CEO Brian Roberts on Tuesday announced that Comcast will enter the wireless phone market by mid-2017 as a mobile virtual network operator.
A 150-strong Comcast Wireless team, headed by Greg Butz, is “getting ready next year … to launch a WiFi and MVNO-integrated product,” Roberts said at the Goldman Sachs Annual Communacopia Conference in New York.
The idea is to sell Comcast’s “very best customers” — 28 million of them — “some sort of multi-package bundle” that will let the company sell them more products, he remarked.
Comcast will use the Verizon Wireless service combined with its 15 million WiFi hotspots.
If the company can offer good value to customers, “we believe there will be a big payback with reduced churn, with more stickiness, with better satisfaction, [and with] more product purchasing from us,” Roberts said.
The move will be cost-effective, he added, because the MVNO agreement with Verizon Wireless means Comcast “won’t have to make the kind of investment that you would if you were just doing something else” on the Verizon network.
Starts Making Sense
“Comcast is aiming to become a leading converged fixed and mobile multiplay content and service provider,” said Sue Rudd, a research director at Strategy Analytics.
“There is strong evidence that multiplay providers do in fact experience lower churn, and so this makes good business sense in addition to meeting broader strategic goals,” she told the E-Commerce Times.
Wireless players should be concerned about Comcast’s invasion of their market, Strategy Analytics said, for a number of reasons:
- It has been successful in selling to segments with skinny bundles and at enabling ad targeting;
- It has had success with content mashups from sports and the Internet, notably during the Rio Olympics;
- It has the platform and digital rights for mobile content play; and
- It has last-mile fiber and 15 million WiFi hotspots.
However, building a national WiFi-centric wireless business would take time, which means competitors will be able to build strong responses, Strategy Analytics noted.
Comcast is betting that the trend toward one-stop shopping will persist.
“One of the things Comcast discovered, like most of the major carriers, is that, given a choice, a consumer will go with a communications service bundle rather than getting services a la carte from different providers,” noted Michael Jude, a program manager at Stratecast/Frost & Sullivan.
“They’re just reading the tea leaves,” he told the E-Commerce Times.
The long-term consequences of Comcast’s move might not be so easy to read, however.
“This will be a targeted offering from a massive cable provider,” observed Rob Enderle, principal analyst at the Enderle Group, and it “has the potential to massively change the cellular landscape.”
Most Comcast users “should find this offering interesting,” he told the E-Commerce Times.
“However, Comcast doesn’t exactly have the best customer satisfaction,” Enderle pointed out, so it might run into some difficulty selling a new service.
Comcast “will need to overcome bad perceptions between them and their customers,” he suggested, “and provide a service that’s better than other cellular providers with regard to content access for their customers.”
The stakes are high, because “the market is moving away from the cable model,” said Enderle, and failure would put Comcast on the “path to becoming extinct.”
There likely will be challenges ahead for the company in executing its new strategy, but there’s something to be said for having settled on one.
“In order to remain competitive with AT&T and Verizon, Comcast have to offer something other than cable TV and broadband data,” Frost’s Jude said. “Comcast has been wringing its hands and running here and there, and it looks like they’ve finally put a stake in the ground.”
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