Charter Communications this week reduced prices on multi-line unlimited data plans.

A customer with one line of unlimited data service will continue to pay $45 a month for the plan, but each additional line of unlimited data will now cost $29.99 a month — a $15 reduction from Spectrum’s old pricing.

Xfinity Mobile, Comcast’s similar wireless service, already cut multi-line unlimited pricing to $30 a month back in April 2021.

Rutledge

Charter CEO Thomas Rutledge told investors last spring that he wanted to drive customer growth in Charter’s mobile phone offering by slashing mobile service pricing.

“Our goal is to do the same with mobile in our service area as we did with wireline voice, where we made Charter the predominant wireline phone carrier by reducing consumer telephone bills by over 70%, meaning Charter can grow for a long time because we remain under-penetrated and our growth will reduce customer costs,” Rutledge said.

For several years, Charter charged most bundled customers $10 a month for a flat-rate, unlimited long distance home phone line. The company raised prices $3 a month for landline service earlier this year, but claims it still delivers significant savings over traditional landline service.

Both Charter and Xfinity Mobile operate their wireless mobile services using a combination of Wi-Fi calling and roaming on Verizon’s 4G and 5G networks. Customers must agree to bundle home broadband service to get the lowest mobile pricing. If a customer drops internet service, mobile pricing increases $20/mo per line.

Charter’s new pricing undercuts T-Mobile, AT&T, and Verizon:

Service pricing for two-line unlimited data plans

• Spectrum Mobile: $75/mo
• T-Mobile: $105/mo
• AT&T: $125/mo
• Verizon: $130/mo

With record-breaking unemployment and an economy in tatters, consumers are abandoning high-priced mobile plans and switching to lower priced cable operator mobile plans.

Comcast, Charter/Spectrum, and Altice USA saw dramatic customer gains of 547,000 new customers in the first quarter of 2020, primarily at the expense of AT&T, Verizon, T-Mobile, and Sprint, according to Wall Street analyst firm MoffettNathanson. The four largest wireless carriers saw a collective 1.3% drop in subscribers, which counts as the worst performance the traditional wireless sector has seen since 2014. But their loss was the cable industry’s gain, with three cable operators achieving a 130% increase in new mobile customers during the first quarter of the year. The three cable companies now have a combined 3.7 million wireless customers.

Comcast and Charter contract with Verizon Wireless for 4G LTE and 5G service, while Altice USA provides its mobile customers with access to Sprint’s network. The cable operators keep costs down by favoring Wi-Fi connections wherever possible.

Two factors are driving the growth of cable industry mobile plans:

1. Price: Altice USA sells its mobile service at just $20/mo per line. Comcast and Charter both sell unlimited data, talk and text plans for $45 a month per line and a “By the Gig” plan option that includes 1 GB of data bundled with unlimited calls and texting for a flat $14/per gig at Charter and $15/1 GB or $30/3 GB or $60/10 GB at Comcast. With unemployment numbers high and consumers worried about the future of the job market, economizing expenses matters.
2. Network: Comcast and Charter both rely on Verizon Wireless, recognized as one of the strongest wireless performers in terms of coverage and signal quality. Customers can switch to a cheaper cable company mobile plan without sacrificing network coverage.

MoffettNathanson’s Craig Moffett noted that the COVID-19 pandemic closed most wireless retail stores, and there was a wide belief that wireless industry sales would be anemic at best during the spring as people stayed home. Instead, the cable industry heavily marketed its wireless plans and expanded the number of pre-owned devices qualified for “Bring Your Own Device” switching, allowing customers to swap SIM cards instead of being forced to buy new devices.

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” Moffett said in a research note.

Moffett predicts the second quarter will show an even greater number of customers dropping traditional mobile plans in favor of plans provided by their local cable company. Some customers report saving over $100 a month by switching.

One potential downside: customers must subscribe to other products sold by their cable provider to get the best price on wireless service. Comcast’s Xfinity Mobile applies a $20 per line monthly charge if the customer does not maintain at least one of the following: Xfinity TV, Internet or Voice service. Spectrum customers that cancel internet service with the cable company will pay an additional $20 monthly charge per line, have Spectrum Wi-Fi speeds limited to 5 Mbps, and are not allowed to add any additional mobile lines.

Comcast is now giving Xfinity Mobile customers access to Verizon’s 5G network, if a customer owns a suitable 5G-capable device and is willing to pay more in certain cases.

“From day one, Xfinity Mobile has been proud to be the only provider to empower customers to design a mobile plan that fits their needs, as well as have the flexibility to seamlessly switch between unlimited or per gig to save money,” said Rui Costa, Comcast’s senior vice president of innovation and customer value propositions. “We’re excited to now extend that benefit with 5G data plans.”

Comcast has diverged from Charter Communications, which has been offering access to Verizon’s 5G network to Spectrum Mobile customers since March. Xfinity Mobile customers paying “by the gig” or subscribed to unlimited service will both have access to 5G service. In contrast, Spectrum Mobile customers must have an unlimited plan to access 5G.

Existing Xfinity Mobile customers will need to opt in to 5G service through the Xfinity Mobile app, which will also raise your rates from $12/GB to $15/GB. If you don’t want 5G access and prefer paying $12 per gigabyte as you have all along, do not opt in to the new plan:

Xfinity Mobile Pricing (Effective May 18, 2020)

• Discontinued By the Gig 4G-LTE: $12 per gigabyte (includes unlimited voice and texting)
• New By the Gig 5G/4G-LTE: $15 per gigabyte (includes unlimited voice and texting)
• Unlimited 5G/4G-LTE: $45 per month (includes unlimited voice and texting)

Comcast and Charter’s wireless offerings have seen substantial subscriber gains as customers discover they can access Verizon Wireless’ extensive network and pay substantially lower prices as well. Verizon’s own customers will eventually face a $10 surcharge per month for access to 5G.

