Comcast appears poised to let the economics of its MVNO agreement with Verizon play out a bit longer before ramping up the deployment of licensed CBRS spectrum that could help to offset MVNO costs in high-traffic areas.
"I think time needs to pass before you see us actively doing anything on that front, given the dynamics that we're faced with today," Comcast CFO Mike Cavanagh said of the company's CBRS plans Tuesday at the Bank of America 2021 Media, Communications & Entertainment Conference. CBRS presents "excellent option value for us," he added.
Comcast bid for and won licensed CBRS spectrum covering about 83% of its footprint, giving the operator the opportunity to deploy it in dense locations that could offload some wireless traffic that would otherwise travel on Verizon's mobile network.
Cavanagh said tests have already shown Comcast that it can offload traffic on CBRS spectrum where it makes sense, but noted that the cable operator's MVNO agreement with Verizon, revised and expanded in 2020, "is excellent."
"There's going to be forces at work that continue to keep the pricing of buying wholesale in line with what we likely could do by offloading. If that proves not to be true, then we can selectively offload," Cavanagh said.
Comcast's near-term attitude with CBRS contrasts with the more aggressive stance being taken by fellow US cable operators.
Charter Communications, which also has an MVNO pact with Verizon, has been much more active, having announced plans to light up CBRS in one market later this year, and to use that deployment as a possible model for future rollouts. Mediacom Communications is using a mix of licensed and unlicensed CBRS spectrum to power Mediacom Bolt, a new fixed wireless service that has been deployed in parts of Alabama, Iowa and Florida.
Comcast's Xfinity Mobile service turned profitable earlier this year, but Cavanagh stressed that the "goal is not to optimize the profitability of the wireless business unto itself anytime soon … We want to continue growing that business."
Comcast, which recently launched new unlimited multi-line mobile offerings, added a record 280,000 mobile lines in Q2 2021, ending the period with 3.38 million mobile lines. About 2 million Comcast broadband customers have bundled in Xfinity Mobile.
"I think I'd rather see us continue to be burdened by having ramping acquisition costs, because I'd like to see that 2 million much, much, much higher," Cavanagh said. "What the ceiling is, I don't really know, but we've got a lot of runway, and it's such a natural combination of broadband together with wireless."
Broadband pace slowing down
Broadband, now the centerpiece of Comcast's cable business, has been growing rapidly, but Cavanagh warned that the operator is starting to see the pace of the third quarter of 2021 slow a bit compared to pre-COVID 2019 levels.
"What we're seeing in the most recent past, like the tail end of August, is a little bit of slowdown in the net adds in cable business," he said, noting that totals for Q3 2021 will likely fall behind what was a record Q3 2019. However, he said Comcast still expects full-year 2021 totals to surpass that of full-year 2019.
Meanwhile, Comcast plans to continue to invest in its network, which, on the hybrid fiber/coax (HFC) side, now offers up to 1.2 Gbit/s in the downstream using DOCSIS 3.1.
"We'll step on the gas a little bit … and continue to invest in the network on the path to DOCSIS 4.0, which will give us multi-Gig speeds up and down," Cavanagh said.
He said deploying a "mid-split" that dedicates more spectrum and capacity to the DOCSIS upstream represents the new "base case" for Comcast, noting that such a move is not disruptive because it does not require new equipment in the home. But it also puts Comcast on a path to DOCSIS 4.0, Cavanagh said.
Bar is 'really high' for big acquisitions
Cavanagh also dug into Comcast's current attitude on M&A, noting that the company is unlikely to chase after any monster deals.
"The bar is really high for us to pursue sort of outright acquisitions of any material size," he said, adding that Comcast will still evaluate any sort of deal that makes sense.
Comcast is "wide open" to smaller, tuck-in acquisitions and deals, pointing to Comcast Business's recent play for Masergy and a new 50/50 streaming joint venture with ViacomCBS focused on parts of Europe as recent examples.
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— Jeff Baumgartner, Senior Editor, Light Reading