Broadband And TV Customers Continue To Flee Charter And Comcast As Ridiculous Merger Talks Percolate

For a long while there it was good to be a lumbering U.S. cable monopoly. Companies like Comcast and Charter pretty much enjoyed a monopoly on broadband at “next generation” speeds (over 100 Mbps) in most towns. So while they were losing traditional cable TV customers to streaming (or piracy), they could still extract their pound of flesh courtesy of their monopoly over broadband access.

But that dynamic is starting to change a little bit with the rise of 5G wireless and community broadband alternatives.

While U.S. wireless has generally been more expensive and slower than in Europe, it’s still been good enough to compete with stodgy old cable monopolies. So users tired of their cable company are signing up for cheaper home 5G wireless services, and the big old cable companies are starting to notice.

The remaining three wireless giants (AT&T, Verizon, T-Mobile) added 900,000 fixed 5G customers last quarter, and many of those came from cable giants seeing significant ongoing user defections.

Comcast, for example, lost 139,000 broadband customers last quarter, and 1.58 million TV customers last year. Charter lost 177,000 broadband customers last quarter, and 1.23 million TV customers last year. A lot of those defecting broadband customers moved over to the home 5G wireless service, though community-owned broadband networks also continue to make inroads in a lot of places.

The losses drove down Charter and Comcast stock substantially, driving chatter about a potential merger between the two terrible companies (always the refuge of executives all out of ideas about how to artificially goose quarterly earnings in growth-stagnant markets).

Trumpism generally loves rubber stamping shitty telecom mergers without reading about potential harms to pricing or competition (see: Sprint/T-Mobile), so telecom executives are very excited about the potential for more consolidation in telecom, streaming, and traditional media.

Charter’s CEO addressed rumors of a potential Comcast merger by saying he was “wide open” to all big merger opportunities, while amusingly pretending that mergers have never been part of Charter’s DNA (Charter merged with Time Warner Cable in 2016 and countless other companies before that):

“I know there’s a lot of chatter out there” about Comcast, [CEO Chris] Winfrey said. But Charter’s strategy, he continued, “has never been dependent on M&A. In fact, it’s really been moving purely from an organic growth perspective, and how do we create value for shareholders from that perspective? You do that by being a great operator. You do that by saving customers lots of money, providing great service.”

Consolidation, whether between direct or indirect competitors in telecom, always ends badly. It always ends with lower quality products, higher prices, and shakier customer service. But it does temporarily goose stock values and generate tax breaks for executives all out of original ideas.

Meanwhile, the broader competitive threat to cable giants is likely being overstated. Charter and Comcast still enjoy broadband monopolies over vast swaths of the U.S. They’ve also been making steady inroads into offering their own mobile wireless service; Charter and Comcast added 529,000 and 307,000 wireless subscribers last quarter alone.

So yes, there’s a slight uptick in competition, but it’s fragile.

Verizon, T-Mobile, and AT&T are artificially lowering their prices for home 5G access to gain market share. Once they’re satisfied (or need to goose earnings due to economic downturns) they’ll start jacking those prices upward. Cable wireless service also leans heavy on the wireless network footprints of incumbent giants, which grab a big cut of the proceeds (and can make those agreements more hostile if needed).

So wireless and cable are “competing,” but they’ll put an end to it should it really start to have any lasting impact on one side or the other.

Keep in mind: there’s also $42.5 billion in infrastructure bill grant money headed to the states. Trumpism is very likely to redirect a big chunk of that money away from popular alternatives (municipal broadband, cooperatives) and toward Big Telecom and Elon Musk. Neither of which, unlike muni-broadband builds, have any particular interest in actually trying to compete on price.

And then, of course, there’s the telecom industry’s multi-decade successful gambit to kill what’s left of federal government and FCC oversight. Thanks to a Trump Supreme Court we’ve effectively dismantled whatever was left of coherent federal broadband consumer protections (whether that’s net neutrality or basic transparency rules), which will likely usher in a new golden age of nickel-and-diming U.S. consumers.

As federal consumer protection falls apart, telecoms will have even less incentive to try and compete on price. Without the pretense of FTC and FCC oversight, they’ll also inevitably fall back into obnoxious new creative ways to nickel and dime existing customers without competitive options.

The only real threat to these companies? The growing number of municipalities and city-owned electrical utilities pushing into fiber access. Recall that Republicans already tried to ban such networks (during a pandemic that highlighted their helpfulness) and I wager a key part of Trumpism will involve helping the telecom lobby interfere with that progress wherever possible in creative and obnoxious new ways.