Could Altice USA do to the US mobile market what Iliad did in France?

via Flickr © (CC BY 2.0)

via Flickr © (CC BY 2.0)

  • Cableco reportedly planning unlimited tariffs priced at $20-$30 per line
  • Altice is currently an MVNO hosted on Sprint's network, but...
  • ...Justice Dept wants T-Mobile, Sprint to create new fourth nationwide player

The US mobile market could be on the cusp of seeing what an 'uncarrier' really looks like.

Sources cited by The Wall Street Journal claim that cableco Altice USA, which is due to launch an MVNO service on Sprint's network this summer, plans to offer unlimited tariffs priced at just $20-$30 per month, per line. This would be anywhere between $30 and $60 cheaper than comparable price plans from the big four, and would also undercut unlimited MVNO tariffs on sale from rival cablecos Comcast and Charter.

Altice is launching a full MVNO service rather than a light MVNO service, meaning it will operate its own core network, giving it greater control over the customer experience. Nonetheless it is still somewhat constrained by the limits of its host access network. In addition, Altice has previously expressed concern about the future of MVNOs on Sprint's network if its host is given the go-ahead to merge with T-Mobile.

However, the latest rumblings from the Department of Justice regarding T-Mobile and Sprint's $26.5 billion tie-up could enable Altice to be yet more ambitious in the mobile market.

Bloomberg reports that the DoJ is keen on the idea of forcing T-Mobile and Sprint to create a new fourth nationwide player in return for approving their $26.5 billion merger.

Unlike the Federal Communications Commission, which came round to the idea of the tie-up earlier this month following further concessions from the two operators, the DoJ is still worried about the harm it will do to competition.

Addressing this concern by forcing merging telcos to facilitate a new entrant – either by mandated wholesale access on favourable terms or by divesting spectrum and other assets – is a tried and tested method in Europe, but it would be new territory for the US.

There for the taking

The market is certainly ripe for disruption. Despite T-Mobile's claims of being the Uncarrier that sticks it to AT&T and Verizon, consumers still pay inordinately high prices compared to other four-player markets.

As we've mentioned before, US smartphone tariffs have the fifth-most expensive per-Gigabyte prices in the world, and you won't find a more expensive mobile broadband plan anywhere else. Furthermore, researchers at Rewheel have shown that per-Gigabyte prices in the US actually work out as more expensive on affordable, no-frills price plans than on high-end price plans.

The situation in the US conjures memories of the French mobile market in 2011. Back then there were three, well-entrenched, nationwide mobile operators, happily charging customers €30-€40 per month for a Gigabyte of data – way more than a typical four-player market.

Enter Iliad-owned Free Mobile in January 2012 with its offer of unlimited calls, SMS and data for €19.99 per month on a rolling monthly contract. It led to a dramatic fall in prices across France and caused consternation among Orange, Bouygues and SFR.

If the DoJ really is keen on maintaining four nationwide players, and if Altice is serious about making its mark on the mobile market, then we could be on the verge of seeing a dramatic, and if you ask me, much-needed shake-up in the US.

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