Untangling the wireless rivalry
Perspectives from BofA Global Research’s Leading Analysts
January 6, 2026
Michael Funk, Senior Research Analyst, Cable, Satellite & Telecom Services, Communications Infrastructure
The best offense is defense in Communications Services
Competitive intensity is a constant focus in the mature and fully penetrated U.S. wireless industry. Fear that a viable fourth competitor may appear and siphon off slowing growth is a persistent source of investor anxiety. Even among the three main facilities-based providers, investors are on constant alert for escalating promotions that presage a price war that only delivers a Pyrrhic victory. As subscriber network experience converges, operators are looking for ways to defend the base and sell add-on services.
Will cable’s struggles turn into wireless’s troubles?
Expanding telco fiber and fixed wireless access (FWA) are increasingly competing for and winning subscribers in areas like broadband. This pressure will persist for years to come based on announced fiber build plans. To slow subscriber losses, cable is leaning into discounted wireless plans through Mobile Virtual Network Operator (MVNO) relationships. To date, cable has not materially impacted wireless growth, but as cable gains scale and discounts deepen, will we see an inflection point? If that materializes, the highest-priced or the least-converged offerings may be at greatest risk.
Operators with the broadest set of owned fiber/wireless assets are best positioned to win through bundled offers and targeted promotions.
How far will telcos go to grow?
Slower-growing wireless operators with high-priced back books of existing customers who are often paying above-market rates are looking for the right ingredients to grow and maintain profitability. How long can the back book be insulated at the cost of ceding market share to peers? Recent changes in telco leadership suggest that market share losses are untenable. New management has promised big changes and improved subscriber performance. To many, this foreshadows a period where price competition will intensify and result in back-book repricing. Striking the right balance is key, and to date we haven’t seen a shift in promotional activity that warrants elevated concern, but risk is to the downside for financial forecasts.
Is LEO a telecom friend or a foe?
After a checkered history of high costs, bankruptcies and failure, low earth orbit (LEO) satellite-based connectivity is now a viable and rapidly expanding business. We believe it best serves markets that are the least well served by the traditional players. According to the Federal Communications Commission (FCC), approximately 24 million Americans do not have access to high-speed broadband. In our view, this is where LEO will gain share. It is also the area telco providers are exiting — one carrier plans to exit legacy copper in 50% of its geographic footprint and 10% of its population footprint. On the wireless side, with direct-to-device (D2D) connectivity emerging (where smartphones and IoT devices connect directly to satellite), is a new competitor on the scene? We think D2D is best positioned as a supplemental service (add-on) in developed markets. D2D shines in the wilderness but is less competitive in high-density, urban and in-building settings. 2026 will be a pivotal year for LEO operators set to reach key operational and partnership milestones.
AI opportunity in transport, but incumbents haven’t participated
AI infrastructure, including transport, benefitted from record levels of investment in 2025. Hyperscaler capital spending is projected to increase 34% in 2026, driving sustained demand for network, data center and power capacity. Incumbent telcos haven’t directly benefitted from AI infrastructure demand, but there are signs of strategic pivots to capture a share of the AI capital spending pie. AI-driven Internet of Things (IoT) demand could contribute positively to a wireless industry where subscriber-based growth has stagnated. However, we think the timeline for this catalyst extends beyond 12 months.
We prefer operators with fiber breadth and wireless owner economics
Fiber and fixed wireless are winning share and wireless owner economics are growing in importance as traffic growth continues at 30% per annum. Carriers with MVNO relationships pay on a usage basis, so they are disadvantaged as traffic grows. The ability to bundle broadband and wireless and offer a targeted product based on customer needs and demographics is a differentiator, in our view.
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