Earlier this week, Schwab Network invited me to a TV news interview on the changing pay TV industry. AT&T had just announced they were stepping away from DirecTV. Separately, but obviously connected, DirecTV announced their acquisition of DISH Network. So, what is going on? Together let’s take a closer look at the changing pay TV space, the larger and also changing telecommunications space, and what we can expect going forward.
The DirecTV and Dish Network merger was something that has been expected for quite a while.
In fact, they tried this two decades ago and failed to win approval.
This time the marketplace has dramatically changed with plenty of new competition and new technology. That’s why I believe chances are better than ever they will win approval this time.
Xfinity, Spectrum, Altice and Cox threatened by FWA wireless broadband
To understand all this chaos, we need to pull the camera back and get a longer-term, historical perspective on the changing telecommunications industry over the past few decades.
Two decades ago, around the year 2000, both traditional cable TV and in fact telephone service reached their most successful stage ever.
Then, after several years of M&A activity, between Baby Bells, long distance companies, cable TV providers and wireless carriers, the many smaller companies became a small handful of larger competitors that offered many different services.
Ever since, both traditional telephone or POTS and cable TV have been declining.
Cable TV is losing traditional market share rapidly
In fact, many smaller cable TV companies have less than 10% market share.
These companies have already started to announce they are moving out of cable TV and are going to focus on areas like broadband and wireless.
Cable TV giants like Comcast Xfinity, Charter Spectrum, Altice and Cox have also been losing market share in traditional cable TV.
In fact, that is why they replaced their primary service from cable TV to broadband, years ago.
FWA wireless broadband let’s AT&T, T-Mobile, Verizon compete with cable TV
This rapid transformation of the industry over the past twenty years has triggered many changes within the pay TV space.
Today, the main cable TV service is broadband. Not cable TV.
Suddenly, this dominance in broadband is being threatened by FWA wireless broadband, which is starting to be offered by wireless carriers like AT&T Mobility, T-Mobile and Verizon Wireless.
FWA is brand new, but the threat it represents to the world of cable television is apparent. That’s why cable TV carriers need to develop a solution to the FWA wireless broadband threat.
Air Wireless and Air5 let cable TV sell DOCSIS wireless broadband
Last week I attended a trade show in Atlanta called TechExpo 24. That’s where I spoke with the CEOs of both Air Wireless and Air5. These are young companies in the early stages of using DOCSIS to provide wireless broadband to the cable TV competitors.
So, looking ahead, it looks like wireless broadband may be in our future from both sides, wireless and cable TV competitive battleground.
You see, the telecommunications industry has been growing and changing for decades. And that transformation is only continuing, and in fact accelerating.
Cable TV giants like Comcast Xfinity, Charter Spectrum, Altice and Cox
That means this is one of the more exciting times in the industry for customers, workers and investors.
Knowing the exact direction the industry will take in advance is always the toughest call.
After all, not long ago we were not even talking about FWA, DOCSIS or wireless broadband. The competitive threat continues to advance and change everything, year after year.
Do CEOs understand new technology like AI and what’s coming next?
Based on the conversations I have with CEOs, I do not think they know yet what to expect in coming years.
Looking at AT&T as an example, nine years ago they acquired DirecTV. Next, they acquired what became Warner Media, which was CNN, Warner Brothers Studio and so much more.
They wanted to transform not only their company, but the entire industry.
Then over the course of a few years, that entire model collapsed under its own weight. AT&T quickly exited that growth plan and went back to square one.
The industry has changed, dramatically. Something they did not see happening until it was too late.
Wireless, Cable TV and telephone companies face risk and growth opportunity
Going forward, every competitor in the growing and changing telecommunications space with all its different segments has the same opportunity to create something new that can transform our world. There are many different directions the industry can move in.
I believe all the major wireless, telephone, broadband and cable TV companies face the same growth potential and risk going forward. Which companies will lead, and which will follow is always the question.
Remember, there are always early adopters or leaders. The rest of the marketplace are the followers. That’s what will happen this time around as well.
AT&T is a leader and Verizon is a follower. That works for them both
It all depends on whether senior leaders are visionary. Leaders. If not, they will follow the lead set by others.
In the case of telecom, AT&T has always been a leader, while Verizon has always been a follower. However, that works for both of them, but the approaches are very different.
That does not make it easy for investors, workers or CEOs for that matter to know where to invest their time and money. Yet, that is the crazy and chaotic world we find ourselves today.
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