- Could resell Verizon's service under three-year-old deal
- Comcast seen offering Wi-Fi, cellular service like Google Fi
Comcast Corp. is moving closer to introducing a wireless service that would compete with major U.S. carriers.
The country’s largest cable company has told Verizon Communications Inc. that it plans to resell Verizon’s wireless service as part of a 2012 airwaves deal, according to two people familiar with the matter who asked not to be named because the information isn’t public. Under that agreement, a consortium of cable companies led by Comcast sold nationwide spectrum licenses to Verizon for $3.6 billion and secured the rights to resell its wireless services.
Verizon Chief Financial Officer Fran Shammo said Tuesday that cable companies he didn’t name have informed the carrier they now want to execute on that part of the agreement.
“Obviously, the industry is moving,” Shammo said during an earnings call Tuesday. “Cable is going to do what they’re going to do, and we’re going to do what we’re going to do.”
Comcast would offer a hybrid cellular and Wi-Fi service, using Verizon’s network and Wi-Fi hotspots. The entry of Comcast in the market would come at a time when Verizon and No. 2 carrier AT&T Inc. are already under pressure from smaller rivals like T-Mobile US Inc., which is winning customers by cutting prices and doubling data allotments.
“This will be bad for the carriers, with the possible exception of T-Mobile US Inc., and good for cable,” Jonathan Chaplin, an analyst with New Street Research LLC, wrote in a note Tuesday.
Bob Varettoni, a Verizon spokesman, declined to comment beyond what Shammo said on the earnings call Tuesday. Comcast spokeswoman Jenn Khoury declined to comment.
A market trial of a Comcast wireless service could begin six months after the notification and a commercial service could start “by this time next year,” according to Chaplin. The cable companies could save as much as half the network costs of a conventional wireless carrier and offer a service starting at $25 to $30 a month with attractive margins because of their Wi-Fi hotspots, Chaplin said. That’s half the price of a typical wireless plan.
While many analysts have anticipated Comcast will introduce a mobile phone service that uses both Wi-Fi and cellular networks for connectivity, a source close to the company said it hasn’t decided whether to do so. Comcast now has potentially more than 10 million Wi-Fi hot spots and is still exploring ways to leverage them, the person said.
“We’re still working on our wireless strategy and how that will manifest itself, but we feel that Wi-Fi is a very strong and powerful asset that we will be looking into the best way to leverage going forward,” Neil Smit, president of Comcast’s cable division, said during a May earnings call.
Cablevision Systems Corp. unveiled a low-cost mobile phone service in January, but that service, called Freewheel, only works when customers are connected to Wi-Fi hotspots.
Cable companies have tried before to add wireless as a fourth service offering of TV, Internet and digital phone for a so-called quadruple play. One of the first attempts was a partnership between Sprint Corp. and a group of cable companies including Comcast, Time Warner Cable Inc. and Cox Communications Inc. That project, called Pivot, shuttered after two years.
The cable companies in December 2011 struck deals with Verizon to sell their spectrum licenses, which they had acquired just five years earlier with wireless ambitions. As part of the accords, Verizon and the cable companies agreed to market and sell each other’s services. Verizon can offer cable-TV products in its retail stores, receiving a percentage of revenue for every cable customer it signs up, while cable companies can receive fees for each wireless customer they sign up.
Though the companies obtained regulatory approvals in 2012, neither side has acted on it.
(An earlier version corrected Khoury’s title.)