T-Mobile tried to counter the growing competitive threat from cable TV companies by saying its wireless service wasn’t profitable. What T-Mobile lacks is that profitability doesn’t matter to it being successful or a threat. Cable TV companies are very happy with their wireless performance for a reason, they create a sticky bundle that helps them target their customers for the combination of services like internet, pay TV, streaming services, VoIP phone and, yes, wireless hold .
Cable TV executives might respond to T-Mobile’s claim by saying it’s really not a bunch of beans. After all, this is like a multi-hit fight. Not every jab has to be profitable to win the fight.
And that’s the strategy of the cable TV industry.
T-Mobile is now a premium wireless competitor. They were almost dead a decade ago. Then they rebuilt themselves from the ground up with a new CEO, new thinking and a damn marketing campaign.
Today they are among the top three companies in the mobile communications industry. You have done a great job.
That being said, they shouldn’t try to cut off the competition’s legs if their argument isn’t valid. It makes her look weak.
Wireless cable TV doesn’t have to be profitable, just a sticky bundle
Years ago, Verizon, AT&T, Sprint, and T-Mobile left the wireless space with postpaid services. Today things are different. Many customers want to pay less and are looking for cheaper alternatives.
Because of this, the MVNO reseller side of the wireless industry is growing rapidly. Not just the cable TV services like Xfinity Mobile, Spectrum Mobile and Optimum, but many different brands like Cricket, Tracfone, Pure Talk and countless others.
Today wireless is divided into two parts. One is the network page. The other is the services offered.
On the network side, MVNO resellers make a deal, start selling prepaid services, and become a competitor. They usually rank second to direct customers in terms of access and peak-time performance, but prices are significantly lower. That’s what attracts customers.
On the service side, Verizon, T-Mobile, and AT&T offer postpaid services. You get primary access to the network. But they also charge more than resellers.
That’s the choice the customer has. Pay full price for primary wireless network access or pay less for secondary access.
Cable TV uses wireless to stabilize its subscriber base and revenue stream
Years ago, cable television competitors like Comcast, Charter Communications, Altice, and others faced a real dilemma. They lost cable TV customers.
So their correction strategy was to offer multiple services and create a fixed package that would be difficult for the customer to cancel.
And they were successful. Today, their customers use many different services and receive discounts on the total package.
Entanglement in a bundle of services keeps the customer in place and reduces the loss for the company.
The main service of cable TV is Internet, Wireless, VoIP and TV
Cable television has changed. It used to be just about cable TV. Today the main service is the Internet. They also offer a variety of other services like pay TV, streaming, VoIP telephony and yes, wireless services to confuse the customer in order to keep them.
Your goal is not to be profitable at everyone. never was Just as a supermarket gives away certain loss-making items each week just to keep the customer, cable TV companies are doing a similar thing.
Wireless is a loss leader for the cable TV industry
So think of wireless as a loss-maker for the cable TV industry. They don’t have to be profitable in the wireless space as long as they are broadly.
I know what T-Mobile was up to. With these comments they tried to cast doubt on the cable television industry. This is the same strategy they’ve used for the past decade.
However, in the beginning it was necessary. They had to make their way onto the map. At that time, T-Mobile was not trusted by the market.
Today things are different. Today they win the competition. Now is the time to curb these kinds of outrageous claims in order to maintain their position in the market.
Cable TV in wireless is good.
Whether their wireless services are viable or not is not the question. The real question is whether it’s a growing company with a solid customer base. And the answer to that is yes.
