Hi, I'm Raj Shah. I'm the industry lead for telco, media, and high-tech for Publicis Sapient. I'm pleased to be joined here today by Craig Moffitt, who's the founder of Moffitt-Nathanson. They're a research boutique firm that has been following the telco industry for quite a while. They've been rated the number one telco analyst by the Institutional Investor magazine for 10 years. Craig, thanks for joining us today.
My pleasure. It's good to be here. Thank you.
So the first question, in your view of the landscape, what would you say is the landscape of the telco industry right now? What's happening? What are the strengths and weaknesses of some of these players?
Well, so these are complicated times. Let's start and think about it in separate segments of the industry, and then we'll sort of think about convergence at the end. In the individual segments of the industry, I think wireless is starting to grapple with the realization that the incremental revenue streams associated with 5G are harder to come by than what people had hoped. What had been a supernormal growth rate in terms of subscribership, particularly in the consumer market, looks like it's finally starting to moderate a bit. And so it feels like it is more of a zero-sum game than ever before. It is looking like it will be more and more challenging to generate growth. And it is also difficult to create real differentiation in a market where network parity is now sort of the law of the land.
The cable segment has its own challenges. The cable segment is struggling with deceleration of broadband. There is currently a very real and almost visceral debate about whether that is a function of incremental competitive pressure in the broadband market or whether it is simply reaching saturation in the broadband market. It could be that both of those things are the case, but that puts real pressure on cable growth rates.
The enterprise segment in the wireline market is a very challenging segment and that you're suffering from real commoditization of the services and price deflation. And then layered on top of that, you now have at least a narrative of convergence, that the cable operators are entering wireless precisely because the telcos are expanding their broadband footprints. I'm sure we'll talk a bit about that in the next few minutes. Personally, I'm not sure I subscribe to the thesis that this is true convergence as much as it is simply that both of them are looking at incremental markets that they can enter. But whether it's convergence semantically or not, it certainly escalates the competitive intensity between the two industries as both of them are now very much struggling to find what's the next growth opportunity.
Do you think one of those segments is better positioned against the other?
Historically, I think the microeconomics of wired network operators dominate the microeconomics of wireless operators. Now, partly that comes from the fact that the legacy business has tended to have fewer competitors in it. And simplistically, a cable operator that is something like a monopoly or close to it in as much as two thirds of their footprint, some would say half their footprint, and then a duopoly in the bulk of the rest is probably a better business than somebody that's got four competitors or three competitors in the entire market. But it is also the case that the cost associated with building a wired network is generally greater than the cost associated with building a wireless network. And so as you start to get this convergence narrative of cable operators adding wireless on top of a wired infrastructure and wireless operators increasingly trying to build wires under a wireless infrastructure, the microeconomics of that are more favorable for the cable operators than they are for the telcos.
Craig, thanks for joining us today. Your insights, as always, are very useful for us, for our clients as they look at the challenges of creating growth, creating experiences that create loyalty for their customers. So thank you again for joining us, and I look forward to our next conversation.
Thank you, Raj. It's been a pleasure.