why is verizon service so bad right now

At first glance, it's easy to chalk up Verizon's (VZ 0.ten%) second-quarter net loss of 215,000 postpaid wireless customers to toll hikes put in place during the three-month stretch in question. Fortunately, the visitor had a better showing on the business organization front, picking upwardly (again on a net basis) 430,000 postpaid customers. Yet, post-obit its first-quarter attrition of 292,000 postpaid consumers that preceded any major price hikes, shareholders accept good reason to be concerned. That'southward particularly truthful in light of the fact that competitors AT&T (T 0.34%) and T-Mobile (TMUS -4.03%) managed to add together 813,000 and 380,000 postpaid accounts, respectively, during the same quarter. Conspicuously, it can be done.

Verizon's woes may go well beyond competing plans from the industry's other two established powerhouses, though; T-Mobile's and AT&T's pricing plans aren't dramatically different, in fact. Rather, the market's toll-conscious crowd is slowly switching to a couple of wireless service providers that should concern T-Mobile and AT&T simply as much equally it does Verizon.

Those culling wireless services? For well-nigh consumers, it's your local cable Goggle box company.

Unexpected disruptors

Y'all're reading that right. If you're a current client of Charter Communications' (CHTR 7.57%) Spectrum or Comcast's (CMCSA 2.73%) Xfinity, yous're likely eligible for surprisingly cheap wireless service offered by either of the two brands. Xfinity's plans start at $15 per month, but even a robust programme tin can cost you lot less than $50. Spectrum's plans are in the same ballpark, with two lines offered at $thirty per month for customers willing to sign a i-year contract.

And odds are proficient yous're a customer of at least 1 of the two giant cable telcos. The 2 collectively account for about ii-thirds of the industry'due south customers, afterward all, co-ordinate to data from Leichtman Enquiry Group.

Consumers are clearly making their style to these more affordable plans, as well. Charter'southward Spectrum added 329,000 wireless consumers to the fold last quarter, bringing its headcount to a little over 4.one million customers. Factor in its business mobility lines, and the figure nears 4.3 million. Comcast's Xfinity picked upwardly 317,000 wireless customers during the same three-month stretch to bring its client count to only over 4.vi million.

Charter's Spectrum and Comcast's Xfinity wireless services are growing quickly, eating into traditional carriers' growth.

Data source: Comcast Corp. and Lease Communications Data is in thousands of subscribers.

Fifty-fifty Dish Network (DISH 2.60%) and Altice (ATUS 17.45%) are in the concern. Altice is serving 231,000 wireless accounts as of the end of June, and Dish's Heave Mobile boasts nearly vii.9 meg subscribers (though they're handled by T-Mobile'south infrastructure). Even taking Dish's Heave out of the equation, that'due south more than nine million consumers' and small businesses' wireless needs being met by cablevision boob tube companies.

Or look at it this way: That's more than nine million accounts that only a few years agone -- earlier cable companies got into the wireless concern -- would have been Verizon's, AT&T's, or T-Mobile's. With a lower-toll selection on the table, though, the industry's old guard is clearly on the defensive. Verizon just happens to be highlighted as the laggard of tardily because its recent price increases took the most obvious recent toll.

By time for a bold, direct response

It's not a perfect apples-to-apples comparison. Xfinity and Spectrum rely heavily on their cable and broadband lines to handle their wireless services' connectivity work while a customer is inside radio reach of this infrastructure. That'south infrastructure that Verizon and the wireless industry's other stalwarts just don't accept (at least not all the same -- Verizon continues to invest heavily in its fiber-optic network). Only once an Xfinity or Spectrum wireless subscriber moves out of reach of this infrastructure are they passed off to a more conventional mobile network. Information technology remains to be seen how long this approach will support the ever-growing data needs of the always-growing usage of mobile devices, merely information technology's working well enough for at present.

One matter is articulate: The traditional wireless carriers underestimated how disruptive this new type of wireless competition could be, particularly on the price front. Now they're paying the toll, in the form of slowing growth at a time when the market itself is already saturated. Pew Research reports that 95% of U.Southward. residents already ain a cellphone, calculation that 85% of them already ain smartphones.

Electric current and would-be shareholders of Verizon, as well as its two biggest rivals, should exist looking for ways these players are specifically responding to this unexpected, low-cost competition. Thus far, they've non done plenty.

James Brumley has positions in AT&T. The Motley Fool recommends Comcast, T-Mobile U.s., and Verizon Communications. The Motley Fool has a disclosure policy.

Source: https://www.fool.com/investing/2022/08/11/verizons-wireless-problem-may-be-bigger-than-you-t/