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Can Comcast Make a Mark with its Wireless Market Venture?

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Is Comcast Corp.CMCSA looking to venture into the wireless market in a bid to diversify its business model? Yesterday, this leading cable MSO (multi service operator) voiced its plans to bid in the upcoming wireless spectrum auction conducted by the Federal Communications Commission (FCC). The FCC expects its upcoming 600 MHz low-band spectrum auction, scheduled to begin by Mar 29, 2016, to be a runaway hit.

Notably, in Oct 2015, Comcast had inked a deal with telecom behemoth Verizon Communications Inc. VZ to become an MVNO (mobile virtual network operator) and offer wireless services. Comcast is likely to initiate its wireless offerings from the second half of 2016.

In Dec 2015, at the Business Insider Ignition conference, Comcast CEO Brian L. Roberts went on to reveal that the company is contemplating whether the decision to sell smartphones along with wireless services will be a feasible one.

Comcast's MVNO wireless service is likely to be a hybrid product relying primarily on its WiFi hotspots, as it uses Verizon's cellular network as a back-up to fill-in for areas that lack adequate WiFi coverage. Brian Roberts also stated the possibility of the MVNO agreement being extended in the near future with Sprint Corp. S and other wireless operators.

Much in the same vein, in Apr 2015, tech giant Google had unveiled its wireless service -- "Project Fi" -- after entering into MVNO agreements with Sprint and T-Mobile US Inc. TMUS . Google is also relying on hybrid cellular-WiFi network to offer its wireless products. Prior- to that, in Feb 2015, Cablevision Systems had launched its WiFi-based wireless service -- "Freewheel".

Nevertheless, bidding for wireless spectrum is a completely different ball game. It remains to be seen how the company utilizes this valuable asset if it acquires the airwaves at all. Firstly, the price of spectrum is likely to be sky high and the establishment of a new wireless network infrastructure is highly capital intensive in nature.

Alternatively, Comsat can acquire either T-Mobile US or debt-ridden Sprint, but at this moment, these are mere rumors. However, a lease agreement with other established wireless operators may be a viable option.

The U.S. wireless market is currently witnessing cut-throat pricing competition. At present, approximately 68% of this market is controlled by Verizon and AT&T Inc. T .

However, T-Mobile US and Sprint are desperately trying to expand their foothold therein by offering lower-priced plans while also doubling the data usage limit. In this scenario, the entry of non-wireless giants like Comcast and Google will further intensify the wireless competition.

Comcast currently carries a Zacks Rank #3 (Hold).

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AT&T INC (T): Free Stock Analysis Report

SPRINT CORP (S): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

T-MOBILE US INC (TMUS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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