Analyst: Comcast triggers MVNO deal, will launch Wi-Fi-first service in 2016

Cable powerhouse Comcast (NASDAQ: CMCSA) will execute on its MVNO deal with Verizon (NYSE: VZ) and will launch some sort of wireless offering -- most likely a Wi-Fi-first service -- sometime next year, according to analysts from New Street Research.

During an investor call yesterday to discuss the company's third-quarter earnings, Fran Shammo, CFO of Verizon, said that Verizon has been notified that the cable companies will execute on their 2011 MVNO deal with Verizon but he would not discuss specifics of the agreements. "Obviously the industry is moving. Cable will do what they are going to do and we will do what we will do," Shammo said.

However, Shammo then emphasized Verizon's views on Wi-Fi as a complementary service and not a replacement for LTE, implying that the cable MVNO offering will likely be a Wi-Fi-first service. "Wi-Fi will not replace LTE," he said.

In a New Street Research note, analysts said that based upon Shammo's comments, they expect Comcast to launch a market trial of a Wi-Fi first service soon with a commercial launch following, probably sometime around fall 2016. 

New Street analysts have long predicted a cable MVNO will enter the wireless market and cause disruption. In a research note from April 2014, the analysts said that a Wi-Fi-centric wireless offering from cable companies could capture about 9 percent of the retail wireless subscriber market in the next five years and boost cable revenues by 10 percent to 12 percent in the same time frame. New Street predicted that while Verizon and AT&T (NYSE: T) have the most subscribers to lose, Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) have more at risk because they are higher leveraged.

The Verizon MVNO agreement with the cable companies stems from Verizon's 2011 purchase of AWS-1 spectrum from Comcast, TWC, Bright House and Cox. The FCC approved the deal in the summer of 2012 and permitted the MVNO agreement, but the cable companies so far have not launched wireless offerings related to the deal.

It's been widely rumored for the past few months that Comcast was planning to execute on its agreement with Verizon and would use that deal as an entry point to launch a Wi-Fi-first service.

Last month Comcast CEO Brian Roberts told investors at a Goldman Sachs Communacopia Conference that the company was open to leveraging its 11 million Wi-Fi hotspots and its MVNO relationships with wireless carriers into something more but had no current plans to enter the wireless market with its own offering.

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