Comcast unveiled its much-scrutinized plan to enter the wireless business today, showcasing what it believes to be a model that undercuts incumbent carriers on promotion, delivery and price.
In a web conference featuring new Comcast Cable CEO Dave Watson, company mobile chief Greg Butz and CFO Mike Cavanaugh, Comcast confirmed the widely understood underpinnings of Xfinity Mobile: The product will leverage the MSO’s existing 16 million public Wi-Fi hotspots, filling the gaps with access to Verizon’s 4G LTE network through a mobile virtual network operator agreement signed back in 2011.
“We get it—wireless is a hyper-competitive marketplace,” Watson said.
Comcast will offer both unlimited and limited data plans, marketing bundled mobile service only to existing users of its high-speed internet services through already established promotional mechanisms such as direct marketing, call centers and stores.
Preferred customers of its advanced X1 video system will pay $45 each for up to five lines on an unlimited data plan, before taxes and fees, while the typical Xfinity broadband rank and file will pay $65 a line for unlimited service. There’s also a pay-by-usage option priced at $12 per gigabyte.
Customers will have the option of zero-interest financing of Apple iPhone, Samsung Galaxy and LG devices over 24 months. These devices will be specially configured to work across Comcast’s hybrid Wi-Fi/LTE configuration and users will not be able to use their own existing phones on the service.
While acknowledging that it still has room to innovate its Wi-Fi network, Comcast expressed confidence that customers will be able to seamlessly move between its hotspots and Verizon MVNO coverage, their phones seamlessly auto-connecting and auto-authenticating.
Notably, the Xfinity Mobile will not enable Wi-Fi calling, meaning all voice service will rely on the Verizon MVNO deal. There will be no zero rating of video, which will be delivered in HD. And speeds on unlimited plans will be throttled once user accounts hit a 20-gig monthly threshold. Interestingly, as noted by the WSJ, speeds will be throttled down to 1.5 Mbps, which is well above the industry-standard throttle speed of 128 Kbps.
Comcast pledged to beat incumbent mobile giants on price. Modeling a customer account for a married 56-year-old with two limited-usage lines and grown, independent kids, Comcast estimated annual savings of $576 over a typical existing plan. A single millennial-aged consumer named “Sarah,” meanwhile, could save $180 a year using a single, unlimited line.
Comcast said it can undercut incumbents on pricing because of its lower-cost promotional model. It will market only to its existing 29 million customer relationships through its existing website promotions, its 500 stores and its myriad call centers.
“We have the ability to take advantage of the capability of our core business,” Butz said. “It’s part of the bundle.”
As a new entrant without its own network, Watson said Comcast will proceed slowly and carefully with Xfinity Mobile, shifting it today from limited employee trials to wide employee trials, before expanding it to consumers later this year.
Watson compared the deployment of Xfinity Mobile to Comcast’s X1 video delivery system, which has been slow to unfurl but has otherwise been a resounding success for Comcast.
“Just like with X1, we started slowly. We were measured and methodical, and there were lot of questions about the pace of X1. But we wanted to make sure we could operationalize it,” Watson said.
At least early on, there are still plenty of critics who suspect Comcast won’t be able to deliver a reliable service as efficiently as promised
For example, BTIG Research analyst Walt Piecyk noted that Comcast’s 500 retail locations are dwarfed by the 4,000 outlets for No. 4 carrier T-Mobile US.
Others question the service’s engineering bonafides.
“Do you mean they are all in on dropped calls and call reset ... how 1980? Who would ever buy this? I thought they were entering wireless?,” tweeted T-Mobile US CEO John Legere.