Verizon and T-Mobile 5G can disrupt the cable business

Comcast CEO Brian
Roberts.
Getty / Scott
Olson

• Analysts predict 5G could disrupt the cable
  business.
• Wireless carriers, like Verizon and T-Mobile, could
  convert customers at Comcast and Charter to their fixed
  wireless home broadband service.
• The analysts sketched out a “worst case” scenario where
  Verizon and T-Mobile could eat into 11.6% of the cable
  industry’s broadband business by 2024.

The threat that 5G poses to the cable business is so ominous that
industry analysts are trying to handicap just how many people
will cut the cord as a result. 

Specifically, some analysts are already taking guesses as to how
many customers will bail on cable giants like Comcast and Charter
if wireless carriers moving into fixed home broadband as
expected.

And the early estimates of how many homes at risk are in the
millions.

Cable companies provide fixed line broadband to homes, or
internet delivered through cables and that connect to a modem. 5G
fixed wireless broadband uses radio signals and installation
of an antenna outside of the home to deliver internet.

That’s scary for cable companies, which have made a killing on
wiring people’s homes for broadband.

“We see 5G fixed wireless broadband as the largest
existential threat to broadband providers, by
far,” 
analysts at Cowen wrote in their
quarterly cable update
. “For now, the largest threats
are coming from Verizon and T-Mobile.”

Millions of cable customers may soon be up for grabs

The analysts laid out the possible encroachment of Verizon
into Comcast and Charter markets by noting Verizon’s
initial four 5G cities —Houston, Sacramento, Indianapolis,
Los Angeles — all seem aimed at disruption. The four cities are
all markets where Verizon is not the incumbent carrier, meaning
there is room for growth in the market.

Comcast is the cable internet service provider in Houston,
Indianapolis, and Sacramento, and Charter is ISP in Los Angeles.

The analysts then drew up an illustrative example, looking at
similar markets for disruption around the US and identified
places where Verizon has made deep fiber investment and it’s not
the incumbent. The report estimated that these markets would
constitute 33 million households nationwide and determined that
Comcast would have 2.1 million homes exposed (or 8.3% of its
base) and Charter would have 1.1 million homes exposed (4.7% of
its base).

Of course, Verizon wouldn’t take 100% of these homes over, so
assuming the company had a 25% win rate, it could take about 2.1%
of Comcast’s customers and 1.2% of Charter’s, a limited risk, the
report notes. 

But the analysts sketched out a “worst case” scenario whereby
Verizon and T-Mobile could encroach into 11.6% of the 5G fixed
broadband market by 2024.