It's something we haven’t been able to figure out — wireless companies are forever coming up with aggressive “on-us” deals to attract new customers, looking to lure them in with great prices on the latest Apple iPhone and Samsung Galaxy devices. 

Loyal existing customers, meanwhile, are often told to pay up once their hardware ages. And they often churn elsewhere to find a better deal.

Also Read: Uncarried! After More Than 4 Dutiful Years and 51 Loyal Billing Cycles, T-Mobile Tells Us to Pound Sand

Credit Comcast with its latest “on-us” promotion, which offers the latest Samsung Galaxy S24 series devices to new and existing Xfinity Mobile customers at $800 off with eligible trade-in. 

Customers can also get $500 off the S24, S24+ and S24 Ultra without a trade-in. 

Xfinity Mobile has grown to exceed more than 6 million service lines since its launch in 2017, with Comcast undercutting traditional wireless companies AT&T, T-Mobile and Verizon in many cases on service and hardware. 

In the latest round of ultimate fighting, broadband wireless advertising edition, score one for T-Mobile.

The National Advertising Division (NAD) of BBB National Programs, the ad self-regulatory review body, has advised Comcast to modify or drop comparative wireless savings claims it makes in an ad for its Xfinity Mobile service. Comcast says it will comply with that and other NAD recommendations, which are to drop or modify its "Unlimited data for $30/line" claim in the ad and modify the ad to make sure consumers don't think Infinity is less expensive than T-Mobile "regardless of how many mobile lines are purchased" or, specifically, that it is cheaper when four mobile lines are purchased. T-Mobile had challenged the ad claims.

The ad was featured in a print mailer, an online (Google), and on TV featuring singer Becky G and animated characters from The Bad Guys film.

Also: Cox's 'Gig Speeds Everywhere' Ad Upheld

One issue NAD had with the $30-per-Line claim was that it was subject to throttling after 20 GB of use, which NAD said was not clear in the Google ad. Neither, it said, was the fact that the price is only available to Xfinity Mobile customers who are also subs of Comcast's Xfinity wired broadband service.

In its response to the decision, Comcast said it "agrees to comply with NAD's recommendations," though it did not say whether that would be modifying or discontinuing. "It also said it appreciated that NAD hewed to the FTC's .com disclosures guidance regarding search engine ads and space-constrained ads.

Broadband companies regularly challenge each other's ad claims before NAD.

Back In August, T-Mobile agreed to drop a home internet price claim that NAD said was unsupported, though in that case T-Mobile said it did not agree with the decision. ■

Amid a tough overall third quarter for Comcast, the cable operator did have some good news to report in regard to its no-longer-so-fledging wireless service. 

Xfinity Mobile, which will celebrate its six-year anniversary in January, enjoyed an all-time best 337,000 line additions in Q3, upping total lines of service past the 5 million mark. 

Comcast recently introduced a $30-per-line monthly price for unlimited service on plans involving two or more users, undercutting wireless incumbents AT&T, Verizon Wireless and T-Mobile. 

Also: Economy, Hurricane Have Comcast Looking Ahead To Tough Q4

Xfinity Mobile relies heavily on Wi-Fi connectivity to Comcast’s wireline network, with its primary cellular access coming via an MVNO (mobile virtual network operator) wholesale agreement the cable operator has long had with Verizon Communications. Operational costs are shared via a partnership with Charter Communiations and its Spectrum Mobile service. 

The performance of the service has been good enough for Comcast to recently tout its Ookla speed rankings. Likewise, Comcast issued a similar press release earlier this year to tub thump its outcome in an American Customer Satisfaction Index survey of wireless users. 

The service remains confined to the Comcast footprint, however. 

“We set out to build a different kind of mobile service designed for the way people use their phones today — with the internet at the center of the experience,” Comcast Cable CEO Dave Watson said in a statement. “Our goal is simple — keep our Internet customers happy with a mobile service that offers incredible value; attract new customers who want a great connectivity experience inside and away from the home; and build a profitable business that has a long runway for growth.” ▪️

A handful of cable operators have made moves over the past few days to allow customers with friends and family impacted by the Ukraine conflict to contact loved ones in that war-torn country by landline and mobile phone free of charge.

Also: NAB Urges Broadcasters to Scrap Russian State-Sponsored Content 

Charter Communications, the second largest cable operator in the country with customers in 41 states, said Wednesday that it is waiving charges for all calls to Ukraine for Spectrum Voice and Spectrum Mobile subscribers through the end of March. According to Charter, standard SMS text messages to Ukraine already are included at no extra charge with Spectrum Mobile service. Charter said that customers don’t need to do anything; the fees will be automatically waived from their monthly bill.

Also: CPJ Disturbed by Russian Attach on Ukrainian TV Infrastructure 

Astound Broadband, the sixth largest cable operator in the country, said Wednesday that it is waiving customer fees associated with calling Ukraine from the United States. The company said international calling charges for Astound Broadband phone customers will be waived when calling Ukraine through March 31.

Also: NATPE Banning Russian Companies from Upcoming Sales Market 

Comcast said last month it will offer free calls to Ukraine for its Xfinity Voice, Xfinity Mobile, Comcast Business Voice and Comcast Business Mobile customers from February 20 to March 10.  SMS text messages are always included at no charge to domestic or international family members and friends, the company said. 

Also: DirecTV Drops Russia’s State-owned RT Channel 

Altice USA said its Optimum Mobile and Optimum and Suddenlink residential and business phone customers will be able to place calls from the United States to Ukraine at no additional cost through the end of March. Optimum Mobile customers will also be able to send free SMS and MMS messages to Ukraine.

Cable One said it began offering Sparklight residential phone customers free calls to Ukraine on February 25, adding that the offering lasts until March 12.

“During this time of unrest, we want to ensure our customers stay connected with what matters most - their loved ones in Ukraine,” Cable One CEO Julie Laulis said in a statement. Customers must visit www.sparklight.com/Ukraine and submit account information in order to have calls to Ukraine credited

Vyve Broadband, which offers service to customers in16 states, is broadening the scope of free long-distance calling to the countries of Moldova, Poland, Romania, Slovakia and Ukraine for the month of March. Additionally, Vyve has set up phones in each of its 38 local offices across the U.S. that both customers and non-customers can use to make free calls to these countries.

“At Vyve, we recognize that the war in Ukraine is a global concern that is impacting real human beings both abroad and at home,” Vyve president and chief operating officer Andy Parrott said in a press release. “By waiving charges for long-distance calls to the area, we want to support our customers as they seek to keep in touch with their friends, family members, and loved ones affected by this crisis.”  

Russia launched a full-scale military invasion of Ukraine on February 24, an attack that so far has caused nearly 1 million refugees to flee the country. According to the European Union, as many as 4 million people could be displaced and may are seeing shelter in neighboring countries like Poland, Romania, Slovakia, and Moldova. Several countries, including the U.S., have denounced the invasion and initiated economic sanctions against Russia to stop the attacks.

Charter Communications’ strong Q4 mobile subscriber growth -- its best quarterly increase ever -- could be the thing that finally changes investor perception of cable wireless from mere “hobby” to “real business,” according to MoffettNathanson senior research analyst Craig Moffett. 

Both Charter and Comcast reported their highest quarterly wireless subscriber growth ever in Q4 -- Comcast also set a record for yearly growth -- and with aggressive pricing and rising profitability, mobile could become a strong second growth product behind broadband for the industry.

