast's Xfinity Mobile, and other cable company MVNOs, are putting pressure on the market. Responding to questions during the company's Q3 2019 conference call with investors, chief executive Ken Meyers explicitly attributed the phenomenon to the “cable influence.”
Meyers's acknowledgement did not go unnoticed. “U.S. Cellular called out cable MVNO competition, flooding in some of its larger market areas, the absence of a high-profile phone launch, and an industry-wide lengthening of upgrade cycles as reasons for the softness in activity,” wrote the Wall Street research analysts at B. Riley FBR. “Somewhat concerning is that around 45% of U.S. Cellular's footprint overlaps with Charter, Comcast, or Altice, all of which have been ramping their wireless offerings. We see the cable companies continuing to present formidable competition.”
Meanwhile, Altice, another US cable giant, is also using Amdocs’ products and services to bolster their competitive edge. Following the company’s impressive entry into the market in September 2019, it added 110,000 mobile lines, including more than 41K net additions in Q1 2020, with quarterly revenue of $18 million.
Even in the midst of the current COVID-19 pandemic, Comcast and Charter MVNO businesses too continue to notch up huge successes , seeing increases in their mobile virtual network operator (MVNO) subscriptions during the previous quarter. Comcast for example, added 216,000 new wireless lines, bringing its total to 2.3 million lines. And its wireless revenue increased 52% to $343 million. Meanwhile, Charter added 290,000 Spectrum mobile lines in the first quarter, and as of March 31, 2020, was serving a total of 1.4 million mobile lines – hot on the heels of launching a new 5G service, also in Q1.
At the same time, Xfinity Mobile and Spectrum are offering customers flexibility and personalization – from mixing data options on an account to easily switching data options mid-month based on usage. As both of these brands continue to grow, it requires a platform that is open and dynamic to support both current demands and future growth. Here too, Amdocs is giving them an edge now and this is set to grow exponentially in the foreseeable future.
Such successes can be attributed to the agility these companies have gained, which enable them to launch new offerings quickly (particularly 5G services), deliver unparalleled customer service and streamline operations, and thereby succeed against traditional operators. Amdocs’ platforms and services have played a crucial in developing this agility.
When it comes to MVNOs, the common denominator in their successes against traditional operators comes in the way they’ve been leveraging Amdocs technology to increase agility and boost customer experience. As the world moves beyond the COVID-19 crisis, by continuing to leverage these technologies, the promise for these players to further raise their profile in the competitive US market will only grow.