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Comcast to Launch Cellphone Service in Garden State Next Year

Comcast to Exercise "Mobile Virtual Network Operator" Rights With Verizon Wireless
Comcast
The Comcast logo. Comcast

NEW YORK, NY--The Pennsylvania-based cable giant Comcast Corporation says it hopes to launch a cellphone service by the middle of next year.

Comcast, which offers cable service in more than half the Garden State, is the top broadcasting and cable television company in the U.S., reporting $16.9 billion in revenue last year.  

The mobile service would be offered as an add-on for existing customers, but only in the areas where Comcast provides cable.

The service would leverage both Comcast's large network of Wi-Fi hot spots, and airwaves leased from Verizon Communications.

Since 2011, Comcast's deal with Verizon entails an exchange: The cable operator resells the telecom carriers service for the use of its airwaves.

Calling it a "good value proposition" for customers, Comcast Chief Executive Officer Brian Roberts said the wireless service will improve "with [our] 15 million Wi-Fi hotspots."

The company also hopes the service will help it retain more customers in the highly-competitive wireless business where Verizon and AT&T each have the most market share.

“It’s very much an in-footprint strategy," Roberts said at an investment conference in New York City on September 20.

"We exercised our MVNO [Mobile Virtual Network Operator] rights with Verizon Wireless, as many people know," said Roberts, confirming the cable giant's plan to launch the "Wi-Fi and MVNO integrated product" in 2017.

The company wants to do it right, said Roberts.

"There is a lot to do.  We have retail locations, [and] many customer interaction points."

Comcast has taken part in meetings with Verizon for about a year, experimenting with new services it could bring to the market.

Roberts said Comcast's "good relationship [to sell] on a wholesale basis" will prevent it from having to invest heavily in the required cell towers neccessary for the service, if not for its collaboration with Verizon.

"If you are one of our better customers," Roberts told investors, “we believe there will be a big payback with reduced churn, more stickiness, better satisfaction, [and] more product purchasing from us.”

Just a day later, on September 21, Charter communications said at an investment conference that it would launch a cellphone service as well, but didn’t specify when.

Charter purchased Time Warner Cable in May and now has a total of about 25.6 million customers. But Comcast serves as many as 28 million customers in all the areas where it provides cable.

But the prospect of bundling wireless with home-based services may not be so easy.

“There have been several attempts in the past to bundle wireless services with home-based services like phone and broadband,” telecom analyst Jan Dawson of Jackdaw Research told New Brunswick Today.  “They've always failed to catch on.”

As a big cable company, says Dawson, Comcast’s advantage over a startup seeking to establish itself in the wireless space is its name recognition, and good relationships with existing customers. Those two things could give Comcast leverage to sell the service, says Dawson.

“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,” Dawson told NBT. “So much depends, ultimately, on the details of what's announced."

“If Comcast 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. The challenge is that they'll be paying fixed wholesale rates to Verizon Wireless for the use of its network, which gives them limited wiggle room in terms of pricing and discounting.”

“Republic Wireless and Google Fi both use this model [right now], of offloading traffic to WiFi wherever possible, but of course, Comcast WiFi isn't available nationally or even ubiquitously throughout the parts of the country where it offers service,” noted Dawson, stressing the importance of  Verizon's Wireless network -- which has repeatedly been ranked as the top network by independent auditors.

In 2011, Comcast officially aquired a 51% stake in NBC Universal, purchasing it from General Electric Co. and creating a $30 billion media giant that Roberts called the "ideal entertainment and distribution company."

We are thrilled to have "more than doubled our cash flow," Roberts told investors, citing NBC's "consistent strength across" businesses.

Comcast “hopes to take advantage of an evolving media world as viewing habits change and audiences expect to find their favorite entertainment on the TV set as well as the PC, tablet and smartphone,” reads a 2011 Reuters report.

Still, it took Comcast more than a year to get the deal “through a rigorous U.S. regulatory review process with the Federal Communications Commission and Justice Department,” according to the report.

NBC Universal LLC, the name of the new partnership, required Comcast to agree to give up management rights to its minority stake in Hulu, an online video content service.

Roberts boasted that "NBC just announced last week that it won the TV season" at the conference, also noting the NBC-owned Spanish-language television network Telemundo was doing well.

“Univision would have triple the ratings [of Telemundo] when we started," said Roberts, noting there had never been a single day Telemundo had more viewers than its chief competitor.

Telemundo was in first place for several weeks in a row, Roberts said.

“A similar story [is] happening and even wider turnaround [is] happening in the Hispanic television [market].”