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Why the Sprint and Altice USA MVNO model is one to emulate – Business Insider

Why the Sprint and Altice USA MVNO model is one to emulate – Business Insider

The current cable mobile virtual network operator (MVNO) business model being deployed by Verizon for its partnerships with Comcast and Charter is, respectively, in need of an overhaul.

Business Insider Intelligence

For background, Comcast, which launched its mobile service Xfinity Mobile in May 2017, and Charter, which entered the space with Spectrum Mobile in July 2018, both offer wireless services that can be accessed through their own network of Wi-Fi hotspots but fall back on the Verizon network that they lease when Wi-Fi isn’t available.

While the cable companies entered the wireless carrier arena to remain competitive in the evolving US telecom landscape, the economics of the deal aren’t working out for Charter and Comcast. The MVNOs aren’t profiting off the deals, according to MoffettNathanson principal Craig Moffett.

For example, although Xfinity Mobile has added over 1.2 million subscribers since its launch, it’s lost over $1 billion in the same period, according to RCR Wireless News. This is likely partially due to the MNVOs having to pay Verizon per gigabyte used by their customers.

Here’s what it means: Charter and Comcast should take a closer look at the deal Altice USA has struck with Sprint as a potential MVNO model to emulate.

In what Sprint called a “first of its kind agreement,” the two companies have built a mutually beneficial relationship. Sprint gets to densify its wireless network by using Altice USA’s broadband infrastructure to deploy small cells and other network gear, while Altice gets to provide a wireless service that leverages Sprint’s network; Altice USA plans to launch its mobile service in the second half of 2019.

According to Sprint CFO Tarek Robbiati, Sprint is building small-cell sites in the “footprint” of Altice USA’s infrastructure, which doesn’t involve permitting and thus reduces the time-to-market; currently, Sprint has deployed at least 19,000 small cells on Altice USA’s network around the greater New York area. And as Sprint builds out its network, Altice will only continue to see a stronger network for its consumers.

The bigger picture:Deals like the one Sprint has entered can be used to strategically build up 5G networks.

While a deal like the one Altice USA and Sprint struck isn’t likely to be as lucrative for MVNOs in the short term, it does strengthen their ability to deploy 5G networks. Verizon is reaping the benefits of the deal it has with Charter and Comcast since it’s able to earn revenue from every customer they add to their services.

However, through its deal with Altice USA, Sprint is putting itself in a stronger position to quickly build out the infrastructure needed to support an effective 5G network. For context, small cells are considered foundational as they are “ideally suited to help deliver 5G connections where they are needed most,” according to Qualcomm.

Sprint not only has a shorter time-to-market for these cells, since it can avoid zoning and permitting hurdles by building on top Altice USA’s infrastructure, but it also comes at a lower cost since Sprint doesn’t pay anything to the MNVO — “Sprint gets a huge cost and time-to-market advantage versus Verizon, AT&T, and, if the deal is rejected, T-Mobile,” according to Moffett.

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