Charter launched Spectrum Mobile, a Mobile Virtual Network Operator (MVNO) offering in conjunction with Verizon Wireless in 2018.  Since then, Charter has grown Spectrum Mobile from 0 to 3.6 million customers. With aggressive pricing and plans to expand its reach to rural markets funded in part by federal Rural Digital Opportunity Fund (RDOF) money, it can only get better. 

Spectrum Mobile isn’t profitable yet, but it’s getting closer. According to Charter, the mobile business had negative EBITDA of $92 million in Q4, and for the year EBITDA was negative $311 million. But the deficits are getting better -- EBITDA was negative $401 million in 2020 and negative $520 million in 2019. According to Moffett, Charter could reach EBITDA break-even this year. 

That would put it on a profitability path akin to its MVNO partner and the largest cable operator in the country -- Comcast -- which already has reported four straight quarters of positive wireless EBITDA growth.

Moffett doesn’t expect wireless to replace broadband in investors’ hearts -- he still believes  high-speed internet is a better business. But he does believe that investors have to stop thinking of cable as “only” a broadband provider.

“Cable isn’t a broadband-only business,” Moffett wrote. “It is, as we have repeated so often over the past two decades, an infrastructure business, with multiple revenue streams – residential and commercial, wired and, yes, wireless – riding on that infrastructure.”

To drive that point home, Moffett pointed out that mobile is becoming a larger component of overall revenue -- wireless accounted for 4.8% of total Q4 revenue, up from 4.1% in Q3. 

Also: Analyst Says It’s Time to Take Cable Wireless Seriously  

“Up to now, investors have treated Cable wireless as something closer to a hobby than a real business,” Moffett wrote, adding that while growth numbers have been good, the service has been pooh-poohed as just an MVNO. Spectrum Mobile’s 380,000 subscriber additions in Q4 -- beating analysts’ consensus estimates by nearly 100,000 customers -- could “go a ways towards changing that perception.”

Comcast is no slouch on the wireless front either. Xfinity Mobile launched in 2017  -- about one year before Charter, using the same Verizon MVNO agreement -- and ended 2021 with 3.98 million subscribers. Xfinity Mobile added 312,000 subscribers in Q4 -- its best quarter ever -- and 1.12 million for the year -- its best annual growth ever.   

Adding to the optimism is that Charter plans to expand its broadband and mobile footprint substantially over the next five years. Charter was the largest recipient of federal Rural Digital Opportunity Fund money last year, and launched its first market -- El Paso, Texas -- this month. According to Charter, the plan is to expand its mobile and broadband reach by about 1 million homes in that five-year period. That’s on top of the 1 million homes passed it is adding each year via edge-out and network expansion programs. 

Also: Cable Knocks on Wireless Giants’ Door 

Last year Charter committed to spending $5 billion -- including $1.2 billion from RDOF -- over five years to bring broadband to more than 1 million customer locations in unserved areas of the country. In El Paso, Charter said it will offer broadband, mobile, TV and wireline voice service to more than 1,200 homes. 

Broadband expansion can only help mobile growth -- customers need high-speed data service to be mobile customers. And at least for now, as the pandemic has caused more and more consumers to stay put and stick with existing providers, much of Charter’s mobile growth is coming from existing broadband customers upgrading to mobile service and existing mobile customers adding lines. 

“I expect that through time, we’ll get more pull-through on the new customer creation side of it,” Charter chairman and CEO Tom Rutledge said on a conference call with analysts to discuss its Q4 results. “But just when you do the math in terms of where the opportunity is to grow mobile, given our existing broadband penetration --  just mathematically, we have more upside in upgrades.”

Rutledge added that Charter also is making inroads in offloading mobile traffic from the MVNO to its own WiFi network, which makes service more cost efficient. Charter also has a large block of CBRS spectrum, which Rutledge said the company could use to offload as much as 30% of its mobile traffic. 

“We also are already offloading enormous amounts of traffic on WiFi,” Rutledge said on the conference call. “And I think that we have the ability to take that up significantly, too.”

That could be key. According to Moffett, the biggest goal for both Comcast and Charter in cable wireless is to offload as much traffic as they can onto their own networks to become both a Mobile Network Operator (MNO) and an MVNO.  

“A hybrid MNO/MVNO combines the best of all outcomes,” Moffett wrote. “They will be facilities-based where the returns are high and an MVNO in the places where the returns on building would be low. Margins will likely grow over time, but the real appeal of the strategy isn’t EBITDA margin but instead return on invested capital.” ■

Cable operators, already gearing up for a slowdown in broadband subscriber growth in the fourth quarter, are likely to see a slight overall deceleration of mobile phone customer additions in Q4, driven by lighter numbers at Charter Communications, according to J.P. Morgan media analyst Phil Cusick.

Cable operators have already warned that the expected slowdown in broadband customer growth could get steeper in Q4. Comcast Cable CEO Dave Watson told a virtual audience at the UBS TMT Virtual Conference in December that it would likely add about 1.3 million broadband customers in 2021, implying that Q4 additions would be about 185,000, its lowest quarterly growth since Q2 2017. Watson was echoed by other cable execs at the conference like Altice USA CEO Dexter Goei, who implied that Q4 broadband subscriber growth could be negative in Q4 and for the year. 

But mobile service was expected to continue its torrid growth pace. Comcast’s Watson predicted that his company would add a record number of mobile customers in the quarter, beating its previous best of 285,000 additions in Q3 2021.

Also: Comcast Q4 Broadband Results Narrowly Miss Consensus; Dividend Upped

In a research note Thursday, Cusick wrote that he expects Comcast to surpass that old mark, adding about 300,000 mobile customers in Q4, ending the year with 1.14 million additions. But he believes Charter will add about 260,000 mobile subscribers, below the 315,000 it added in Q4 2020. He estimated Altice USA would add about 2,000 mobile customers in the quarter, down from 7,000 in Q4 2020. 

Overall, Cusick expects cable to add about 562,000 mobile customers in Q4, implying a 20%  share of total growth for the sector in the period, compared to 23% in Q4 2020. For the full year, Cusick estimates that cable will add 2.23 million mobile customers, or about 24% of total ecosystem growth, compared to 35% in 2020. 

Cusick sees the slowdown continuing into 2022, forecasting that Comcast mobile subscriptions will be about 1.047 million next year, and Charter slipping to 1 million additions. Cusick predicted that Altice USA would grow mobile customers by 29,000 in 2022, up from 13,000 in 2021. 

Also: Charter Falls Short of Broadband Subscriber Targets, Wireless Soars

Other analysts have revised their Charter estimates as well. In a January 3 report, Bernstein media analyst Peter Supino pointed to a possible industry-wide mobile deflation risk, and revised his expectation for Spectrum Mobile subscriber additions to 252,000 from 277,000 in Q4.  

The answer should come in the next few weeks. Comcast is scheduled to report Q4 results on January 27, with Charter reporting on January 28. Altice USA has not said yet when it plans to release Q4 results, but usually does so in early February.   

Cable operators have been aggressively pricing mobile service in the past year — Comcast dropped monthly pricing to $30 per month per line for four lines minimum in April — and have added device promotions and discounts for customers that switch service.

According to Cusick, Comcast’s Xfinity Mobile now offers up to $400 in device credits for any iPhone 13 users that switch — double its prior offer. Cable companies also have benefitted from their ability to bundle wireless service with broadband, which has had a big impact on wireless customer growth. 

