Comcast’s Xfinity Mobile endeavor is fraught with risk in a competitive and price-sensitive market led by big incumbents like Verizon, AT&T, T-Mobile US and Sprint.
PHILADELPHIA — Comcast will launch a wireless service by the middle of this year with a network that combines its 16 million Wi-Fi hot spots and wholesale access to Verizon Communication’s cellular towers and spectrum.
The endeavor is fraught with risk in a competitive and price-sensitive market led by big incumbents like Verizon, AT&T, T-Mobile US and Sprint. But the venture also has the potential to reach millions of consumers who have become attached to their smartphones to watch streamed TV and entertainment.
The wireless product, Xfinity Mobile, will be available to Comcast customers as part of a so-called “quad play,” or four-service bundle of TV, phone, high-speed internet and wireless.
Comcast announced the plans — hinted at for months — in New York on Thursday.
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Xfinity Mobile customers will have the option of Apple, Samsung or LG phones. They’ll be able to buy the phones outright or on a monthly interest-free installment plan, Comcast officials said.
Comcast — whose previous wireless venture, as part of a cable company consortium, failed within the last decade — said that this time around Xfinity Mobile has been designed with data and video in mind, not necessarily talk and text.
It will be available only to the 29 million Comcast customers who subscribe to TV or internet services. Consumers will be able to buy unlimited data plans for $45 or $65 a month, or 1 gigabyte of data for $12 a month, and continue adding gigabytes, at $12 a pop, as needed during the month.
Comcast estimates that Xfinity Mobile could save consumers about 10 to 40 percent a month on wireless bills, depending on usage and package.
“They are not at the very bottom of the market. I would describe (the prices) as low but reasonable,” said Craig Moffett, a telecom analyst with research firm MoffettNathanson. “It signals that their ambition is to use this service to mitigate (cable-TV) churn as opposed to as a stand-alone profit opportunity.”
Phone calls will go only through Verizon’s network. For video and data, Xfinity Mobile will toggle between Comcast Wi-Fi hot spots and Verizon’s wireless network. The Comcast phones will automatically find a Comcast Wi-Fi hot spot, authenticate the phone as eligible, and connect to it. Outside the hot spot’s range, the Xfinity Mobile phone will find another hot spot or revert to the Verizon network.
Comcast has built this Wi-Fi network through public hot spots and its TV and internet consumers. Xfinity Wi-Fi routers have both private and public Wi-Fi channels. Comcast has said that the public Wi-Fi channel — which will be part of the Xfinity Mobile network — is secure for its subscribers.
Up to 80 percent of wireless data travel today over Wi-Fi networks, according to industry estimates. Offloading data traffic onto Comcast’s extensive Wi-Fi network will relieve congestion on Verizon’s network, thus saving Comcast operating costs.
Moffett noted that “it will be critically important that Comcast unload as much traffic as possible onto their own network to mitigate the risk that customers consume unreasonably large amounts of Verizon bandwidth that Comcast would have to pay for.”
A catalyst for Comcast’s new wireless product was AT&T’s acquisition of DirecTV in 2015, allowing the two companies to offer both wireline and wireless bundles, said Jeff Kagan, a longtime wireless analyst in Georgia.
AT&T’s DirecTV Now service now streams live television to smartphones and mobile devices, a service that Comcast can’t offer without Xfinity Mobile.
“Comcast understands the need to get back into the wireless business for their own survival. They have to compete in this new mobile television space,” said Kagan. “The transformation of the industry is forcing Comcast back to the drawing board.”
Investors seemed to agree. Comcast shares closed up 2.1 percent Thursday.
Comcast can offer the wireless service now because of an agreement it reached six years ago with Verizon.
In late 2011, Comcast and other companies sold Verizon a big chunk of wireless spectrum for $3.6 billion after a consortium of cable companies, including Comcast, failed to impress consumers with its wireless phone product.
As part of the spectrum sale, the cable consortium negotiated a deal to use Verizon’s wireless network on a wholesale basis if it wanted to get back into the business. This is what Comcast will be using to offer Xfinity Mobile.
Analysts said this could lead to the loss of customers for Verizon Wireless but it also could boost Verizon’s national wireless wholesale business.