Is Xfinity’s 5G “By the Gig” plan worth an extra $3 per gigabyte? Only if you live in one of 35 U.S. cities where Verizon offers millimeter wave 5G service in select neighborhoods. Verizon’s current 5G network is extremely limited, with most living and working outside of a Verizon 5G coverage area. That could mean upgrading to Xfinity’s 5G plan will only result in paying more money for the same level of service you already had.

Altice USA could be your next cell phone provider, if you subscribe to Cablevision’s broadband service in the metro New York City area.

The Wall Street Journal reports Altice is preparing to launch an unlimited calling/texting/data plan that will cost between $20-30 per month, powered by Cablevision’s in-home Wi-Fi, its network of public Wi-Fi hotspots, and Sprint’s 4G LTE network.

The service, likely to be called Altice Mobile, is the latest entry from cable operators pitching low cost mobile service as an incentive to keep customers from switching providers. Altice will charge dramatically less for its unlimited plan than Xfinity Mobile and Spectrum Mobile ($45) — both reselling Verizon Wireless service — (with speeds reduced to 1 Mbps download and 512 kbps upload after 20 GB of data usage in a month.)

Customers using AT&T and Verizon pay even more. Unlimited monthly plans for a single phone start at $80 at Verizon and $70 at AT&T, depending on bundling certain other AT&T-owned services. For less than half the price, Altice Mobile would deliver all the same services larger providers offer, although Altice intends to offload as much usage as possible to its network of Wi-Fi hotspots, to keep costs low. Before Altice acquired the cable company, Cablevision built a major Wi-Fi presence in the New York City metro areas where it provides cable service. Altice announced it intends to strengthen that network to support its mobile initiative, including the possibility of deploying its own small cell network.

Where Altice cannot supply its own wireless connection, it will rely on Sprint to take over, paying the cell phone company for its customers’ traffic. In return, Sprint will be able to bolster its network in Altice’s service area, perhaps even using Altice’s fiber-to-the-home network, now under construction. That could help Sprint launch 5G service relatively soon in the region, regardless of whether its pending merger with T-Mobile USA is approved. To protect the venture, Altice has secured an agreement with both T-Mobile and Sprint not to terminate its contractual agreement with Sprint should a merger be approved. But the service will still be dependent on network owners like Sprint willing to sell connectivity. Should Altice Mobile take a significant share of the market, network owners may be reluctant to renew such contracts, or price them much higher at renewal time, raising prices.

The cable industry’s incentive for getting into the wireless business, even if it proves unprofitable, is plain to see. All entrants require their mobile customers to maintain a broadband account in good standing to qualify for mobile service. Comcast, Charter, and Altice are aware their video packages are increasingly untenable in a cord-cutter’s marketplace, but maintaining internet service remains essential. In most areas where the cable operators provide service, Verizon or AT&T also sells both broadband and wireless service. Customers may be reluctant to bounce between providers looking for a better deal if they also have to switch mobile providers at the same time.

Comcast and Charter Communications are losing money on their cell service plans because their partner, Verizon Wireless, sets its wholesale rates too high, making certain the two companies cannot cannibalize Verizon’s own customers for long.

MoffettNathanson analyst Craig Moffett claims the cable industry’s 2012 $3.9 billion sale of wireless spectrum to Verizon Wireless, which included an agreement allowing the two cable operators to resell Verizon Wireless service, turned out to benefit Verizon more than Comcast and Charter.

The problem is Verizon set its own price for service high enough to guarantee the two cable operators will have a hard time outcompeting Verizon Wireless. Moffett estimates Verizon is currently charging the two operators about $5/GB and around $5/month per customer for unlimited voice and texting. According to Moffett’s calculations, only the pay-per-gigabyte plans have any chance of marginal profitability. Comcast charges $12/GB for its pay-per-usage mobile plan; Charter charges $14/GB for essentially the same service. Both plans include unlimited voice and texting.

Things quickly get unprofitable when a customer signs up for Spectrum Mobile’s or Xfinity Mobile’s Unlimited plan (both $45/mo). Once a customer uses more than 8GB of 4G LTE data per month, Verizon’s wholesale price, including the cost of voice and texting, reaches the same amount those companies are charging customers for service. That does not include any of the ancillary costs Comcast and Charter have to pay to support and market their wireless plans.

Moffett believes the two companies overestimated how often subscribers would offload traffic to Wi-Fi, and the future potential for more solid Wi-Fi coverage “looks cloudy.” The problem, as Moffett sees it, appears to be the cable industry’s loss of interest building out their metro Wi-Fi networks. Moffett called the joint CableWiFi project between Comcast, Charter, Cox, and Altice USA “a bust” because the members of the coalition have largely stopped investing in new hotspot installations. That leaves about 500,000 working hotspots around the country, a number that has remained unchanged for two years. Only in-business Wi-Fi continues to grow, as business cable broadband customers are offered the opportunity to provide Wi-Fi service for their customers. But those hotspots don’t typically offer outdoor coverage.

Comcast has grown its Xfinity Mobile service to 1.2 million lines since launching in 2017 and Spectrum Mobile, which began in last September, had attracted almost 134,000 customers by the end of 2018.