Comcast’s Wireless Service Lacks Compelling Reason to Buy
Following years of discussion, hints, and speculation, Comcast finally announced its MVNO wireless service, branded Xfinity Mobile. In its current iteration, I cannot see it being an overwhelming success. There’s no particularly compelling reason for anyone to switch to Xfinity Mobile: it’s only slightly cheaper than the competition and there aren’t any features that offer a distinct competitive advantage. Ironically, perhaps the best reason to consider Comcast is if you want to put your family on a “wireless diet”, by taking advantage of the zero charge per access line and buying a limited amount of wireless data.
So here’s the Xfinity service in a nutshell:
• One has to be a Comcast customer (there are about 29 million households, representing about 130 million potential ‘lines’)
• You buy a phone from Comcast (no BYOD at launch), and sign up for Unlimited or by the GB
• There is no ‘per line access charge’. Voice and text are free and data is $65 per line for Unlimited or $12 per GB. For X1 customers spending more than $150/month, the Unlimited price is $45 per line
• When using the Xfinity Mobile service, the customer is signed into other Xfinity apps, such as home entertainment and Xfinity home – although that’s available to any Xfinity customer
• It’s a digital-centric service in terms of buying the phone, paying the bill, and contacting customer care
The Xfinity service is a bit less expensive than the competition but not sufficiently so to compel one to switch, especially when the purchase of a new device is required. It’s hard for me to see how a ‘family’ will spend $500-700 per device to switch to a service that saves maybe $20 per month over AT&T or Verizon. And, as long as Comcast needs Verizon for the cellular service, there’s little likelihood Comcast will further discount its service, since it is paying Verizon $6-8 per GB for data on a wholesale basis. In fact, since Comcast allows up to 20 GB of full speed data, there’s the possibility the company could be underwater in some scenarios. Although, in reality, average usage is ~4 GB per line and Comcast will be pushing subs onto Wi-Fi.
There aren’t any particularly compelling features. There isn’t any zero rating of entertainment content, unlike AT&T/DirecTV, T-Mobile BingeOn, or some of the content on Verizon.
Ironically, Xfinity Mobile could be a great budget option if you want to put your family on a wireless data ‘diet’. You could have 3-4 lines, with unlimited voice and text, and buy 4 GB a month, for under $50 total. This could be especially compelling if and when Comcast allows customers to bring their own phone or has some other option for customers to get an inexpensive device.
A big question is whether the Wi-Fi aspect will be an asset or a liability for Comcast or its customers. Comcast is relying on the 16 million Wi-Fi hotspots — a combination of indoor/outdoor hotspots the company has deployed, plus residential gateways broadcasting an extra SSID — to siphon a healthy percentage of data off the wireless network. This would clearly help Comcast’s economics. From the customer perspective, data speeds could be faster than cellular in some instances.
In my view, the execution on the Wi-Fi side is the big wildcard here. My personal experience using Xfinity Wi-Fi outside the home has been mixed. I have found many hotspots to be slow and unreliable and my phone occasionally gets stuck in what I call ‘purgatory mode’. It attaches to a poor Xfinity Wi-Fi signal and can’t do anything. So a big question is whether Comcast has improved this issue. How effectively the phone seamlessly attaches to a hotspot and adjudicates whether to use Wi-Fi or cellular in a given context to deliver the best connection will be a major governor of the quality of service. This was a problematic issue when Comcast tested the service last year. It is telling that Comcast is not offering Voice over Wi-Fi, which is a signal Comcast is still nervous enough about the reliability of Wi-Fi to not offer a ‘Wi-Fi First’ experience a la Republic Wireless or Google Fi.
So, why is Comcast even doing this? Given the economics of the Verizon deal, Xfinity Mobile won’t be massively profitable on a standalone basis. Comcast is clearly banking on some increased level of stickiness with regard to its broadband and Pay-TV offerings. More likely, this is an initial foray into mobile (actually it’s Comcast’s third whack at wireless, for the historians among us). Within a week or two, we’ll learn how much spectrum Comcast won in the 600 MHz auction and its potential plans to build some form of a facilities-based wireless network, perhaps even as part of a potential acquisition of T-Mobile, Sprint, or a deal for some of DISH’s spectrum down the line. In the meantime, this is a relatively low-risk and inexpensive way to test the wireless waters (again).