Convergence seems to be the buzzword du jour. The term is tossed around loosely by telecom service providers. But what does it really mean? And who benefits from this so-called convergence?
AT&T (NYSE: T) and Verizon (NYSE: VZ) offer customers in their respective established markets both wireless and fiber broadband service under one brand and call it convergence. Now they are taking a similar tack in fiber expansion markets piggybacking on AT&T’s joint venture with BlackRock (NYSE: BLK) in Gigapower, and Verizon’s recent Frontier Communications (NASDAQ: FYBR) acquisition, Inside Towers reported. Truth be told, pitching separate wireless and fiber services under a convergence tagline is simply a marketing ploy to attract and retain customers. There is no convergence on a technical level. Rather, call it ‘Mad Men advertising’ convergence.
Even T-Mobile (NASDAQ: TMUS), a wireless pure play, is getting in on the act. The company, with investments in fiber companies, Lumos and Metronet, and partnerships with smaller fiber overbuilders, sees an opportunity to pitch its wireless services to these fiber customers. Again, that’s not convergence!
The closest thing to convergence is that the Big 3 MNOs and UScellular (NYSE: USM) offer fixed wireless access (FWA) over mobile spectrum. These are two separate services – mobile and broadband – from one wireless platform. But then again, AT&T and Verizon report FWA stats under their wireline segment.
Convergence, in its best interpretation, should somehow benefit customers. This means telecom service providers should make it easy and economically attractive for customers to buy mobile and fixed broadband services from a single point of contact and all on one bill.
For now, it doesn’t work that way. Full disclosure, I am a long-time customer for both Verizon Wireless and Verizon FiOS services. My combined average revenue per account (ARPA) is around $500 a month. (Note to VZ: Do I qualify as a top-tier consumer customer?)
But here’s the catch. I get two bills every month – one for wireless and one for broadband. Sure, I receive a small discount for having both services, but it’s a token gesture at best. Here’s the worst part – I have to deal with two separate customer service groups to resolve any operating or billing issues. Friends and colleagues report similar experiences with AT&T. For us, that’s not convergence!
Interestingly, true convergence may be coming from the cable companies. Several cablecos are incorporating wireless into their established hybrid fiber coax networks. Some are deploying next generation FWA to reach customers where it is difficult or uneconomic to extend their cable plant, Inside Towers reported.
Other cablecos are considering transporting 5G spectrum over the DOCSIS standard to radios attached to the cable. Since the cable is line-powered, some cablecos that own spectrum, such as CBRS, are using strand mounted small cells to provide facilities-based wireless as a replacement for their branded MVNO-based services. This way, they can deliver both fixed broadband and mobile services from the same platform and benefit from owner economics.
The point is that the cable customer receives the same broadband and mobile services through a single point of contact, and on one bill, regardless of the delivery technology.
MNOs should take note.
By John Celentano, Inside Towers Business Editor
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