Comcast’s wireless strategy
There’s been widespread speculation that Comcast (CMCSA) is set to compete with wireless providers AT&T (T), Verizon Communications (VZ), T-Mobile (TMUS), and Sprint (S). These speculations arose when the company filed a bid to participate in the FCC’s (Federal Communications Commission) 600 MHz (megahertz) broadcast television spectrum incentive auction in 2016.
However, Comcast put an end to this speculation at the Goldman Sachs Communacopia Broker Conference in September. The company stated that it expects to launch its wireless service by mid-2017. The company also recently recruited Greg Butz to head its wireless business.
The company stated at its fiscal 3Q16 earnings call that it believed its agreement with Verizon had a good value proposition with its MVNO (mobile virtual network operator) agreement with Verizon Communications (VZ). The company believes that with the renewal of a 2011 agreement with Verizon, it could generate more value for its shareholders.
In effect, Comcast will become an MVNO for Verizon. As an MVNO, it will have access to Verizon’s network services at wholesale rates and will sell these services to its customers.
Comcast further stated it’s already in the wireless business given its wireless gateways, its Wi-Fi service, its 15 million Wi-Fi hotspots, and its MVNO agreement with Verizon. The company further stated, “We are going to have to include handset procurement as part of it, but we built that in the model and we think we can – Verizon’s been a great partner so far in the wholesale relationship and we think that will continue and we have a great product that will add value over time.”
Increase in mobile video data traffic
Wireless networks are increasingly coming under pressure over their speed and latency as more and more viewers stream videos over the Internet. According to Cisco Systems’ (CSCO) VNI (Visual Networking Index) at the end of 2015, video accounted for ~61.0% of mobile data traffic in the United States. By the end of 2020, analysts estimate that this figure could expand to ~77.0% of mobile data traffic in the United States.