Also: Analyst Says It’s Time to Take Cable's Wireless Seriously  

Cusick added that his estimates for Charter could be a bit low, given the operator’s aggressive discounting in October, dropping monthly charges for two lines or more to $29.99 from $45 per month. And Charter CEO Tom Rutledge has said he sees the wireless business as a huge catalyst for the future.

Back in December at the UBS conference, Rutledge did not offer any future subscriber growth guidance but said that going forward, the biggest growth driver for the business overall is mobile. 

And both Charter and Comcast have seen the benefits of bundling broadband and mobile, with efforts to pair the two more aggressively beginning last year.  

At the same time, the Big Three (AT&T, Verizon and T-Mobile) wireless players are beginning to see their subscriber dominance wane. AT&T, which Cusick expects to more than triple its wireless subscriber additions in 2021 to 3.19 million from 1.46 million in 2021 — largely due to aggressive device promotions — will see that growth dip to 2.35 million additions in 2022. He predicted that Verizon, which should nearly double its mobile additions in 2021 to 1.101 million from 667,000 in the prior year, will fall back to about 875,000 additions in 2022. T-Mobile, which is expected to add 2.917 million mobile customers in 2021 — up from 1.87 million in 2020, will add 2.4 million in 2022 according to Cusick. ■

The National Advertising Division (NAD) of BBB National Programs, the ad self-regulatory body, has advised Comcast to drop a host of claims about its "unlimited" and "best price" advertising for its Xfinity 5G mobile plans. Comcast said it would comply.

The claims were challenged by T-Mobile.

Those claims are:

1.  “Unlimited 5G”
2. “Break free from the big three” carriers and “get the best price for Unlimited 5G”
3. “[G]et the best Unlimited price”
4. “Xfinity Mobile now has the best price for Unlimited 5G”
5. “Switch to Xfinity Mobile and get the best price for Unlimited”
6. “Get the best price on Unlimited data”
7. “Get Unlimited 5G for $30/mo per line”
8. “Get four lines of Unlimited 5G data for just $30/mo each with our new pricing”
9. “Get 4 lines of Unlimited 5G data for just $30/line/mo”
10. “The more lines you add, the more you save with our new plan pricing.”

NAD said the "unlimited 5G" claim delivers the specific message that customers get unlimited data at 5G speeds when customers only get access to 5G speeds up to 20 GB of data, after which the data is limited to 3G speeds. And while Comcast does "sometimes" include a disclaimer about "reduced speeds after 20GB of use," NAD said that does not cure the misleading initial claim because it is like saying "unlimited" service with a disclaimer that it is not unlimited.

As to the "best price" claims, NAD said that the message that a four-line plan costs less than the four-line plan of its competitors was unsupported given that the price was $30 per line and T-Mobile had a promotional price of $26 per line for its service. NAD said that issue might be cured by a caveat that Comcast was excluding promotional pricing from the comparison.

Comcast said it can come up with an "appropriate" disclaimer that will "make clear to consumers the basis of comparison (including comparisons which exclude temporary promotional pricing) and will comply with NAD’s recommendation in future advertising.”

Cable and telecom operators regularly challenge each other's ad claims before NAD. ■

Comcast stock fell 7% in early trading Tuesday after cable division CEO Dave Watson told a virtual industry audience that the nation’s top cable operator will add about 1.3 million broadband subscribers in 2021, implying that Q4 high-speed internet subscriber additions will be about 185,000 customers, the lowest growth in years. 

“We’re going to wrap up the fourth quarter and deliver a really solid year,” Watson said at the UBS Global TMT Virtual Conference. “We’re going to be around 1.3 million broadband additions for the year.” 

Comcast added about 1.9 million broadband customers in 2020 and 1.4 million in 2019. So far in 2021, the company has added about 1.115 million broadband customers, so to reach 1.3 million for the full year, Q4’s tally will be about 185,000 additional customers. That’s the lowest quarterly addition figure for the company since Q2 2017 when it added 175,000 broadband customers.

Comcast shares were priced as low as $48.72 each on Tuesday morning, down 7%, or $3.63 per share. Watson’s comments also affected other stocks in the sector -- Charter Communications fell 5% to $639.28 in early trading Tuesday and Altice USA was down about 6.7% to $15.80 per share. 

Most cable analysts predicted that broadband additions would be about 1.4 million in 2021.

Later at the UBS conference, Altice USA CEO Dexter Goei said that he was hopeful Q4 broadband additions would be positive, but at the moment are trending slightly negative, meaning the company could lose about 5,000 to 10,000 broadband customers in 2021.   

While the broadband slowdown is expected to continue, Watson said Comcast would add a record number of mobile customers in Q4, after signing on 285,000 additional Xfinity Mobile customers in Q3, its best quarterly performance since launching the wireless product in 2017. At the UBS conference, Watson said Comcast expects cable EBITDA growth to be in the 7% to 8% range in Q4 (beating most analysts' expectations), while net cash flow growth will be in the low double-digit percentages. 

“In wireless, we’ll  beat Q3 in Q4,” Watson said. “We’ll set a record.”

Comcast launched Xfinity Mobile in April 2017 to its broadband customers and had about 3.7 million subscribers at the end of Q3. At the UBS conference, Watson said he sees wireless as “one of the largest addressable market opportunities” Comcast has. 

“We’ll set a record here in Q4. Our view is that all 32 million broadband customers should get two lines [each],” Watson said. "And we should have an opportunity to go to all of them, so that’s 64 million lines of opportunity just within our footprint. We’re not going to stop growing broadband.”■

Cable wireless service is growing into its own.

In the four years since Comcast pulled the trigger on what was to be the fourth attempt by a cable company to crack the wireless nut, Xfinity Mobile has been a growth engine, accumulating 3.9 million customers since April 2017. In the first quarter of this year, Xfinity Mobile achieved cash flow break-even, setting the wireless business on a course well beyond the early notion that it would be a backup to plans from more established carriers. Analysts and executives alike are taking notice, predicting that wireless could be a strong competitor in the market, especially if paired with broadband.

“Cable wireless is ready for its star turn,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a research note. Moffett, whose earlier take was that cable wireless is more of a retention tool for other services, now sees the product as a potential profit center. 

Comcast is currently the cable industry’s largest wireless provider and Moffett expects its lead to grow over the next four years. Moffett expects Xfinity Mobile to be close to breakeven in 2021, generating about $12 million in negative cash flow, and to turn profitable in 2022.

Aggressive Pricing a Plus

Moffett’s enthusiasm comes primarily from Comcast’s decision earlier this year to aggressively price wireless service. Comcast now substantially undercuts Verizon Communications and AT&T for unlimited mobile data across all plan sizes, according to Moffett, making the product competitive for a vastly larger portion of the market. 

Charter Communications followed Comcast, launching Spectrum Mobile wireless service in June 2018. That offering also is flirting with profitability, but chief financial officer Christopher Winfrey said Charter is more concerned with adding subscribers.

“Our goal isn’t to drive short-term EBITDA profitability,” Winfrey said on Charter’s Q1 earnings call. “Our goal is to drive as much growth as we can, because we know what the underlying profitability is and what it does for the overall business.”  

Spectrum added about 300,000 wireless lines in Q1, raising the total to about 2.7 million subscribers. 

