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Comcast plans to jump into the wireless phone service marketplace by mid-2017 by offering its cable customers phone plans that will use WiFi and the Verizon network for connectivity.
The upcoming Comcast mobile services were unveiled by Comcast CEO Brian Roberts at the Goldman Sachs Communacopia conference in New York, according to a Sept. 20 article by Bloomberg. Rumors of some kind of Comcast mobile phone service offering have circulated since at least October 2015, according to an earlier eWEEK report.
Roberts said Comcast would deliver the mobile services to current and new customers through its extensive nationwide network of 15 million WiFi hotspots and via Verizon’s existing cellular network, the Bloomberg story said.
The move comes as Comcast continues to seek new sources for revenue and business as many consumers drop their cable television and internet services and move to streaming video and media services, such as Hulu, Netflix and Amazon Prime. Comcast made a similar bold move in April when it announced the acquisition of DreamWorks Animation for $3.8 billion as the longtime cable company seeks to steady its future by adding complementary businesses as the future of cable television remains unfocused.
“There will be a big payback with reduced churn, more stickiness, better satisfaction,” Roberts said at the conference, the article reported.
Comcast intends to offer its new services through a reselling arrangement with Verizon that was created as an option back in 2012, when Comcast and others sold nationwide FCC spectrum licenses to Verizon for $3.6 billion as part of an industry shift, according to the earlier eWEEK story.
A Comcast spokesperson reached by eWEEK on Sept. 21 declined to comment on the upcoming mobile services beyond Roberts’ remarks.
Several IT analysts said the Comcast strategy is intriguing.
Charles King, principal analyst with Pund-IT, called the wireless plans “a sensible move by Comcast that I expect reflects competitive concerns” since all four major U.S. mobile carriers support WiFi calling. “For Comcast and other cable companies that want to play in the communications space, supporting WiFi calling is table stakes, not an innovative strategic move.”
For Comcast customers, the move could mean a reduction in their monthly bills as well as the consolidation of their entertainment and communications bills into one easy payment a month, King said. “I doubt it will spark a gold rush of new business for Comcast, but it might marginally slow the steady stream of customers exiting their service.”
King said any Comcast move into the mobile marketplace is not likely to cause fear for the major mobile carriers because “they have larger concerns than cable company attempts to catch up with them.”
What the move does communicate, said King, is that Comcast is looking for ways to remain relevant with its customers, particularly with younger consumers who are happy consuming their video on their smartphones rather than through cable TV.
“Personally, I don’t think it will deliver the increased level of stickiness that Comcast thinks it will,” said King. “But at the same time, the company has to do something to stanch the bleeding … in terms of customers cutting the cord or young customers who aren’t even bothering with cable.”
Bill Menezes, an analyst with Gartner, told eWEEK: “Cable operators have been looking at ways to provide a mobile offering since the digital wireless carriers began launching in the mid-1990s.” In the past, though, those efforts and investments have never amounted to any significant mobility offer by the cable operators, he said.
“Now, however, given the cable operator’s creation of widespread WiFi footprints, their ability to offer a compelling mobile service is the strongest it ever has been,” said Menezes. “If Verizon effectively supports an 802.11u handoff of live cellular calls to WiFi hotspots, then the experience will be virtually indistinguishable from pure cellular—making a Comcast mobile product essentially equal to mobile service from Verizon, AT&T, Sprint or T-Mobile.”
Comcast to Offer Mobile Phone Services in 2017: Report
In the past, the big gap in service was that calls couldn’t be handed off from stationary sites to vehicles moving at high speed, said Menezes. “Now, if the Comcast handset can seamlessly roam onto Verizon coverage in those areas, the gap is gone.”
Much will also depend on the pricing of such services from Comcast, Menezes said. His expectation is that the company will price the offering as part of a Comcast bundle. “If they’re smart, they’ll also provide more flexible plan structures than the big four cellular carriers do, such as the ‘pay per use’ pricing from [Google’s] Project Fi ,where you only get charged for the data you actually use during a billing cycle.”
Another analyst, Jan Dawson of Jackdaw Research, said that while many details of Comcast’s upcoming services are still to be disclosed, if the company “is to make this a compelling offer, especially given their lack of history in wireless, they’re going to have to offer some steep discounts in their bundles.” Similar efforts by other companies in the past have failed to catch on, he said.
On the other hand, Comcast has advantages over startups that are getting into the wireless space, including name recognition and lots of existing customer relationships that it can leverage to sell service. “But there are also downsides to being a big cable company in terms of its spotty reputation for customer service, which could work against it,” said Dawson. “So much depends, ultimately, on the details of what’s announced.”
The Comcast moves into wireless services follow a big move by AT&T in July 2015, when the company acquired DirecTV for $48.5 billion and began making efforts to get customers from both companies to bundle their services. AT&T’s move to offer enhanced deals to bring over DirecTV customers to grow its own subscriber base was part of the company’s vision for making the acquisition in the first place. The merger turned AT&T into a bigger player with its hands in more markets and a ready pool of new prospects to bring into its business coffers.