The Numbers Game

It’s a numbers game. Cable companies and mobile operators are losing subscribers and playing games to minimize the impact. 

When I was a Comcast Xfinity customer, and my internet access costs were going to increase, I was offered cable tv for free. I didn’t want cable tv, as I have YouTube TV, but to lower the broadband cost, I had to take cable, and then Comcast credited me the same amount as my cable cost on the bill while also giving me a lower price for broadband. 

Yesterday, while watching the NFL games, I saw that Verizon is playing a similar game with devices to stave off the onslaught from T-Mobile, who is picking off their users left and right. When you get a new iPhone from Verizon, they’re adding another device—for FREE. 

Just like Comcast did with cable subscriptions, Verizon is subsidizing the cost of the hardware to stimulate subscriber growth. In reality, it’s to do the same thing Comcast did with me back in 2019. The difference with the hardware-based loader program is that revenue hits the books for a second or third device on the plan, and the devices are part of promotional budgets. This allows Verizon to present numbers that imply reduced churn by reporting net additions to offset their losses.

However, analysts need to look at not net additions of lines but port outs and port ins of accounts. They will see massive changes in customer account numbers, with the accounts leaving them to go elsewhere, including switching to the cable companies who buy wireless access from them and MVNO’s like Mint, Consumer Cellular, and even Verizon’s step-child brand, Visible.

It’s all just a numbers game. Moving revenue and expenses around, all to impress Wall Street. But as analysts dig deeper into the numbers, they’ll find that more and more customers are leaving, and these short-term patches to keep things level are inevitably long-term losses.

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