Moffett estimated Charter’s mobile service would be profitable by 2024 as capital expenses decline. 

Charter said its wireless business is finally hitting stride, fueled by competitive pricing, reliable service and the ability to bundle mobile with broadband.  

According to researcher Parks Associates, about 19% of U.S. broadband households bundled high-speed data with wireless in Q1 2021. That’s up from about 15% in Q1 2020. With the number of broadband-only homes on the rise — Parks said 41% of households now take unbundled, standalone broadband service, up from 33% in 2018 -— the opportunity to sell mobile service to those households is increasing.   

At the JP Morgan Media & Communications conference in late May, Winfrey suggested wireless customers could eventually number about half the level of broadband subscribers, currently at 29.2 million. 

“I don’t think people took us seriously when we came into the voice market,” Winfrey said, adding that today, Comcast and Charter are the largest wireline phone service providers in the country. “And the way we did it is, because we weren’t the incumbent, we had the ability to save customers money, we had the ability to bundle it, and as a result we took down phone pricing dramatically across the entire industry and the entire U.S. 

“Over 20 years, we became the largest operators,” Winfrey continued. “At its peak, you could almost count as clockwork that voice subscribers would be about half of broadband and if it hadn’t been for mobile substitution, those numbers were continuing to increase. I think our opportunity is at least that.” 

Charter has been growing broadband at a 7% annual rate over the past three years and its wireless customers have doubled over the past two years. Continuing that pace, the wireless segment would reach about 15 million customers by mid-2023. 

That might be a bit optimistic, as Moffett predicted Charter would reach 7.2 million wireless customers by 2025. But many analysts anticipate Charter will add about 1.1 million mobile customers annually over the next few years. That pace would lead to nearly 15 million wireless customers by 2030.

At the JP Morgan conference, Winfrey said Charter does not view wireless as a standalone product but rather as an extension of broadband service. He said all Spectrum sales channels are required to sell wireless with other products.

While Charter won’t commit to a date when the wireless business will be profitable, Altice USA, which launched Altice Mobile service in September 2019 under a very aggressive pricing structure ($20 per, line per month for unlimited service for life), has since revamped that pricing. At the Credit Suisse conference, Altice USA chief financial officer Michael Grau said after a brief hiccup mainly around onboarding issues, the mobile product was beginning to hit stride in 2020 when the pandemic halted growth because retail stores shut down. The hiatus also forced Altice USA to take a hard look at the wireless business’s gross profit and churn metrics.

Altice Rethinks Pricing

“In the latter half of 2020, we offered 1 [Gigabyte] and 3 [GB] plans to supplement our unlimited plans, and we did right-size some of our pricing,” Grau said. “We’re starting to solve the gross profit problem; we’re no longer taking on customers that are generating negative gross profits.”

Altice USA now offers 1 GB data plans for $14 per month, 3GB data plans for $22 per month and unlimited data plans for $45 per month.   

Grau said take rates on the 1 GB and 3 GB products are between 60% and 70%, an encouraging sign. The new pricing also has helped dramatically reduce churn, he said. 

According to MoffettNathanson, Altice Mobile improved churn by 20% to 30% as it moved traffic to T-Mobile’s network in Q4. 

“At the same time a lot of our stores are reopening,” Grau said. “I think we’re very close to getting to the point where we’re saying, ‘I’m comfortable with the gross profit, I think we’ve solved for that; I’m comfortable with churn, I think we’ve solved for that.’ And that’s when we’ll turn up the sales and marketing machine again. I think you’ll see that somewhere in the back half of 2021.”

Because of a late start, Grau said the mobile unit probably won’t see break-even this year.

“We’d like to see it break-even on a run-rate basis as we exit 2022,” Grau said. “I think that’s more realistic.”

While cable wireless continues to hum along, one potential competitor — Dish Network’s Dish Wireless — lurks in the wings. With plans to launch the first market, Las Vegas, in the third quarter, Dish appears to be moving forward with plans for the state-of-the-art 5G wireless network, despite Wall Street skepticism. 

Dish appears to be branding the wireless offering under the “Project Gene5is” name, launching a website under that moniker in June that appears mostly to be a vehicle to gauge interest beyond Las Vegas. The website, which Dish confirmed as its own, promises to notify those who leave an email address and ZIP code when service will be available in their area. A Dish spokesperson confirmed Project Gene5is is from the company but declined further comment. 

“We’ll be communicating to customers as options are available in their area, with Vegas being our first market,” a Dish spokesperson said.

Dish has until June 2023 to make the service available to about 70% of its footprint under a federal mandate. Over the years, pundits have criticized the offering, which Dish has said  it can build for about $10 billion, on everything from time to market (too late) to expected cost (too little). 

Dish Plans Draw Skeptics

JP Morgan media analyst Philip Cusick was the latest analyst to cast aspersions on Dish wireless plans, downgrading the stock to “underweight” from “neutral” while raising his 12 month price target to $45 per share from $38. 

“We can’t find a way but to be skeptical on the Dish story,” Cusick wrote. He said while he has the highest respect for Dish chairman Charlie Ergen and the company, he remains stymied by three major issues: the inherent difficulty in launching a brand new wireless service, Dish’s spectrum disadvantage and the perception the company is too late to the 5G game.

Cusick noted the history of service and quality issues that have plagued wireless newcomers including Sprint, Leap Wireless and MetroPCS.

“Many times these were not issues of money to spend or desire, but simply that getting on the right cell sites can be very hard in areas and take years, if they are even possible,” Cusick wrote. While he noted that Dish has a leg up on previous new carriers by owning low-band spectrum and having a MVNO deal with T-Mobile, those aspects only reduce the challenge. 

Dish, according to Cusick, has about 114 Megahertz of spectrum, far less than its competition. While Dish could buy more licenses in future federal spectrum auctions, Cusick doesn’t believe the company has the money now. Finally, Cusick stated that he worries that Dish missed the boat on 5G, adding that other larger carriers that have already rolled out the technology will accelerate those plans and erase any differentiation Dish would have had by coming to market sooner. λ

Less than five years after first launching the latest iteration of cable wireless service, the major operators have finally got it right, according to influential media analyst Craig Moffett. 

Moffett, principal and senior analyst at MoffettNathanson, makes his case In a 44-page report issued Thursday, adding that he believes that annual revenue at Comcast Xfinity Mobile, which launched in 2017, could reach $5.1 billion in sales (more than twice the $2.3 billion expected in 2021) by 2025. Moffett also expects Xfinity Mobile to have 7.9 million subscribers by 2025, nearly double the 3.9 million customers estimated for this year.

Moffett expects Charter Communications, which launched its Spectrum Mobile service in 2018 and shares an MVNO agreement with Comcast, to also aggressively price its wireless service. As a result, he estimated that Spectrum Mobile revenue will double from $2.1 billion in 2021 to $4.2 billion by 2025 and that subscribers will double from 3.5 million to 7.2 million in the same time frame.

“Cable wireless is now ready for its star turn,” Moffett wrote, adding that the product “offers the potential for significant value creation for the MSOs and their investors.”

That’s a far cry from 20 years ago, when cable first ventured into the wireless business with Sprint, the first of three failed attempts at a wireless product with that company. Now Sprint is no more -- it was purchased by T-Mobile in 2020 in a $26 billion deal  -- and Comcast and Charter smartened up, reaching a mobile virtual network operator deal with Verizon in 2015 that has paid off in spades. 

