There is an unmistakable trend taking hold in the wireless industry: video is quickly becoming bait for big carriers to lure and retain subscribers. All 4 of the biggest U.S. carriers have not only launched unlimited data plans, which are being explicitly promoted for video viewing, but in addition 3 of the 4 (T-Mobile, AT&T and Verizon) are also tying in aggressive discounts on video services. As I wrote recently, all of this carrier activity will drive more widespread mobile video use.
The start of the trend can clearly be traced to November, 2015 when T-Mobile launched its Binge On program, which now allows users to watch 120+ video services without impacting the user’s data plan. T-Mobile upped the ante in late 2016 by offering AT&T subscribers who switched to T-Mobile a full year of DirecTV Now for free (a $420 value). In January, T-Mobile further tweaked AT&T by adding a free year of Hulu for these subscribers because of the launch problems DirecTV Now experienced.
Continuing its video promotions, last week, T-Mobile announced that on April 4th it would give ALL of its subscribers access to MLB.TV Premium (a $113 value) and MLB.com At Bat Premium (a $20 value) for the full 2017 season. These were on top of a separate offer that anyone who switches to T-Mobile by March 16th will receive a free iPhone 7.
While T-Mobile is most extensively using video as bait, AT&T and Verizon are right behind. AT&T announced last week that anyone signing up for its new AT&T Unlimited Plus plan would receive a $25 credit if they also signed up for DirecTV, DirecTV Now or U-verse (or are an existing subscriber). For its part, Verizon announced last week that existing Verizon subscribers who switch to its recently-launched Unlimited plan would receive a $250 credit if they sign up for a Fios TV, Internet and phone plan with a 2-year agreement. Non-existing Verizon subscribers who sign up for the package and Unlimited service receive another $250 credit.
Even as the biggest wireless carriers duke it out with their new unlimited plans and video offers, a potentially major market disruption is coming mid-year, when Comcast plans to launch its own hybrid wireless service backed by an MVNO agreement with Verizon. Last week at Morgan Stanley’s technology conference, Comcast’s Chairman and CEO Brian Roberts shared the company’s 3 “pillars” for pursuing wireless, which included, (1) the ability for the new service to be net present value positive with minimum scale, (2) the ability for it to reduce churn for existing subscribers to other services, by saving them money and (3) the ability for it to help sell more non-wireless products.
My interpretation of all this is that Comcast’s primary strategy will be to bundle wireless with 2 or 3 of the company’s other services (video, broadband, voice) in a way that makes the incremental charge for wireless service lower than what wireless service costs on a standalone basis from either AT&T or Verizon (I’m guessing it won’t go low enough to compete with T-Mobile’s and Sprint’s pricing).
But Comcast could rely on much more than price promotions to carve out wireless market share. It could also provide new value by giving bundled subscribers extensive mobile access to their full video subscriptions at no extra charge (ordinarily this would be called “zero-rating,” but since the FCC has dropped any concerns about it, I’m not even sure it should have a term any longer). Finally Comcast could also offer new multiscreen value through its mobile apps for things like DVR access, etc.
In short, while we’ve seen carriers mainly using promotions of video services as bait to draw new subscribers, Comcast could go well beyond this by providing new feature-level value, in addition to cost-savings, to take a bite out of the market. With its extensive WiFi network, Comcast can also leverage underlying network savings and other benefits of network awareness like minimum quality of service. And Comcast isn’t the only major cable operator poised to enter wireless as Charter has also indicated it will launch a hybrid wireless service, also backed by a Verizon MVNO agreement.
Clearly the trend toward wireless and video coming together is only going to accelerate in 2017, driving ever-higher mobile video consumption. However, it is still far from clear who the ultimate winners and losers will be.