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Let’s hope Comcast and Charter don’t make a wireless network

Published May 8th, 2017 5:39PM EDT
Comcast wireless plan
Image: JeepersMedia

A report in the Wall Street Journal says that Charter and Comcast are teaming up to make some kind of play in the wireless market. Before you run for the hills screaming OH HELL NO, let’s take a minute to discuss all the reasons this isn’t going to work.

The report says that Comcast and Charter have formed some kind of uneasy partnership, in which both companies agree to not make any moves in the wireless space for the next year. It prevents either company from moving right now to acquire one of the existing wireless carriers like T-Mobile or Sprint, and potentially lays the groundwork for the two companies to work together to create their own wireless network.

It’s also a big hint that Comcast and Charter might make a joint bid to acquire one of T-Mobile or Sprint. Buying an existing wireless network is the easiest way to become a wireless carrier overnight, and it’s no secret that the parent companies of Sprint and T-Mobile have been considering selling for years.

In T-Mobile’s case, a sale right now would mean cashing out at a good time — T-Mobile has seen industry-leading growth for the last two years, and it could command a steep price for an acquisition. For Sprint, an acquisition would give it much-needed cash to invest in the network and become a serious competitor.

But for consumers, either case would be terrible. The only reason cell prices have been falling for the last few years is an influx of major competition. Sprint, with its dirt-cheap plans, has prevented Verizon from AT&T from raising prices too far; T-Mobile’s bold strategy of offering unlimited data forced Verizon and AT&T to finally offer real unlimited plans this year.

All of that goes out the window if either company gets acquired. The logic for Comcast or Charter (or both!) acquiring a wireless network is to allow for “quad-play,” the mythical situation where a company can offer home phone, cell phone, cable, and internet bundles for one price. It tends to lock customers in by inertia: even if you can get all four services elsewhere for cheaper, the inconvenience of switching is enough to keep most people locked in.

Quad-play is particularly problematic because of the regional monopolies cable companies already have in the US. If cable companies end up only offering cell service to customers who also subscribe to their cable bundles, you end up with a weird situation where customers get locked into Comcast’s wireless network, even if Verizon has much better wireless signal in their area. This isn’t a dystopian fiction, either — Comcast’s newly-announced cell service is only available to cable subscribers for now.

Whichever way you cut it, T-Mobile or Sprint being acquired by Comcast/Charter would be awful for consumers. If Sprint gets bought, prices will rise, and T-Mobile will likely struggle to compete against the prices that Verizon, AT&T and Charter could offer by bundling services together. If T-Mobile gets bought, Sprint won’t have the resources to compete, and we’ll end up with a wireless industry run by the three biggest cable companies. God help us all.