New Rule: No Triple Play Provider can Grow by Acquisition Beyond 30% Share of Any Single Service
The emergence of the triple play bundle now has affected its first big merger victim, one might argue. In the past, the rules for market leaders were fairly simple. In the voice, linear video and now high speed access market (it seems), the old rule of thumb was that no service provider would be allowed to gain more than 30 percent share.
Every large telco knows that, and Comcast likewise has known it would bump up against the 30 percent rule when it proposed buying Time Warner Cable.
It seems the math is a bit more limiting now, since no single bundle provider can have more than 30 percent of voice, linear video, high speed access of any other future consumer service that might be created in the future.
So now service providers have to worry not only about failing, and modest success, they also have to worry about robust success, as too much customer share in any one segment makes the evaluation of expansion through acquisition in any other area problematic.
Comcast now has reached a point where it likely cannot expect to gain any more fixed network customer share--defined as percentage market share for any of the triple play services--through acquisition.
As AT&T discovered with its failed effort to buy T-Mobile US, once that 30-percent limit is reached--in any single segment--growth by acquisition is blocked.
AT&T’s effort to buy DirecTV only has a shot at success because AT&T will not exceed 30 percent share in fixed network voice, linear video or high speed access.