For the past decade, U.S. telco and cable TV revenue sources have been a game of musical chairs: give up the chair you have and hope you can grab another when the music stops.
And everybody is playing. Telcos have relied on mobile services to replace lost fixed network voice revenues.
Cable TV companies have grown by adding voice, high speed access and business segment customers.
Mobile companies have grown by adding tablet accounts on top of phone accounts, while adding Internet access revenues to displace dwindling voice and text messaging revenues.
But it can be a difficult game if the new revenue sources are smaller than the lost revenue sources, or if profit margins are significantly less robust. And that might be a growing issue.
“Gross margin dollars will be lost in video, and will not be replaced by faster growth in broadband,” said Craig Moffett, Moffett Nathanson analyst.
That might be why firms such as Comcast and Cablevision Systems Corp. are planning--or have launched--mobile services. The best way to add incremental revenue is to add one more new service to the bundle.
Comcast and Cablevision are using, or are expected to use, their own public Wi-Fi hotspots as the foundation of their mobile services.