Comcast's New Wireless Service Hits 200,000 SubscribersBy
Most popular plan of $12 per gig could prove profitable
Low-cost service adds pressure on rivals in price battle
Comcast Corp.’s low-cost entry into wireless service, called Xfinity Mobile, has attracted about 200,000 subscribers in less than five months, according to people familiar with the situation who asked not to be named, a warning shot to larger rivals locked in a price battle.
The service is available only to Comcast customers who subscribe to Internet and TV service. When it launched in May, unlimited data plans cost $65 a month, or $45 a month for those who already subscribe to premiere packages that include video and landline phone services. Users also can pay $12 per gigabyte of data they use. They are some of the lowest prices among the top U.S. wireless carriers. Comcast declined to comment.
Comcast, the largest U.S. cable operator, is seeking new sources of revenue as consumers ditch traditional TV packages while competitors like AT&T Inc. bundle wireless and video services to entice customers. Comcast also is using the mobile service to get its 29 million subscribers to stick around instead of moving to online alternatives like Netflix. While 200,000 Xfinity users is far from gangbuster sales, it is a sign that an inexpensive offering can gain traction in a hypercompetitive market.
“That number is just a rounding error to the other carriers at this point, but what’s interesting is that Comcast might be making a profit at this,” said Roger Entner, an analyst with Recon Analytics LLC.
Comcast relies on Verizon Communications Inc.’s cellular network to provide the service. The Philadelphia-based cable giant is buying capacity from Verizon at wholesale prices to resell to XFinity subscribers. If Comcast is paying Verizon an estimated $3 or $4 a gigabyte then selling it to consumers for $12 retail, the markup is pretty good, Entner said. The $12 per gigabyte offer has been the most popular option, Comcast has said.
Comcast sees an opportunity to offer lower prices than other wireless companies because most people use their phones on Wi-Fi at home or at work. Comcast says as much as 80 percent of smartphone data in the U.S. travels over Wi-Fi, not cell networks, so it won’t have to pay Verizon much for the capacity needed.
XFinity lets subscribers connect their phones using the company’s 18 million Wi-Fi hotspots and Verizon’s cellular network as a backup. In August, Comcast made the service available to customers across its entire territory, which includes Philadelphia, Chicago and Boston.
Comcast executives have said their wireless business will be profitable once subscribers reach a “low-to-mid-single-digit” share of the 25 million broadband customers.
“Once we get to some minimal scale, which isn’t a huge number, every incremental customer pays for itself,” Chief Executive Officer Brian Roberts said at a conference last month.
— With assistance by Scott Moritz, and Lucas Shaw