& cplSiteName &

Analysts More Than Bullish on Comcast MVNO

Mari Silbey
4/22/2016
100%
0%

Verizon made it known last fall that Comcast had cashed in its chips on an MVNO agreement the two companies signed back in 2012. Comcast confirmed its plans to activate the MVNO at the time, but has been cagey ever since on how and when it intends to act on those plans.

Alex Besen, founder and CEO of consulting firm The Besen Group, however, believes Comcast Corp. (Nasdaq: CMCSA, CMCSK) will launch an MVNO service by the end of this year, or at the latest in early 2017. And fellow analysts Craig Moffett of MoffettNathanson Research and Francis McInerney of North River Ventures are also convinced that Comcast will disrupt the wireless market with its own mobile service in the near future.

The three analysts spoke on the subject of Comcast and the wireless market at the Wi-Fi Now 2016 conference. At times, they were quite blunt.

"If you aren't thinking about Comcast," McInerney told the wireless crowd, "leave this industry."

As far as McInerney is concerned, the future of the mobile market is all about capital efficiency, and that's where Comcast has an advantage. There are a couple of ways to look at that assertion. The first is by considering Comcast's more than 13 million WiFi hotspots around the country -- the vast majority of which are home hotspots that Comcast deployed as part of a normal router upgrade process. Those hotspots will help Comcast offer a WiFi-first mobile service that relies primarily on WiFi connectivity, but falls back on a cellular connection when WiFi isn't available. Comcast spent relatively little to build out its WiFi hotspots, but it can now use its existing footprint to mitigate the capital costs of starting up a mobile network service. (See Comcast Confirms It Will Activate MVNO Deal.)

The second way to look at Comcast's capital efficiency is more interesting, however. Comcast's advantage isn't really in its existing WiFi hotspots, especially considering that, as Moffett admits, the jury's still out on how well current home hotspots perform. (See also How Home Hotspots Could Hit Hurdles.)

Instead, the real leverage Comcast has is in its last-mile wireline network. Regardless of how Comcast distributes wireless connectivity from the endpoints of its HFC network, the cable company has the all-important local backhaul capacity necessary to support heavy wireless broadband traffic across large regions of the country. Incumbent wireless carriers don't.

Moffett has a theory that Comcast needs a "capacity layer" and a "coverage layer" of connectivity in order to introduce a mobile service. The capacity layer will come from WiFi, while Verizon Communications Inc. (NYSE: VZ)'s network assets will provide the coverage layer Comcast needs to support true mobile connectivity. That's a short-term view, however. Moffett believes Comcast will eventually be able to wean itself off of Verizon's network, possibly by acquiring spectrum in the current 600MHz auction. (See Comcast May Be Lone MSO Wireless Bidder.)

Comcast could also form a joint venture with Charter Communications Inc. in the future (assuming the acquisition of Time Warner Cable is successful), and use that added scale to pressure incumbent carriers further. With enough pricing pressure, Comcast could eventually even buy out a mobile network operator on the cheap.

As Moffett sardonically explains, it doesn't make much sense for Comcast to acquire one of the incumbent carriers now. "If you're going to wreck the cellular market, wreck it first and buy it later."


Want to learn more about wireless networking? Join us at our upcoming Big Communications Event in Austin, Texas, May 24-25. Register now!

The big picture for US mobile operators is fairly bleak. According to McInerney, carriers won't be able to afford the local backhaul capacity necessary to support growing mobile traffic in the coming years. Companies like Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG), however, will continue to profit from traffic growth while carriers spend money to "densify" -- i.e. build out more fiber in local areas to manage higher bandwidth consumption and keep content closer to the network edge.

At the same time, Comcast should be able to undersell carriers, even as they face mounting capex demands.

It's a lose/lose proposition.

