Comcast’s slim silver lining in its third quarter results came from the performance of its year-old MVNO business, which the operator is using to boost broadband usage and in turn leverage as a platform for selling video services. It’s one big, convoluted loop that has certainly caught the attention of rival Charter Communications. We touched on the figures in an earlier edition of Wireless Watch, but now have further analysis courtesy of our sister service, Faultline, which provides weekly insights into digital video markets and platforms.
It begins with Comcast’s Xfinity Mobile service, which gained 204,000 subscribers in the third quarter to bring its mobile footprint up to 1.8m subs riding on the Verizon mobile network. But Comcast has sought to offload traffic via its prolific installed base of 19m Xfinity WiFi hotspots, which automatically switches Xfinity Mobile subscribers onto Xfinity WiFi hotspots when in range. Reducing Xfinity traffic going over the Verizon network reduces the network leasing costs for Comcast payable to Verizon.
With broadband being such a sizeable breadwinner for Comcast, the operator is manipulating its mobile business to create ‘stickiness’ with its broadband subscribers to reduce churn. As such, Comcast recently started giving away free Xfinity Flex set tops to internet-only subscribers in a bid to introduce cord cutters and cord nevers to streaming offerings and premium channels. Crucially though, offering free Flex set-tops to broadband subscribers is a medium for selling subscriptions to Peacock which will be front and center of Flex (which costs $5 a month), once the NBCUniversal streaming service launches in April 2020 (price TBC).
Such is the audacity (or perhaps desperation) of offering Flex hardware free to broadband-only homes, that Charter’s ears have pricked up to the extent that it wants to license the platform, after earlier this year suggesting there were plans to license the RDK-based X1 platform. So, Charter appears to have changed its mind.
Clearly it makes sense for Charter, which saw its video base shrink by 77,000 subscribers in Q3 to 16.1m, but the cable operator gets zero points for originality.
Charter CEO Tom Rutledge said in the company’s earnings call: “We have a significant number of app-based relationships that we’ve developed on multiple devices. That strategy is working for us but putting inexpensive devices out with our service makes some sense to us.”
Interestingly, during Comcast’s third quarter earnings call, the company noted that Sky in Europe plans to follow a similar playbook by using the xFi dashboard to differentiate the broadband experience, beginning in Italy next year. Details are thin on the ground, but it suggests that certain elements of the Comcast WiFi ecosystem could be coming to Europe.
Comcast’s xFi is built around Quantenna 8×8 MIMO chipsets in newer Xfinity DOCSIS 3.1 gateways, while its xFi pods (WiFi extenders) run Qualcomm 2×2 WiFi chips and include a download of Plume software to the home gateway to manage other nodes using the xFi advanced gateway software.
The cableco built its xFi Advanced Security service around Cujo AI, a US start-up peddling AI-driven security and monitoring, launched initially to 15m homes in January 2019. This aimed to meet rapidly rising demand for WiFi security, resulting from privacy concerns and proliferation in the number and scope of connected devices under the IoT banner.
Sky CEO Jeremy Darroch said last week: “We’ll be driving Sky Q in particular very hard over the next quarter. Sky Q, which I think is Europe’s best-quality, app-based TV experience by a long way is about 40% of our business today, and we think we can get it a lot higher.”
Comcast’s video business in comparison contributed 38% of cable communication revenues during the third quarter (and approximately 20% of total company revenue).
On the WiFi offload front, Charter, which only has about half a million WiFi hotspots, is reportedly looking to deploy strand-mounted small cells on existing aerial cables – a technique allowing cable operators to deploy wireless small cells on the aerial cable plant.
Charter’s Spectrum Mobile business has a subscriber base of 794,000, adding 276,000 in Q3, which also uses the Verizon wireless network.