T-Mobile CFO to cable: ‘You're never going to get deep integration in the network with an MVNO’

T-Mobile CFO Braxton Carter (T-Mobile)
T-Mobile CFO Braxton Carter. Image: T-Mobile

T-Mobile’s CFO argued Monday that cable companies keen on entering the wireless space won’t be able to effectively do so through a simple MVNO resale agreement.

“Having that ecosystem is extremely important,” T-Mobile’s Braxton Carter said Monday morning during an appearance at the 44th Annual UBS Global Media and Communications Conference. “But there's a reason where it's even more important: You're never going to get deep integration in the network with an MVNO. The only way you're going to get deep integration is by owning and controlling what you're doing. And that's absolutely critical.”

Carter was asked about the potential entry of cable companies into the wireless industry. Already, Comcast and Charter Communications have activated their respective MVNO agreements with Verizon, and Comcast has promised to offer some kind of wireless service in its cable footprint through Verizon sometime next year. Moreover, Comcast is a registered participant in the FCC’s ongoing incentive auction of TV broadcasters’ unwanted 600 MHz spectrum licenses.

Charter, for its part, has said it has major plans for the wireless industry: “Charter sees wireless as a primary area for future communications growth—and plans to be a key part of that growth,” the company said in a filing with the FCC last month. “Charter intends to leverage and expand its existing Wi-Fi service, work with MVNO partners, and, at the appropriate time, invest in its own licensed spectrum based wireless network.”

The Verizon MVNO agreements for Charter and Comcast stemmed from Verizon’s 2012 agreement to purchase spectrum from a group of cable companies. Such agreements allow MVNO players to essentially piggyback on the networks of existing wireless carriers, reselling wireless service under their own brands and handling customer service and billing.

Related: Comcast, Charter and cable’s uncertain wireless future

However, Carter argued cable companies will need more than an MVNO agreement to be successful in wireless.

“They understand what’s coming, they understand what’s going to happen with their customer base, they understand they have to have an effective OTT offering,” Carter said of cable providers. “And certainly there’s a great additional way to do that by leveraging somebody else's network that you don't own.”

But, Carter added: “When you're looking at the power of OTT, which has to work and have mobility because it has to be ubiquitous. But the power is, you know what the individual consumer is doing, what the individual consumer is looking at, because it's purely a personal device. The cable industry now knows who the household is, but the household is very diverse. And the value creation that you can get from understanding that intelligence down to the individual is very, very, very powerful. And you'll never get that type of integration with a resale type agreement.”

Carter also heaped praise on AT&T’s newly launched DirecTV Now service, which starts at $35 per month and allows users to stream live TV services over the public internet. “It’s truly developing what could be a very attractive over the top product, and right now it’s attractively priced from a promotional standpoint,” Carter said of DirecTV Now. “It has the ability to be the catalyst to change everything going forward. And change is very, very good for a company like T-Mobile.”

RELATED: DirecTV Now’s $35 price point could leave out some content partners, analyst says

Overall, Carter predicted that a number of players, including cable operators, would increasingly look to enter the wireless industry. “This is a fascinating period of change and what it does to other industries, and what it does to cable, for example,” he said. “There’s no question that there will be additional entrants, additional competitors. And that changes the equation.”

“Just look at what the cable guys are going now, really dipping their toe in wireless,” he added.