While there is enough evidence on the surface to support this view, digging deeper suggests that this may be the first move in a broader strategy to attack the mobile market.
How Comcast Got into Mobile
Comcast and its cable industry members have a long and well documented history of trying to determine what to do about “mobile” or wireless.
These attempts were exemplified by the creation of SpectrumCo LLC, in 2006 (a joint venture between Comcast Corporation, Time Warner Cable, and Bright House Networks); the purchase of AWS spectrum; and the later $3.9 billion sale of this spectrum to Verizon Wireless in December 2011.
Comcast, which received over $1.1 Billion, as its share, also received a marketing arrangement option with Verizon to cross-sell their products and for Comcast to be a modified MVNO on the Verizon network. The details as to the pricing, i.e. wholesale, have not been released, except for the public comment of its being “attractive”.
Basic Elements of Xfinity Mobile Service
The new Comcast Xfinity Mobile service has a clear set of key addressable market elements, which make it appear to be very competitive with the existing LTE alternatives in the US market:
- Top tier Devices: IOS, Samsung, LG
- Verizon’s LTE (advanced) national network for non-Comcast originated traffic
- Comcast 29 million customer base and 16 million Wi-Fi hot spots
- $45.00/65.00 per month price, as well as per GB pricing
From the standpoint of peer to peer comparisons, in the very specific target market area, there should be a winning percentage for Comcast from the existing big four mobile carriers. Verizon may net out on the bottom line, and even be positive in light of their MVNO service revenues from Comcast.
Looking Beyond The Basics
However, the above may be far from the whole story or may miss the even bigger one.
Comcast Xfinity service now in its X1 version offers a valued added platform for management of video. What has not been in place is Comcast’s next evolution of X1, previewed in their 2017 CES presentation of the “Advanced Gateway”.
In our view “Advanced Gateway” is an offensive – rather than defensive strategy – based on a cloud-centric mobile, smartphone, wireless set of products, with ubiquity in their franchise service areas. The unique feature of these products is the customer experience across accessing the Digital Broadband media world.
Implications for Xfinity Mobile
We believe that Comcast is on a track to provide breakthrough capabilities in terms of ease of access across all of its digital services. These summary conclusions are supported by some of the largely unnoticed set of attributes the Comcast Xfinity Mobile service will have (due to their cloud platform):
- Example: Ease of Use. Per Greg Butz, President of Comcast Mobile, “make Wi-Fi easy”, and per CES “a seamless experience”.
- Example: Feature Set. Expanded set of features to resemble existing, i.e. Google Home, and future, home network management products – parental controls monitoring, intelligent voice controls, etc.
Also overlooked in most of the coverage of Xfinity Mobile is potential impact on Comcast’s Business segment. Business Services is the fastest growing segment of Comcast, with a growth rate two-to-three times that of its other major segments. It would appear that Mobile could be a further significant growth driver for this segment.
Looking Deeper – Comcast & Arris
Giving more reality to the likelihood of expanded offensive action by Comcast is the recent news from one of their largest suppliers of Wi-Fi routers and STBs, Arris International.
Arris recently announced the acquisition of Ruckus Wireless, the global leader in the implementation of industrial strength WiFi networks for business and enterprise. Their product line includes not only access points and beam forming antennae systems but also management systems for the world’s most complex and secure wireless networks.
Comcast is Arris’s largest customer, accounting for $1.6 billion, fully 24%, of Arris’s 2016 revenue. It’s difficult for us to imagine that Arris would have taken a giant step into wireless network management without confirming that its major customer, Comcast, was going to be quite interested.
Our Take
Estimates that have been bandied about for Xfinity Mobile appear to range from about 4 or 5 million, to maybe 10 million subs and revenue of about $2.5 billion to $7.5 billion per year.
These may be reasonable near term targets, however, it is clear that wireless offers the biggest growth potential of any area within Comcast’s fold. After all, Sprint is a $30+ billion per year revenue company, with over 50 million subs.
Once Comcast gauges how difficult it is to add subs, we would expect them to likely expand strongly in the direction of differentiating their service through ease of use and customer experience.
Essentially this narrow initial Xfinity Mobile announcement by Comcast can have a far larger horizon in its sights.
Comcast 4/6/17 Announcement: www.corporate.comcast.com/news-information/news-feed/comcast-xfinity-mobile