War makes for strange bedfellows. In this case it’s Comcast, Verizon and Netflix – an unlikely set of bedfellows – and the war is over wireless broadband.
Comcast will launch a wireless service by mid-2017, according to Comcast CEO Brian Roberts at a Goldman Sachs investor conference. It could help Comcast keep its pay TV and broadband subscribers at a time when cellcos such as AT&T and Verizon move into delivering pay TV and other content over their cellular networks. Roberts said the service will use its 15 million Wi-Fi hot spots and airwaves leased from Verizon. Having also recently signed a deal to integrate Netflix into its next-gen X1 set-top box and guide, Comcast’s wireless service could easily offer Netflix and other OTT services. Roberts said Comcast’s deal brought the two companies “a lot closer” and that Comcast is negotiating with other OTT services.
Roberts said Comcast wants to up-sell subscribers to bigger bundles.
The Comcast deal goes back to 2011 when Verizon acquired wireless spectrum from Comcast in exchange for Comcast getting the rights to use Verizon’s cellular network at some future date – which turns out to be mid-2017. Roberts said that because it will use Verizon’s cellular network, Comcast “won’t have to make the kind of investment” that’s needed to build a cell towers and other infrastructure. He said, “We believe there will be a big payback with reduced churn, more stickiness and better satisfaction.”
However, Comcast will offer the cellular service only within its wireline footprint, not nationwide as Verizon, AT&T and other cellcos do.
Comcast did not provide any other information such as prices, OTT services which phones will be supported. It has been talking with Verizon and working on the project for several years.
All hell could break loose if Comcast is successful with its wireless broadband service. Although the US cellular market is already saturated, consumers are actively looking for better service at better prices as shown by major cellcos offering untethered services for a little as 445 a month – and with no contract. By using its Wi-Fi hotspots where available instead of Verizon’s cellular network (the Wi-Fi-First strategy), Comcast can substantially cut the costs of operating a wireless network, perhaps by more than 50%. If it can do that, it will have a major financial impact on the big four US cellcos AT&T, Verizon, and especially, T-Mobile USA and Sprint who don’t have a wireline broadband or pay TV service. It will also increase Comcast’s revenue, profits and stock price. Verizon could also get some incremental revenue increase although at the loss of some of its more profitable cellular subscribers.
There are two more possibilities:
– Comcast, alone or in alliance with other cablecos, could expand the Wi-Fi-First strategy nationwide.
– Comcast could bid for and win additional cellular spectrum in the auction the FCC is currently conducting.
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