Also Read: Comcast, Charter Eye Wireless-Broadband Double Play  

According to Moffett, in the four years since Xfinity Mobile launched, cable wireless has grown to 6 million subscribers, becoming the fastest growing segment in the industry and accounting for about 30% of new additions. The cable wireless segment, he added, represents about 2% of the total U.S. mobile phone market.    

Because cable operators are regional players -- they only market service in their respective service territories, their wireless success is even more impressive. Moffett estimated that assuming each home has 2.5 people, Comcast and Charter have reached 4% penetration among their existing customers. 

Also Read: Cable Knocks on Wireless Giants’ Door 

Comcast said in Q1 that Xfinity Mobile reached break-even, a milestone that was helped by the restructuring of its MVNO agreement with Verizon last year. With the mobile service no longer losing money and a new, more economical MVNO deal in hand, Moffett said that encouraged Comcast to aggressively price its unlimited wireless data plans.  

“With more aggressive family plan pricing, they have a much longer runway,” Moffett wrote of Comcast’s wireless business. “And while their new pricing will mean a step backwards in near term profitability, their ability to offload traffic in the future means that they can eventually achieve at least adequate margins on what is now likely to be a much larger revenue base than we had anticipated.”   

Cable operators may not be an imminent threat to the Big Three wireless carriers, Verizon, AT&T and T-Mobile. After four years of tapping on the front door, though, they may be closer than ever to knocking it down, with help from Citizens Band Radio Service (CBRS) and 5G mobile spectrum.    

Since Comcast launched its Xfinity Mobile service in 2017, via a mobile virtual network operator (MVNO) agreement with Verizon Communications, cable wireless amassed nearly 6 million subscribers, making it the industry’s fastest growth product in terms of percentages. Cable’s biggest wireless rise was in 2020, when top cable operators Comcast, Charter and Altice USA, fueled in part by pandemic-
driven increases in broadband, grew their wireless customers at a 68% clip. That momentum continued into Q1 2021, with those three operators growing their total wireless lines to 5.9 million, a 9% increase. 

Comcast broke records in the wireless business in Q1, adding 278,000 lines — its most ever in a quarter — while the Xfinity Mobile unit reached cash flow breakeven (it didn’t lose money) for the first time since its launch. Wireless revenue rose nearly 50% in the quarter to $513 million, further solidifying the company’s wireless commitment.  

The news was just as good for Charter, which added 300,000 wireless customers in Q1. Altice USA added about 5,000 wireless customers in Q1.

Comcast still leads the pack with 3.1 million mobile subscribers, followed by Charter — which also has a MVNO agreement with Verizon — with 2.6 million and Altice USA with 174,000. Altice USA was the last to launch a mobile service (Altice Mobile) through an MVNO pact with T-Mobile, in September 2019. 

Those cable companies are still a long way from being an immediate threat to wireless’ Big Three: AT&T leads with 164 million postpaid wireless customers, followed by Verizon with 117 million and T-Mobile, which completed its $26 billion purchase of Sprint in 2019, has 67 million. But as pricing continues to be one of the biggest deciding factors in selecting a mobile service, and many cable wireless customers are also hardwire broadband subscribers, the gap is poised to close rapidly. Add in the potential of 5G mobile service — which depends greatly on fiber interconnections between towers, a cable strong suit — and the notion that cable wireless could become a major player isn’t that much of a stretch. 

Skeptics need look no further than the dominant position cable has carved out in broadband service. In the beginning, telcos ruled the day with copper wire digital subscriber line service, offering 1.5 Mbps speeds that in the 1990s were a major upgrade from dial-up. But as cable continued to deploy fiber deep into its network, and speed requirements vaulted into the hundreds of megabits per second, cable broadband quickly overtook its DSL competition. Today, cable accounts for about 70% of the U.S. broadband market, a number expected to grow as operators push fiber out to the edges of their footprints. 

Broadband Sets Precedent 

Cable operators have been edging out their footprints at an accelerated pace over the past few years. In 2020, Comcast added about 1 million homes passed to its footprint, with Charter adding about 1.1 million homes. Even at 30% penetration rates, that could translate into about 300,000 more broadband customers. And increasingly, cable operators seem anxious to add wireless to that bundle, which could drive those numbers as well.  

As many as 90% of cable wireless customers are also cable broadband customers, said Evercore ISI media analyst Vijay Jayant. Extending that broadband reach can only help the cause for wireless.

In its Q4 conference call with analysts, Comcast chief financial officer Mike Cavanagh said mobile is a “strategic priority” for the company and has been “fully integrated” into the core business. Xfinity Mobile added 774,000 wireless customers in 2020, slightly behind the 816,000 added in 2019, all during a period where most of its retail stores were closed because of the pandemic. Those outlets were fully open this year and as a result expected to have a positive impact on sales.  

Did they ever. Xfinity Mobile reported its best quarterly subscriber additions yet in Q1: 278,000 versus 216,000 adds in Q1 2020.

Many analysts are beginning to see wireless as a replacement for video in the overall cable bundle. As video subscribers continue to cut the cord for streaming services but keep their cable broadband connection, adding wireless service could keep the price of broadband more manageable. According to Bernstein, penetration for the video/broadband double-play has fallen from about 63% in 2018 to 51% in 2020.  

On its Q1 earnings conference call April 28, Comcast Cable president and CEO Dave Watson said that bundling broadband and wireless is something the company has done in the past and will continue to do. 

 “We think it’s good for broadband, it’s helping broadband, we’ve seen the results in terms of churn, and it’s just a growth engine for us, period,” Watson said of the wireless product. “We’re focusing on every sales channel. We’re going to be consistent with our approach.  You’ll probably see a bit more packaging with broadband and mobile, but that’s not really different than anything that we’ve been doing.”

Lose Some, Win More

In a research note, Bernstein media analyst Peter Supino called the practice of shedding low-margin video service for higher-margin broadband the industry’s “losing to win” strategy.

“The downside is the potential loss of ‘stickiness’ as a result of moving to a single offering,” he wrote. “Mobile is the potential cure.”  

Supino added in other client notes that wireless is “far stickier” than video because the decision to switch internet/video providers is about a single item. It’s much harder to try to persuade every household member to change cellphone providers at the same time. 

Wells Fargo Securities media analyst Steven Cahall estimated Comcast would add about 225,000 wireless customers in Q1 and 935,000 for the full year. That compares to his estimates of an increase of about 400,000 broadband subscribers in Q1 and 1.3 million for the full year.  

Earlier this year, Comcast revised its Verizon MVNO agreement. It said in April it would drastically reduce pricing for its Xfinity Mobile service, offering four lines with unlimited data for $120 per month. That price lines up with T-Mobile’s flagship Magenta service ($140 per month with Netflix and taxes included) and severely undercuts comparable offerings from Verizon and AT&T that are priced above $160 per month. Charter, which has an identical MVNO arrangement with Verizon, is expected to follow suit.

While the price reductions are likely to attract some additional customer interest, Bernstein’s Supino wrote, they don’t include phone discounts so they’re unlikely to have a huge impact on subscribers. But once Comcast achieves scale in phone equipment — which Supino predicted will occur in 2023 — and achieves even greater economies by shifting the bulk of traffic onto its CBRS spectrum, all bets are off. 

