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Why Dish Approves of Comcast’s Prepaid Services

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Aug. 30 2016, Updated 10:04 a.m. ET

Dish’s opinion of Comcast’s prepaid service

As US pay-TV operators like Dish Network (DISH) and Comcast (CMCSA) continue to face subscriber churn, pay-TV companies are trying to target new customers with a host of offers.

Last month, Comcast announced Xfinity Prepaid services, which would allow people to renew their subscriptions or sign up for Comcast’s television or Internet service for a duration of seven or 30 days without a credit check or signing a contract.

Dish was asked about Comcast’s Xfinity Prepaid service during the company’s fiscal 2Q16 earnings call. Dish Network’s chairman and CEO, Charles William Ergen, noted that prepaid services are “a good way” to target a “less credit-worthy customer.”

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Ergen added, “We do some of that today at DISH. Again, there are profitable customers in the prepaid world, and certainly in the wireless world…. I would think that that is something that would make sense for Comcast to look at. I guess I could add you’re probably not dealing with the $1,000 SAC to get that customer. So I think you have to balance your SAC versus your churn rate versus your ARPU and margins, right? It’s a different customer.”

Why has Comcast launched the prepaid service?

Comcast stated at the company’s fiscal 2Q16 earnings call that when it comes to Xfinity prepaid plans, it is targeting a customer base that is low income, “may or may not have a credit card,” and may not meet the company’s credit standards for its customers.

As the above chart indicates, Comcast narrowed its video subscriber losses to 4,000 in fiscal 2Q16, its best second-quarter result in the past ten years.

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