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Some cable companies are new players in the cellphone business. Since 2017, Comcast has offered Xfinity Mobile. Charter Communications offers Spectrum Mobile, and Altice is about to start. The service is cheaper than standard cellphone plans, with about $45 being the maximum cost per month, all the way down to about $12 a month. (Downside: you can’t necessarily use any phone you want.)
A lot of consumers have started to add cellphone service to their monthly cable bill. But at a time when people are opting out of cable plans, is cheap phone service enough of a reason to stay? Host Molly Wood spoke with Marketplace correspondent Sabri Ben-Achour about how he got pitched on phone service from his cable provider. The following is an edited transcript of their conversation.
Sabri Ben-Achour: I was going to get a cable box from my cable company. It was a nightmare situation, I was on the phone for hours. I didn’t want the cable box, but they made me get one in order to have internet. (Let’s not even talk about it.) The point is: While I was on hold forever the cable lady was like, “Hey, do you want cellphone service?” And I was like, “Since when do you have cellphone service?” (And if your cellphone service is anything like your cable service, then no, I do not want it. But also, tell me more about it.)
Molly Wood: Why are these cable companies — Comcast, Altice, Charter — trying to be cellphone companies, too?
Ben-Achour: Because there are lots of people like me who really do not want to have cable, and they need to find ways to retain customers. This is a way to do it.
Wood: Let’s talk about that cost, because it is cheap. I have been tempted, even though I, myself, just churned out of the Comcast ecosystem. Did you talk to anybody about how [the cable companies are] making any money [on phone service]?
Ben-Achour: So there’s two things. They’re leasing cellular service from Verizon, basically. That’s cheaper for them because they don’t have to deal with the infrastructure side of being a cellphone operator. And then they’re lowering their costs by using their own Wi-Fi networks to cover some of the data of their users.
Wood: Well, here’s the $45 question: Did you sign up?
Ben-Achour: No, and I don’t have a rational explanation for that because I should be signing up for that.
Wood: I should, too. I should have stuck with Comcast and gotten the quadruple play or whatever. And I wonder if the biggest hurdle that these companies have is this: They are by every poll among the most hated companies in America. Is it just a marketing problem?
Ben-Achour: It could well be that, because that was the first thing that popped in my mind when they were trying to sell me on their cellphone service. I was like, “With your track record?” But this is a very sticky business. Once you are with a mobile cellphone provider, you are likely to stick there for a while. So maybe they can get people to leak in via their cable service.
Wood: The other most hated group of companies in the world is those cellphone companies: Verizon, AT&T. So I wonder, is it possible that this could be actual competition, especially if Sprint and T-Mobile merge and there are only three big providers? Could this actually prove to be a helpful competitive landscape for poor consumers?
Ben-Achour: Maybe, but the thing is that those cell companies already offer competing low-cost cellphone services, like Boost Mobile. They’re all in that same arena.
Wood: Got it. I just want Verizon to have competition. Although, in this case, Verizon is still getting paid because these cable companies are leasing their space from the Verizon network.
Ben-Achour: Which Verizon has to do by law. There are two reasons why Verizon is doing that. Because when I learned that, I was like, “Verizon, what were you doing? Why are you giving your lunch to your competitors?” But then I learned A) this is going after a segment of the market they would otherwise not get: people who are only willing to pay a very low price. And B) they’re required to by law, a very old law.
Related links: more insight from Molly Wood
Clark, a reviews site, published an article where a reviewer wrote about how he got his monthly phone bill to $12. It also mentioned another user who said that because he used under 100 megabytes of data per month, mostly by staying on Wi-Fi and banning YouTube, his monthly bill for the cellphone services was $0.
However, these cellphone services operate like any pre-paid service: it’s cheaper, but there might be more data limits, and you can’t bring any old phone you want.
The Wall Street Journal published a story in May about Altice’s plans to launch its service this summer, piggybacking on the Sprint network and Wi-Fi hot spots. But the plot may be thickening even more because if you wouldn’t buy cell service from your cable company for reasons of trust or reputation, what if Amazon got in that game? There’s been persistent rumors for about a month that Amazon might buy Boost Mobile, the prepaid carrier that’s owned by Sprint. Federal regulators said that if Sprint wants to merge with T-Mobile, it’ll have to spin off Boost Mobile.
Why Amazon? According to a Wired piece, Amazon might be tempted by another service to sell you. It’s already got your credit card number and it could end up with more control over the wireless network you use to access its service, so no one could block the Amazon app or streaming video or music services.