“We expect Comcast (and Charter) to continue to reinvest wireless economies of scale in subscribers in order to drive total cable customer lifetime value,” Supino wrote. “By 2023, when we forecast that Comcast and Charter will have deployed enough phones and small cells to make use of their recently acquired CBRS spectrum, we expect operating cost savings to fund more competitive phone promotions. ”

Betting on CBRS

The cable companies have invested heavily in CBRS spectrum: Charter spent about $465 million for 210 CBRS priority access licenses in the recent federal auction, while Comcast spent about $459 million for 830 licenses, Supino said. 

“CBRS spectrum and low-cost, strand-mounted small cells allow cable operators to build out their own facilities in dense areas,” Moffett wrote. “As much as 70% of all wireless traffic is handled by just 10% of cell sites. Cable will attempt to build out these dense areas (high ROI) with CBRS, leaving the less dense areas to the Verizon MVNO agreement, effectively arbitraging the wireless industry.

“Everything hinges on how much traffic can be offloaded onto CBRS,” Moffett said.

During the Q1 conference call, Comcast chairman and CEO Brian Roberts acknowledged the spectrum will be used to offload some traffic from the MVNO, adding that the ability to do so requires a strong wireless partner.

“Yes, we bought some spectrum and we’ll be doing some trials to see how we can offload, and that really will prove to be a cost savings if we get it right in dense areas,” Roberts said on the call. “That whole relationship requires a healthy partnership with a wireless [mobile network operator]. And in the case of Verizon, we were really pleased with the partnership.” 

For 5G, Moffett wrote as networks get more dense, key to their success will be the fiber connections between towers, which are spaced much closer together in 5G architectures. 

“As wireless networks densify, underlying wires will become the single most important part of the cost structure,” Moffett added. “As wires begin to dominate the cost structure, he who has the densest wired network will win. Cable has the densest network. Therefore, cable infrastructure will ultimately win in wireless. Just as it has already won in broadband.” 

As video subscriber losses continue to rise across the board in the pay TV segment, Comcast Cable CEO Dave Watson and Charter Communications chairman and CEO Tom Rutledge told a virtual industry audience Wednesday that a new double play that ties wireless and broadband is beginning to emerge. 

Comcast lost about 491,000 video subscribers in the first quarter, up from the 409,000 it lost in the prior year and a trend that Watson said would likely continue. While the cable operator will continue to focus on high-end video subscribers who want a full package of video, at Wednesday’s MoffettNathanson Virtual Media & Communications Summit, Watson said the company is not ignoring the growth at its wireless unit.

Comcast launched Xfinity Mobile in 2017, part of its MVNO agreement with Verizon Communications, and has grown the business to about 3.1 million customers. The mobile unit had its best quarter ever in Q1, adding about 278,000 customers (its highest quarterly number) and becoming profitable for the first time.

Watson said the mobile product has “energized our sales channels,” including digital, call center agents and retail. 

“I think there’s definitely an opportunity to combine an elegant and seamless broadband- mobile offering. We’ve done it in a whole bunch of our go-to-market approaches and for the right segment, it's a great way to start the relationship,” Watson said. He added that tacking on the Xfinity Flex product to that double play could make it even more attractive. 

“That is a really unique proposition that we have that no one else has,” Watson continued.  “Over time, look for us to do more of that.”

Later on in the conference, Rutledge said that wireless is an integral part of the company’s connectivity strategy, adding that that ultimate goal is to converge wireless and broadband.

Charter, which also has an MVNO agreement with Verizon for its Spectrum Mobile service, added about 300,000 wireless customers in Q1. It ended the quarter with 2.7 million wireless customers. 

“I look at our opportunity to create customers that buy mobile services, and create those customers along with the capabilities that we have added through our broadband network, which are vast, and to converge the product itself into a single product,” Rutledge said. "If you look at the total prices that people pay for these products today, I think we could gain significant market share at much lower pieces than people are currently paying. I think mobile represents the opportunity for us to save people money and give them better products than they have today. .... The combination of the product is bigger than the component pieces.”  

Rutledge added that profitability for Spectrum Mobile isn’t that far off. 

“They [Comcast] reached a point that we will reach,” Rutledge said. “From a break even perspective, we said previously that about 2 million customers is all we needed to make the business profitable. That’s true and that proved out to be true. The difference between us and Comcast at the moment, I believe, is where we are in the cycle and how much new growth we have versus how much base.” 

Rutledge added that he expects mobile to be a real contributor to profitability going forward.

“To the extent  you create a customer that raises your ARPU but saves the customer money on their household spend and creates additional EBITDA per customer for you, that both allows your existing base to be more profitable and your incremental growth opportunities to be greater because you more valuable, that’s a really attractive model,” Rutledge said. “I think that’s what mobile does for us.”

On the flip side, some have complained that the emergence of streaming apps and the trend toward content companies shifting content -- like sports -- to their direct-to-consumer products, adds more pressure to carriage negotiations.   

“Obviously it changes the dynamic,” Rutledge said, adding that in the current climate, content distributors would be “much better off not blowing up the existing model just now," mainly because it generates much more revenue than its streaming counterpart. 

The dilemma, he continued, for content companies is in deciding whether to keep raising linear prices while premium content is available on streaming apps and risk being dropped by traditional distributors, or maintaining or lowering rates to preserve that distribution relationship. 

Rutledge guessed that content companies would choose the second route, which would mean less money “but it’s still better than the alternative.”  

And despite continued pay TV subscriber losses -- MoffettNathanson estimates that pay TV is losing about 7% of its video customer base per year -- Rutledge believes there is still some life left in the traditional linear video business.

“It’s hard for me to believe that there won't be linear TV at all in the near term,” Rutledge said. “I think the model is under pressure, it's been under pressure for a  long time. I don’t think it’s about to collapse, but I do think it's shrinking rapidly. I think the most likely scenario is that rate changes will moderate and you’ll still have a pretty expensive linear model. I don’t see it just collapsing.”  

Comcast has unveiled an aggressive pricing strategy for its fast-growing mobile product, offering unlimited 5G data for as little as $30 per month per line for new and existing customers. 

It’s a competitive price: T-Mobile offers unlimited 5G at $140 a month for four lines, pricing the first three at $47 each and offering the fourth line gratis. Comcast’s Xfinity Mobile customers pay $45 for a single line of unlimited 5G service, $80 for two lines, $100 for three, and $120 for four. 

Comcast’s previous unlimited data line offering is priced at $45 per month per line. 

Xfinity Mobile is still offering its “By the Gig” plan, offering shared data at 1 GB for $15, 3 GB for $30 and 10 GB for $60.

Unlimited has its limits: After 20 GB of monthly data use, Xfinity throttles speeds to a maximum of 1.5 Mbps download/750 kbps upload, “determined and applied on a per line basis.”

Also starting later this month, new and existing Xfinity Mobile customers will be eligible for a free Motorola one 5G Ace phone when they add a line.

Xfinity Mobile is driven by a MVNO agreement to use Verizon’s 5G and 4G LTE networks. In addition, Comcast leverages a national network of more than 20 million WiFi hotspots to drive the service. 

Xfinity Mobile added 246,000 subscribers in the fourth quarter, and 2020 with 2.8 million total lines of service. Comcast’s wireless revenue grew by 35.8% to $505 million in the fourth quarter. 

