Comcast has offered Xfinity Mobile for about a year and a half, and on its third quarter 2019 earnings call yesterday the company reported that it added 204,000 net customer lines in the latest quarter, and now counts 1.79 million mobile lines.
Comcast operates as a Mobile Virtual Network Operator (MVNO) whose service rides on Verizon’s network. In addition, Comcast supplements its MVNO service with 19 million Xfinity Wi-Fi hotspots. That’s in contrast to Charter’s MVNO service, which also rides on Verizon’s network. But Charter counts only 500,000 hotspots compared to Xfinity’s 19 million.
Whenever a Comcast customer is within an Xfinity Wi-Fi hotspot area, their phone automatically switches from Verizon’s network to the Wi-Fi network. This reduces the leasing costs that Comcast must pay to Verizon.
Company executives have said that the primary aim of the Xfinity Mobile service is to create “stickiness” with Comcast broadband customers. Broadband is a big revenue generator for Comcast, and the cable operator wants to reduce churn as much as possible.
“With broadband as the foundation of our customer relationships, we utilize additional products and services in a manner that profitably helps us attract and increase the lifetime value of the overall customer relationship,” said Comcast CEO Brian Roberts on yesterday’s earnings call, per a Seeking Alpha transcript.
A research note from Lightshed analysts Walter Piecyk and Joe Galone said, “It’s becoming increasingly clear that Comcast’s wireless offering is simply playing a supporting role to residential broadband, which performed well this quarter.”
The Lightshed analysts also noted that Charter has said it could break even at two million wireless subscribers. But even though Comcast could hit the two million-subscriber milestone next quarter, Lightshed doesn’t expect it to reach break-even in wireless until 2021.
David Watson, president and CEO of Comcast Cable, said on the earnings call, “We're always studying and we are actively testing the options of being able to offload in any number of different ways. So we look at the trade-offs between price and volume and then the amount of data on our MVNO network and then when you offload data to our own network.”
Comcast's cable competitor Charter has expressed interest in the CBRS spectrum as a possible way to offload more of its MVNO traffic. Charter has been testing CBRS radios on its plant with dual SIM devices that allow a customer to use the wireless MVNO or alternately use Charter’s own network on CBRS, whichever is best from an economic standpoint. “That looks like it works,” said Charter CEO Tom Rutledge last month at a Goldman Sachs Communacopia conference. “The question is, so, how fast would you roll that out? Over a long period of time we’ll do that opportunistically. But right now, the MVNO is a good relationship for us.”
On Comcast’s call yesterday Watson wouldn’t directly answer a question about the company’s interest in CBRS other than to say “We'll always be opportunistic. We'll evaluate every option.”
But then he went on to say,“We're absolutely testing the eSIM, dual-SIM capability” on both the iOS and Android operating systems. We think that is an opportunity, and we'll continue to look at that. And that does go with any offload strategy, so we're very active in thinking through that…. I do think that there's promising opportunities when you combine dual SIM with the cable infrastructure.”
Roberts said that Comcast is taking a “capital-light approach” to wireless and “we're getting scale; we're learning all the realities of a new business extremely well. And the technology, the innovation in the handsets, possibly spectrum, all the conversations we're having, all of those are net positives to where we're going.”
The company has already been somewhat disruptive in mobile by offering two types of plans: an unlimited plan and a by-the-gig usage plan. In addition, these types of plans can be mixed and matched within families. For example, a parent who mainly uses Wi-Fi can choose the by-the-gig plan, while his teenagers might each need the $45/per month unlimited plan. And customers can use the Xfinity Mobile app to switch their plans on-demand at any time. So it’s basically a form of dynamic pricing.
Roberts also said that Comcast is upgrading its existing retail stores to offer Xfinity Mobile and it’s not “having to spend a lot more in terms of new locations; We do add a few locations here and there along the way.”