Uber-Competitive Wireless Market Growing Slower Than Cable Industry

Stiff competition in the wireless sector is hurting revenues, and therefore even the cable industry is growing at a faster clip, according to a research note by Bernstein analyst Craig Moffett.
Barron’s reports that while wireless subscriber growth is up, revenue per subscriber is down, resulting in overall revenue growth of only 3.6 percent. That compares to the cable industry, which is seeing overall growth of 5.3 percent, because subscribers are paying for additional services — most notably broadband.
Mostly this has to do with competition, Moffett writes. There’s at the minimum four wireless providers in the U.S, and even more when you count prepaid providers and regional operators. Contrast that to the cable industry, where 75 percent of the country just has three operators — one cable company, DirecTV (NYSE: DTV) and Dish Network, and in a quarter of the country, there’s four, including Verizon’s FiOS or AT&T (NYSE: T) U-Verse.
But it’s not video that’s driving revenues, it’s broadband — that’s because there’s usually only two competitors in that field — the phone company’s DSL and the cable operator, which often offers superior speed. Moffett concludes that broadband “is quite simply a better business than either video or wireless….They got there first with a truly high capacity pipe into the home, and in the majority of America they will remain almost unchallenged.”
The edge cable has in broadband is so strong, he contends, that companies should reinvest in data as their core product, not video. If that’s the case, I wonder why Moffett places Clearwire (NSDQ: CLWR), which is also building out broadband to the home and partnering with many cable operators, in the wireless cellular bucket. If broadband is truly underserved, and prices continue to stay favorable, perhaps there is room for another alternative??