Is leading cable MSO (multi service operator), Comcast Corp. CMCSA looking to venture into the wireless market to diversify its business model? In Oct 2015, the company inked a deal with telecom behemoth Verizon Communications Inc. VZ to become an MVNO (mobile virtual network operator) that would offer wireless services. Comcast is likely to initiate its wireless offerings from the second half of 2016.
Yesterday, at the Business Insider Ignition conference, Comcast CEO Brian L. Roberts stated that the company is contemplating whether the decision to sell smartphones along with wireless services will be a feasible one.
Back in 2006, Comcast together with other cable MSOs, viz. Time Warner Cable, Bright House LLC and Cox Communications, had acquired 122 AWS-1 spectrum licenses auctioned by the FCC. However, these precious wireless assets had been of no use, which finally led them to sell off the same to Verizon in 2011. Per the deal, Comcast holds the right to operate as an MVNO through Verizon’s nationwide wireless network.
Comcast’s wireless service is likely to be a hybrid product relying primarily on its WiFi hotspots, as it uses Verizon’s cellular network as a back-up to fill-in for areas that lack adequate WiFi coverage. At present, Comcast boasts an extensive public WiFi network consisting of nearly 11 million hotspots. At the conference, Roberts also stated the possibility of the MVNO agreement being extended in the near future with Sprint Corp. S and other wireless operators.
Notably, in Apr 2015, tech giant Google unveiled its wireless service – "Project Fi" – after entering into MVNO agreements with Sprint and T-Mobile US Inc. TMUS. Google is also relying on hybrid cellular-WiFi network to offer its wireless products. In Feb 2015, Cablevision Systems had launched its WiFi-based wireless service – “Freewheel”.
The U.S. wireless market is currently witnessing cut-throat pricing competition. At present, approximately 68% of this market is controlled by Verizon and AT&T Inc. T. However, T-Mobile US and Sprint are desperately trying to expand their foothold therein by offering lower-priced plans while also doubling the data usage limit. In this scenario, the entry of non-wireless giants like Comcast and Google will further intensify wireless competition.
Comcast currently carries a Zacks Rank #3 (Hold).
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