The only plus side in the forecast for carriers is that any long-term predictions are subject to an abundance of unknown forces. For example, Besen thinks the future for wireless carriers lies almost solely in the wholesale access model, where Internet companies own the consumer experience, and carriers eventually sell to those companies rather than directly to consumers. But, as Moffett points out, the move to a wholesale model would also depend on how the government decides to regulate the wireless market going forward, and that's still an "x" factor.

McInerney notes that we don't know what other innovations will occur either. What if suddenly communications networks were able to play a role in power generation? (Think solarized windows with converted energy carried as power over telecom networks.) That would disrupt mobile economics in unfathomable ways.

The bottom line is that there are too many unknowns to create a reliable long-term forecast.

The short term, however, is a different matter. The short term is easier to predict, and as far as Besen, Moffett and McInerney are concerned, mobile operators are facing one certainty: Comcast is about to make its mark on the wireless market, and that's going to mean a whole lot of new challenges for incumbent carriers.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
WilliamMiller58
50%
50%
WilliamMiller58,
User Rank: Light Beer
4/23/2016 | 6:06:27 AM
Bad
I think analiysts behaviour is more than inappropriate! They shouldn't act like that, even when we know that these guys deserve that.
brooks7
50%
50%
brooks7,
User Rank: Light Sabre
4/22/2016 | 4:47:07 PM
WiFi
 

So, are they planning a UMA style service with fallover?  Or if you leave the WiFi footprint will the call drop when you go cellular?

seven
David Dines
50%
50%
David Dines,
User Rank: Light Beer
4/22/2016 | 3:20:04 PM
I agree Comcast should be taken seriously
However, I have noticed that when large, highly bureaucratic companies try to make a dent in a different, albeit adjancent, market, they often have execution issues. Poor coordination with partners, tone deaf marketing, less than a compelling package or offer, and mediocre customers service are a few that I have observed. The incumbents are not going to make it easy for them to take market share.  

It will definitely be very interesting to see how the competitive landscape shifts as they make their entrance and it portends well to see more seiously competition in this space.
cnwedit
50%
50%
cnwedit,
User Rank: Light Beer
4/22/2016 | 3:09:49 PM
Xfinity WiFi footprint
As a former Comcast subscriber that only lfet to get gigabit fiber, I already find Xfinity WiFi is available in many attractive locations - and by attractive, I mean many places where I want WiFi. 

I can't get it for free anymore but I still notice it's there and it's there in a surprinsgly large number of places. 

 
wagudu
50%
50%
wagudu,
User Rank: Light Beer
4/22/2016 | 1:37:15 PM
Insightful Article!
Marie - Your analysis is on point!

Comast is definitely positioning the right chess pieces for the disruptive final "checkmate" on the Telco incumbents!

Very exciting times ahead!
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom on what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
LRTV Custom TV
Nokia Introduces Virtual Service Router for More Rapid Service

4|6|17   |     |   (0) comments


James Cumming, product line manager for virtualized service routers at Nokia, demonstrates how the virtual router based off the Nokia ecosystem changes the network function experience.
LRTV Custom TV
The Keys to SD-WAN Success

4|6|17   |     |   (0) comments


Versa Networks CEO Kelly Ahuja talks about the key requirements for service provider-managed SD-WANs.
LRTV Custom TV
Intel & Cisco on Joint 5G Solutions

4|5|17   |     |   (0) comments


Dave Ward, SVP and CTO of Cisco, is joined by Sandra Rivera, corporate VP and general manager of network platforms group of Intel, on the revolutionary 5G technology that changes networking and computing fundamentally.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Time for a Telecom Reboot
Steve Saunders, CEO and founder, Light Reading, 4/19/2017
Comcast Ready for Clash With Hulu
Mari Silbey, Senior Editor, Cable/Video, 4/18/2017
Unlicensed: It's What's Next for US Mobile Operators
Dan Jones, Mobile Editor, 4/19/2017
Verizon's Fiber Spend Won't End With Corning
Mari Silbey, Senior Editor, Cable/Video, 4/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
Now That's an Ad Campaign Click Here
Meerkats to the rescue!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.