Is Comcast cooking up its own voice-over-WiFi service?
It certainly seems that way, based on the company's fourth-quarter earnings call Tuesday. During that call with Wall Street analysts, coy Comcast Corp. (Nasdaq: CMCSA, CMCSK) executives broadly hinted that they are developing some type of WiFi-powered services, quite possibly including a WiFi-first product that would route mobile calls primarily over the company's WiFi networks and use cellular networks just as a backup.
"We're still assessing the possibilities," said Neil Smit, president and CEO of Comcast Cable. He noted that 70% of the in-home mobile traffic in Comcast's broadband households now travels over the company's WiFi connections. "Wireless seeks wired," he said.
While they may still be exploring their options, Smit and other senior Comcast executives made it clear that they have big plans to reap much greater financial benefits from the company's rapidly growing WiFi footprint, similar to their counterparts at Cablevision Systems Corp. (NYSE: CVC). "We're working on how we monetize that asset and bring it to market," Smit told the analysts. "We do believe in the asset and we're looking for ways to bring it to market over the next several months."
Comcast certainly is in a better position than most, if not all, other US cable operators to consider such an ambitious WiFi strategy. As the nation's largest MSO disclosed in its fourth-quarter earnings report, it has now installed 8.3 million WiFi hotspots throughout its cable footprint, relying on a mix of dual-signal wireless broadband gateways inside broadband homes, commercial sites and public venues. Plans call for the company to keep expanding its hotspot deployments aggressively through at least the end of this year.
Cablevision's recent introduction of a WiFi-exclusive phone, text and data service in the New York City metro area has fueled even greater interest in the idea by other cable operators. Cablevision, the nation's fifth-largest MSO with more than 3 million customers and 1.1 million WiFi hotspots, launched the service, known as Freewheel, for both its Optimum WiFi subscribers and other broadband users three weeks ago. (See Cablevision's New WiFi Try – Freewheeling Enough? and Cablevision Wheels Out Freewheel Across US.)
In conjunction with its ambitious WiFi push, Comcast has also been aggressively expanding its wired broadband reach. The MSO signed up 375,000 high-speed data subscribers in the fall quarter, boosting its broadband customer count to almost 22 million, up nearly 1.3 million for the year. As a result, Comcast now has almost as many broadband subscribers as video subscribers, like such other major US cable operators as Cablevision, Time Warner Cable Inc. (NYSE: TWC) and Charter Communications Inc.
On the video front, Comcast also enjoyed a relatively strong quarter, netting 6,000 new Xfinity TV subscribers. While this represented a decline from the 46,000 video subscribers it picked up a year ago and fell short of the Wall Street consensus forecast of 25,000, it still marked the company's third video subscriber gain in the last five quarters. Most large US MSOs would kill for that kind of video performance right now.
For the full year, Comcast still lost 194,000 pay-TV subscribers, due to heavy losses in the spring and summer. But the annual loss was its lowest in seven years. As a result, the company ended 2014 with slightly under 22.4 million video customers.
As they have for the past several quarters, Comcast executives credited the improving video results to the popularity of their next-gen X1 platform, an IP-based video home gateway that has enabled them to introduce a cloud-based user interface, network DVR service, video streaming to mobile devices and other advanced products and features. On the earnings call, executives said they have now deployed X1 set-top boxes in about a quarter of their nearly 9.9 million triple-play homes.
Plans call for extending X1 aggressively to more video households in 2015 and 2016. The company also intends to offer its new cloud DVR service to its entire video customer base by the end of this year.
— Alan Breznick, Cable/Video Practice Leader, Light Reading