“Our top-rated mobile service is now even better with our best unlimited pricing ever that includes 5G and offers savings up to $400 a year for customers as they have the freedom to pay for mobile the way that best fits their unique needs, either unlimited or By-the-Gig,” said Greg Butz, president of connectivity and consumer experience for Comcast Cable, in a statement. “By surrounding our Internet customers with innovative products like Xfinity Mobile, Flex, Peacock, xFi, and more, we’ve created a broadband product and a value proposition that we believe is unmatched in the industry.”

Count the consumer wireless industry as among the legions of sectors being transformed amid the pandemic.

With consumers locked at home amid the recessionary environment, aggressive price promotion by cable operators with MVNO-based mobile services grew their customer bases by 547,000 users in the first quarter. This was at a time when the incumbent wireless carriers saw their subscriber bases shrink 1.3% year over year. It was the worst customer growth quarter for the retail wireless industry since 2014.

According to numbers assembled by MoffettNathanson, Comcast, Charter Communications and Altice USA accounted for nearly 130% of wireless customer additions in Q1.

The cable trio now have more than 3.7 million wireless customers combined.

Like Verizon, AT&T and T-Mobile, the cable operators have found themselves hindered by the closure of retail touch points. But the cable companies have managed to keep growing with aggressive price promotions, including a $20-per-line campaign instituted recently by Altice USA.

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” MoffettNathanson principal analyst Craig Moffett noted.

The analyst believes these mobile industry trends will be even more pronounced in the second quarter.

As we headed into a COVID-19 environment, our broad expectations for the carriers were they would see record-low activity levels (lower gross additions, lower upgrade rates and lower churn) as retail stores closed down and people began to stay home, with the brunt of the impact being felt in Q2 2020,” he added … “But it is also the case that cable seems to be using the crisis to push even harder for subscriber gains.”

Count the consumer wireless industry as among the legions of sectors being transformed amid the pandemic. 

With consumers locked at home amid the recessionary environment, aggressive price promotion by cable operators with MVNO-based mobile services grew their customer bases by 547,000 users in the first quarter. This was at a time when the incumbent wireless carriers saw their subscriber bases shrink 1.3% year over year. It was the worst customer growth quarter for the retail wireless industry since 2014. 

According to numbers assembled by MoffettNathanson, Comcast, Charter Communications and Altice USA accounted for nearly 130% of wireless customer additions in Q1.

The cable trio now have more than 3.7 million wireless customers combined. 

Like Verizon, AT&T and T-Mobile, the cable operators have found themselves hindered by the closure of retail touch points. But the cable companies have managed to keep growing with aggressive price promotions, including a $20-per-line campaign instituted recently by Altice USA. 

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” MoffettNathanson principal analyst Craig Moffett noted. 

The analyst believes these mobile industry trends will be even more pronounced in the second quarter.

As we headed into a COVID-19 environment, our broad expectations for the carriers were they would see record-low activity levels (lower gross additions, lower upgrade rates and lower churn) as retail stores closed down and people began to stay home, with the brunt of the impact being felt in Q2 2020,” he added … “But it is also the case that cable seems to be using the crisis to push even harder for subscriber gains.”

Comcast announced Monday that it’s switching on free 5G network service for both its Xfinity Mobile by-the-gig and its $45-a-month unlimited plan users. 

The move comes two months after Charter Communications, which also relies on an MVNO relationship with Verizon and collaborates extensively with Comcast on mobile tech and strategy, began offering its customers 5G access. (Notably, Charter doesn’t provide its by-the-gig customers 5G access.

Xfinity Mobile’s X5G data plans include an unlimited data option for $45 per month per line and by-the-gig shared plans priced at $15 per month for 1GB, $30 per month for 3GB, and $60 per month for 10GB.

Comcast began several months ago selling two 5G-capable smart phones, the Samsung Galaxy S20+ and Galaxy S20.

In order to access Comcast’s MVNO-based 5G services, existing Xfinity Mobile customers will need to proactively opt in, in addition to owning a 5G-capable handset. 

“From day one, Xfinity Mobile has been proud to be the only provider to empower customers to design a mobile plan that fit their needs, as well as have the flexibility to seamlessly switch between unlimited or per gig to save money. We’re excited to now extend that benefit with 5G data plans,” said Rui Costa, senior VP of innovation & customer value propositions for Comcast Cable, in a statement. 

Verizon, which has struggled to festoon the country with the cumbersome but much faster millimeter-wave flavor of 5G, has recently pledged to step up the process by user a lower-band iteration. 

During its first quarter earnings call on April 30, Comcast said its wireless revenue increased 52% to $343 million during the quarter, driven by 216,000 additional Xfinity Mobile lines. Comcast said it now has 2.3 million Xfinity Mobile lines. 

Comcast announced Monday that it’s switching on free 5G network service for both its Xfinity Mobile by-the-gig and its $45-a-month unlimited plan users.

The move comes two months after Charter Communications, which also relies on an MVNO relationship with Verizon and collaborates extensively with Comcast on mobile tech and strategy, began offering its customers 5G access. (Notably, Charter doesn’t provide its by-the-gig customers 5G access.)

Xfinity Mobile’s X5G data plans include an unlimited data option for $45 per month per line and by-the-gig shared plans priced at $15 per month for 1GB, $30 per month for 3GB, and $60 per month for 10GB.

Comcast began several months ago selling two 5G-capable smart phones, the Samsung Galaxy S20+ and Galaxy S20.

In order to access Comcast’s MVNO-based 5G services, existing Xfinity Mobile customers will need to proactively opt in, in addition to owning a 5G-capable handset.

“From day one, Xfinity Mobile has been proud to be the only provider to empower customers to design a mobile plan that fit their needs, as well as have the flexibility to seamlessly switch between unlimited or per gig to save money. We’re excited to now extend that benefit with 5G data plans,” said Rui Costa, senior VP of innovation & customer value propositions for Comcast Cable, in a statement.

Verizon, which has struggled to festoon the country with the cumbersome but much faster millimeter-wave flavor of 5G, has recently pledged to step up the process by using a lower-band iteration.

During its first quarter earnings call on April 30, Comcast said its wireless revenue increased 52% to $343 million during the quarter, driven by 216,000 additional Xfinity Mobile lines. Comcast said it now has 2.3 million Xfinity Mobile lines. 

April 1 will be no joke for the telecom industry. That’s the day T-Mobile-Sprint is scheduled to complete a two-year odyssey to get its $26 billion merger across the finish line, creating a more competitive and deeper-pocketed No. 3 wireless carrier. But just as the New T-Mobile, as the combined company is tentatively called, bulks up to an estimated 100 million wireless customers, other players are beginning to emerge.

Dish Network is poised to become the fourth-largest U.S. wireless carrier, based on the asset it has agreed to buy from T-Mobile-Sprint as a condition of federal regulatory approval of the latter’s merger. Shortly after T-Mobile-Sprint closes its deal, Dish will buy 9.3 million former Boost Mobile and Virgin Mobile prepaid wireless subscribers. Dish will also gain access to the new T-Mobile network via a seven-year mobile virtual network operator (MVNO) deal, and will spend another $3.4 billion to purchase spectrum from the new entity over three years.

On the sidelines sits cable, which after three failed attempts to break into the wireless business over the past two decades seems to have found the right elements within the past two years. Comcast’s Xfinity Mobile, launched in 2017, crossed 2.05 million subscribers in 2019 and, according to some analysts, is on a path to more than double that base in the next four years. Typically conservative Comcast said it expects wireless to become cash-flow positive by the end of 2021.

