Comcast Dipped its Toe into the Wireless Business
Yesterday, Comcast officially unveiled its wireless ambition. It now offers a mobile service featuring unlimited voice and data starting from $45 per month (other non-unlimited data plan options are available). Our quick takes are as follows:
1. It is a small step forward but may imply bigger moves in the future: right now, Comcast’s mobile plans are only for its existing customers, and it discounts heavily for its high ARPU customers—for its double-play or triple play package, an unlimited voice and data plan is only $45/month, $20 lower than for those with only one service. Will Comcast move beyond its current customers? We believe so, once they become more comfortable with mobile data plan marketing. The mobile service can be a teaser for the cable giant to entice customers from competitors to sign up for its triple- or quad-play packages.
2. Cable companies are emboldened by T-Mobile’s success. In a mature wireless service market in the U.S., T-Mobile’s success in the last two years is perhaps eye-opening to cable companies that talked a lot about becoming a wireless player but stayed on the sideline for fear of being crushed by Verizon or AT&T. Now they see how T-Mobile has turned around its business with a combination of low prices, unconventional marketing, and aggressively meeting consumer needs, and perhaps concluded that there are enough business opportunities in this market with their own reach and assets.
3. Its Wi-Fi network is a key component of its service strategy, yet less emphasized than we thought. Comcast definitely will encourage its wireless customers to use its Wi-Fi network as much as possible to reduce the size of bills it has to pay Verizon for the latter’s mobile network use (thus keeping its plan price low). How much they want to emphasize its XfinityWiFi’s coverage and service experience over cellular use can be a delicate balance. Consumers may get confused on XfinityWiFi with public Wi-Fi networks not controlled by Comcast, and any underwhelming service experience can be a headache for the cable company to explain to consumers. Comcast did emphasize smooth switch between its Wi-Fi and cellular and across its owned Wi-Fi networks. How to address potential public Wi-Fi’s impact on user experience in this business is not only a challenge to Comcast but to all Wi-Fi-first mobile service providers.
We did ask consumers about their interest in Wi-Fi first services and how much savings they would expect from such a service compared with conventional mobile service. The average saving cited by consumers who showed an interest is 38%. Given that the Xfinity Mobile is $65 vs Verizon’s $80 for the same unlimited plan, we will see if such 20%+ savings are big enough for consumers to flock to Comcast. Of course, the $45 plan looks very attractive to those who have two or more services from Comcast.
Along with the Sprint news about its refrehed unlimited data plans, the U.S. mobile service market is becoming even more competitive.
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