5G Represents a Marriage Made in Heaven For the Cable Industry
Last week MIDiA Research was invited to participate on a panel at the Cable Next Gen Europe event in London, to discuss convergence and the impact of 5G for cable providers.
The gathering largely focused on sharing best practices, innovation and technology road map for the next few years. In essence, cable providers need to be better placed in order to compete with telcos, which are making big bets in convergence.
During the course of the day, a rosy picture was painted for the cable industry. Some of the key themes centred upon 1Gbps connection speeds for households, as well as managed wifi services due to device ownership growing in homes.
Cable providers were arguably among the first proponents of convergence with cable broadband and video services sold as a bundle. This in turn was followed by the addition of mobile services to further strengthen their offerings thanks to a mobile virtual network agreement. However, looking at the quarterly results over the last few years, many cable providers have been unsuccessful with this strategy; whether this is for mobile or video (reporting losses or unmeaningful net additions). And as we have seen in the US, cable providers have lost millions of video/TV subscribers due to cord cutting. Despite this, cable providers still see consumer uptake for their core high-speed broadband services.
Furthermore, the arrival of 5G allows telcos to offer households with fixed wireless access connections, which will pose a further threat to cable providers – more so in the US given the launch of Verizon’s 5G service.
Verizon is positioning its fixed wireless service at $50/month with speeds of around 300Mbs. The offering is limited to parts of Houston, Indianapolis, Los Angeles and Sacramento. Others will follow, including AT&T, which is a sensible strategy for the US given the challenges of rolling out cable or fibre for that matter nationwide.
We believe that there should be a reality check given the euphoria and hype surrounding 5G at the moment; it is clearly supply led with many vendors keen to sell more network technology equipment. Numerous markets still need to award or even free up spectrum for 5G use. There is still plentiful capacity in 4G and more needs to be done to increase coverage to satisfy users demand for connectivity.
Very few cable operators own spectrum or have a mobile offering over licensed spectrum. For this reason, it will be difficult for them to compete with carriers that own 5G spectrum. Despite this, there is an opportunity for cable providers to be relevant in the new 5G world. In particular by providing backhaul capacity, which will be more important in delivering 5G efficiently than current 4G networks.
Ultimately the role of a cable provider will change. There is an opportunity for cable providers to open up their networks and offer access to telcos and potentially the tech giants on a wholesale basis. This will provide another much-needed revenue source.