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Comcast drops mobile bomb – MNO survivors will suffer shock and awe

Comcast has been preparing its Xfinity Mobile announcement for the past two years, so it’s hardly a secret – and most US analysts in the run up to this announcement felt it would contain little or no threat to existing US MNOs. Our take on the detail is that this is a marketing tsunami set to take 8 to 10 million lines from incumbent MNOs in just a few years.

The key element is pricing – no service fees for up to 5 phones per home – with unlimited free calls and texts– only data cost money and it comes in two flavors – unlimited at an existing Xfinity broadband customer at $45 a month, or not an Xfinity customer at $65 a month. Anyone who doesn’t need unlimited data, can pay $12 per GB, and if they find they would be better off on an unlimited plan, a no quibble, one touch switchover during any given month.

Comcast claimed these deals are at least 13% below rival charges, as and as much as 44% less. The network is WiFi first, with no configuration for anyone to do, no rooting around in settings – your phone arrives, switch it on, and it diverts to Xfinity WiFi wherever it can. Comcast is now up to 16 million Xfinity WiFi spots, and it suggest that 80% of all data will go over WiFi.

Comcast phones are iPhones, Samsung or LG, either paid up front or over 24 month in interest free payments.

Comcast is a master at selling such services of the web and it will be in every bundle offering, and never more than one click onto the website. Purchasing options are genuinely child’s play – demonstrated during the launch – and support can be delivered over text, an industry first with the support number pre-loaded on the phone.

If the experience is anything like France where Free managed to get 12 million subs from 5 million existing customer homes over 4 years, then Comcast’s scale could attract multiple tens of millions of customers over the same timeframe from its 20 odd million homes. It says the service will be profitable at mid-single digit percentages – say 5% of homes taking a phone, which means 1 million phones and this is making money. If less than 100,000 sign up per month we would be shocked, and we would guess more like three times that number, totaling a 1 million a quarter, with the bulk of them coming from AT&T, Sprint and Verizon.

There are just 130 million individuals living in the Comcast homes, and the cost of sale for Comcast will be almost nothing – existing mailshots, campaigns and promotions which cost Comcast $3.3 billion a year will simply expand to have a mobile element and Xfinity retail stores will grow to put almost everyone within a 15 minute drive of hands on help.

Right now the service is going from controlled low numbers of employees at Comcast, to any Comcast employee, presumably to look for scaling problems and fix them, and will “soon” go to the public, but initially only those within its footprint.

Look out for a ton of “Nah this won’t be a problem” comments from rivals, but it is so much a problem that it will genuinely affect the ability of some of the major US networks to support their existing capex plans without reduction, just 3 years from how – and they will all be baying about getting to 5G to eliminate the threat. More analysis next week.

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