Comcast (NASDAQ: CMCSA), the U.S. cable giant, may not operate its own wireless infrastructure but it is still one of the fastest-growing wireless service providers in the country.
Wireless is part of Comcast’s Cable Communications segment that offers high-speed internet, video, voice, wireless, and security and automation services. Comcast operates a 40,000 route-mile fiber network in 29 regional markets across 39 states and has franchises in 23 of the top 25 markets in the country.
At the end of 2Q21, Cable operations passed 60 million homes and businesses. It has 34 million customer relationships (that is, connected and billed) or 57 percent penetration of all premises passed. Residential tallies 31 million accounts and businesses were just under 3 million.
The company offers its services individually, and as bundles at discounted rates. Cable Communications’ 2Q21 revenues were $16 billion of the $28.5 billion corporate total.
Broadband, video and voice services accounted for 76 percent as Comcast maintained connectivity and streaming content throughout the pandemic. Business services, advertising and others added another 21 percent. Xfinity Mobile residential and Comcast Business Mobile wireless sales contributed $556 million or 3 percent of Cable’s total.
The company operates as a mobile virtual network operator (MVNO) on the Verizon Wireless 4G LTE network, giving Comcast wireless customers nationwide coverage. New iPhone and Android phones are 5G-ready and can operate on Verizon’s 5G network where it is available. Xfinity Mobile also operates 18 million WiFi private and public hotspots in its franchise areas, allowing wireless customers to seamlessly access Xfinity WiFi service as they move around.
Even though wireless is Cable’s smallest segment, it is the high runner. Wireless lines have grown at an average of 38 percent a year and revenues at a 35 percent CAGR since 2019. This compares to a 3 percent overall revenue and subscriber growth for the Cable operations in the same period.
At the end of the quarter, the company reported almost 3.4 million wireless lines (read, connected devices), up 280,000 lines from 1Q21, its biggest quarterly increase to date, and up 990,000 lines on a year-over-year basis. At the current run-rate, wireless lines should reach nearly 4 million lines by year-end 2021. Wireless revenues likely will exceed $2 billion for full-year 2021.
Last week, Xfinity Mobile and Comcast Business Mobile announced availability of the new iPhone 13 Pro, iPhone 13 Pro Max, iPhone 13, and iPhone 13 mini along with the iPad (9th generation) and iPad mini. These devices operate on 4G LTE in North America and countries around the world.
However, customers must purchase the iPhone 13 Pro Max, iPhone 13 and iPhone mini to operate on 5G. These devices can access all the available low-, mid- and millimeter wave high-band frequencies in the U.S., and low- and mid-band frequencies in most other countries.
The question is when, not if, Comcast will construct its own facilities-based 5G network. Certainly, it has adequate spectrum and deep financial resources.
Comcast led the nine cablecos bidding in FCC Auction 105 for 3.5 GHz CBRS spectrum. The company spent $459 million for 830 Priority Access Licenses in 306 counties. No surprise that these licenses overlay Comcast’s existing cable networks around the country.
At this juncture, there is little impetus for Comcast to participate in more auctions. If it needs more spectrum depth, CBRS allows Comcast to access General Authorized Access blocks or request use of inactive PALs.
Under Auction 105 rules, Priority Access Licensees must provide “substantial service” in their license area by the end of the initial 10-year license term. This term gives Comcast leeway to determine where and when to build.
Building its own wireless infrastructure does not suggest Comcast is intending to compete with the national mobile network operators. Rather, a custom wireless network gives it a strategic advantage in offering advanced devices and tailored services as part of its broadband and video bundle. Such bundling creates stickiness with subscribers and drives higher monthly revenues per customer.
This is not to say that Comcast may take away existing MNO customers who are also Comcast cable customers. In that sense, it is competing with the MNOs, even Verizon. But in the end, Comcast’s goal is to offer wireless in ways that serve its cable customers best.
At the same time, converting wireless customers from MVNO wholesale status to postpaid retail status will reduce operating costs. With a growing wireless subscriber base, a facilities-based network becomes more attractive.
By John Celentano, Inside Towers Business Editor