Comcast Confirms It Will Activate MVNO Deal
After much public speculation, Comcast confirmed in its third-quarter earnings call that the company will activate a mobile virtual network operator (MVNO) deal signed with Verizon in 2012. While stating that the company has no specific news to report today, Comcast CEO Brian Roberts acknowledged that an MVNO plan is in the works, and that it could be an important complement to the cable company's WiFi initiatives.
"We're going to trial some things and test some things after we activate," said Roberts, noting that it will take about six months to trigger the MVNO agreement.
Comcast Corp. (Nasdaq: CMCSA, CMCSK) could also look to purchase its own spectrum for wireless services.
Asked about the potential to participate in the upcoming 600MHz spectrum auction, Neil Smit, president and CEO of Comcast Cable said, "We don't know. We're evaluating."
However, Roberts clarified that Comcast sees the MVNO option as only "part of a product set." That could mean that the cable operator will pursue new spectrum in addition to the MVNO agreement, but Roberts was careful to state that the company doesn't "necessarily have to seek owner economics."
As a side note, Roberts also made clear that Comcast will participate in the spectrum auction on the NBCUniversal LLC side, where it may donate spectrum, move channels or share spectrum with wireless providers in exchange for a share of auction proceeds.
The latest round of mobile activity from Comcast comes as both AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) have made clear their strategies to combine media and mobility to engage more subscribers. At the recent SCTE Cable-Tec Expo conference, numerous industry experts reported that MVNO arrangements are gaining appeal even as cable operators also push to improve and expand their WiFi footprints. (See Cable's Chance to Get Mobile Right.)
Comcast is by far the leader on the WiFi front. On today's earnings call, the company announced it has installed 11.7 million WiFi hotspots and that it boasts the "fastest in-home WiFi."
Aside from mobility, the other big story coming out of Comcast's quarterly earnings report was the continued acceleration of the deployment of the company's X1 video platform, which is now in almost 25% of video subscriber households. The service provider added nearly 1 million X1 customers in the past three months, and is now rolling out more than 40,000 X1 boxes per day. That's up from 30,000 X1 set-tops per day in the second quarter.
CTO Tony Werner projected earlier this month that by the end of 2016, Comcast will have deployed 8 million IP set-tops supporting the X1 platform. (See Comcast: All-IP Video Target Is Q1.)
Interestingly, there was very little mention on the Comcast earnings call of either the company's trial of its skinny-bundle service known as Stream, or its new Watchable web video offering launched in September. (See Comcast 'Stream' Joins OTT Flood and Comcast's Watchable: Like YouTube… Sorta.)
However, Roberts did point out that Comcast nearly quadrupled the reach of its Xfinity on Campus service. The all-IP, multiscreen video service is now available at more than two dozen colleges and universities. (See Xfinity Goes Back to School in Style.)
Overall, Comcast's cable subscriber numbers were promising for the third quarter. The company's number of customer relationships grew by 156,000 to 27.4 million, with revenue per user increasing by 4.3% to $143 per month. Total cable revenue amounted to more than $11.7 billion in the three-month period.
Notably, Comcast lost only 48,000 video subscribers even as it increased video revenues by 3.3% to $5.3 billion. That compares to Verizon which gained 42,000 video subscribers in the quarter, and AT&T, which shed a whopping 92,000 U-verse video subscribers even as it gained 26,000 new DirecTV Group Inc. (NYSE: DTV) customers. It was the best third quarter for video subs that Comcast has had in the past nine years.
Other highlights for Comcast came in the categories of residential Internet and business services. The company added 320,000 new high-speed Internet customers, increasing revenue in that sector by more than 10%.
Business services revenue grew 19.5% to $1.2 billion, which means it is now approaching a $5 billion annual run rate. Just last month, Comcast announced that it is now targeting Fortune 1000 enterprises in addition to small and midsized companies. (See Comcast Business Targets Fortune 1000.)
Finally, Comcast executives were exceptionally bullish in their report on the performance of subsidiary NBC Universal, saying that it "continues to exceed expectations," based largely on the success of the film and theme park businesses. Total revenue for NBCU was $7.15 billion for the quarter.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading