Convergence — the bundling of broadband and wireless service — is reshaping the economics of both markets in ways that should command the attention of every service provider, according to a recent report from research firm MoffettNathanson. The firm argued that convergence is no longer a niche offering but has the potential to redraw competitive lines across the industry.

At the center of the firm’s analysis was a contrarian conclusion. While Wall Street largely expected the major telephone companies to prevail as the two markets merged, the analysts argued the opposite, contending that cable operators had the stronger position. Their reasoning rested less on any single quarter’s subscriber tallies than on the underlying structure of the converged market.

A defining characteristic of that market, the report said, was that convergence is deflationary. As bundling spread, providers competed by lowering the price of individual services, pushing down average revenue per user even as revenue per household held up.

Standalone broadband offers had already fallen to as low as $25 per month for 300 Mbps in some markets, a level the firm said made continued price erosion difficult to avoid. For operators weighing new network investment, that pricing reality complicated the case for building in lower-density areas.

The report tied convergence to what it described as a normalizing broadband market. Pandemic-era subsidies had inflated growth, and their withdrawal in 2024 deflated it, leaving the market to settle back toward growth driven by new households and rural expansion. Fixed wireless access captured the largest share of recent growth, fiber-to-the-home expanded at a steady pace, and digital subscriber line service lost subscribers.

The firm’s view of the end state carried the clearest implication for providers. In a fully converged market, the analysts reasoned, footprint and bundled cost advantages would matter most, and cable could offer a combined package across its entire service area.

By contrast, fiber from the largest telephone companies was on track to reach only a portion of the country.

The analysts stopped short of predicting that convergence would become the standard way broadband connectivity is sold. However, they expected the converged segment to keep expanding, drawn by the steep discounts the bundled players were offering.

Whatever its eventual size, the firm concluded, that segment looked set to grow, and the economics of convergence all but ensured it would.