Charter Communications, which launched Spectrum Mobile in September 2018, added more than 1 million customers in the past 18 months and expects to be cash-flow positive in 2021.

Those new and stronger players will all have to compete with wireless industry behemoths AT&T (166 million wireless subscribers) and Verizon Communications (120 million wireless customers). Here’s a closer look at how they are expected to stack up.

New T-Mobile

T-Mobile proposed its merger with Sprint in April 2018, a deal it said would allow it to better compete with AT&T and Verizon and introduce new products and services to underserved markets. Along the way, the companies had to clear hurdles set up by a group of state attorneys general, which claimed the merger would result in higher prices for consumers. T-Mobile-Sprint was cleared for takeoff in February, after a federal judge ruled the combination was in the public interest. While other states have said they won’t appeal, including New York state, California Attorney General Xavier Becerra has said he would keep his options open. Most observers believe T-Mobile-Sprint can go through with the closing no matter what Becerra decides.

Just what the new T-Mobile will do after the close is anyone’s guess. But the company has made at least one thing clear: It’s going after cable.

“We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition,” T-Mobile CEO John Legere said in a press release shortly after the federal court decision was announced. “The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond. Look out Dumb and Dumber [AT&T and Verizon] and Big Cable — we are coming for you … and you haven’t seen anything yet!”

Whatever T-Mobile does in the video space will likely involve its 2018 purchase of Layer3 TV. T-Mobile spent about $325 million for over-the-top multichannel video programming distributor (MVPD) Layer3 TV and launched TVision Home in eight markets in April of 2019. Layer3 has high programming costs (20% to 30% higher than its peers, T-Mobile has said in federal filings) which has made launching the video service difficult.

Legere has said he will step down as CEO in May, after the deal closes, replaced by T-Mobile chief operating officer Mike Sievert. With the merger behind it, Sievert said the new T-Mobile will be able to focus on providing stronger service and expanding its 5G footprint.

T-Mobile-Sprint has pledged to spend about $40 billion over three years on 5G deployment and to expand its rural wireless service to reach 59.4 million homes. It has also promised to deploy a new in-home broadband option to more than 52% of U.S. ZIP codes, with a plan to obtain 9.5 million U.S. households by 2024, with 20% of those homes in underserved areas. The new T-Mobile also expects to build 600 additional retail outlets.

Dish Network

Dish has agreed to purchase T-Mobile-Sprint’s prepaid wireless businesses (Boost Mobile and Virgin Mobile) for $1.4 billion, adding about 9.3 million subscribers shortly after the larger merger closes. Dish will also spend another $3.6 billion on T-Mobile-owned 800 MHz wireless spectrum over the next three years, and will have its own MVNO agreement with the combined company for seven years.

Dish has been relatively quiet about its plans for the wireless service — it needs to build a 5G-capable network available to 20% of the country by 2022, expanding to 70% of the U.S. by June 2023, as per federal mandate. In the past, Dish has spoken of using its wireless capability to accelerate the Internet of Things, but lately the focus has been more on 5G, especially the ability to bring that technology to rural America. Dish has said it expects to spend about $10 billion to build out the 5G network, a figure some analysts have said is too low.

The biggest short-term benefit of the deal for Dish is that it gives it more time to build out its wireless network with its existing spectrum. It had been facing a March 2020 deadline for its network to reach 20% of the country. Now, it has two more years to reach that milestone. The addition of the Boost Mobile and Virgin Mobile subscribers also provides a pool of potential customers for its postpaid business. While prepaid customers churn at a 5% rate, Dish has said migrating those customers over to a more reliable Dish-operated network — both via the T-Mobile MVNO and whatever it builds out — should reduce that churn substantially.

On Dish’s Q4 earnings conference call, founder and chairman Charlie Ergen was reluctant to reveal too much of the company’s wireless strategy, but said the build for 5G service will be on a city-by-city basis.

“There’s obviously going to be some cities that are more interested in getting 5G quickly,” Ergen said. “And those cities that want to work with us will probably get first priority. And then, obviously, when we build out a city, we can have owner economics there. So we don’t have to build — we’re probably not going to build two towers in every city. We’ll build that city by city, and complete a city before we move to the next city.”

Xfinity Mobile

Comcast launched Xfinity Mobile in 2017. Two years later, the mobile service has 2.05 million customers and is evolving from its initial purpose as a retention tool for broadband to becoming a profit center. Comcast chief financial officer Michael Cavanagh has said wireless is expected to be profitable by 2021.

The success of the wireless product can be traced to one tenet: Keep it simple, Comcast senior VP of innovation and customer value proposition Rui Costa said.

“The starting point has always been our connectivity business,” Costa said. “The success attributed to wireless is how well we position it as an additional benefit of our connectivity value proposition. The way we’ve introduced this, as the missing piece of our broadband, has been paramount to the success of this.”

The way Comcast has introduced wireless this time around also is different, Costa said, in that the focus is on the overall customer experience.

“Our product is the experience and the experience is our product,” he said, adding that Comcast has purposefully kept the mobile product as simple as possible, whether it be flexible pricing plans, different data options and even a pay-as-you-go option. The idea is to offer consumers choice without bombarding them with options that are difficult to understand.

Wireless has also proven to be an incentive for customers to keep their broadband service. Like its cable peer Charter Communications, Comcast wireless customers are required to subscribe to broadband.

In 2019, Comcast Cable added 1.4 million broadband customers, its best performance in 12 years. While there are other factors associated with that growth, including the speedy demise of telco digital subscriber line service, at least some of it can be traced to wireless stickiness.

Costa didn’t want to take credit for the rise of broadband, saying there are a lot of factors that could be attributed to its success. But wireless is becoming an increasingly important component of the overall connectivity value proposition, he said.

“The success has been the proof of how well we’re telling the story to consumers and how valuable that has become to them,” Costa said.

Those subscriber increases have helped substantially reduce the mobile unit’s EBITDA, or cash flow, losses. Comcast cut its wireless EBITDA losses by nearly half in 2019, to $402 million from $746 million in the prior year. In Q4 alone, the unit’s EBITDA losses improved by 40%, prompting Cavanagh to predict wireless would be cash-flow positive for the full year of 2021.

Analysts see strong growth ahead for the wireless product: Moffett has estimated that Xfinity Mobile will more than double its subscribers to 5.7 million by 2024.

“The strategy has been, and is and will be, how can we use mobile as a benefit back to our broadband and connectivity business?” Costa said. “It is working because we see a benefit translated in many ways — churn, and attachment of other products. The other is the halo that has been created on the back of this new way of doing business with us.”

Spectrum Mobile

Charter launched Spectrum Mobile in September 2018 and in a little more than a year grew its wireless customer base from virtually nothing to 1.1 million. According to chief mobile officer Danny Bowman, Charter’s recipe for wireless success can be summed up in two words: simplicity and speed.

“We’ve integrated mobile into our core business,” Bowman said. “We introduce mobile into every possible transaction, whether that’s inbound sales or someone walking into our stores. The channels themselves have built a lot of mobile muscle memory and it’s just become part of what we do.”

Charter was also expected on March 6 to launch 5G in 14 cities via its Verizon MVNO. (Comcast also has said it would begin offering 5G handsets on March 6.) Speeds of the service will range from 700 Megabits per second to 1 Gigabit per second. According to Bowman, 5G will be included at no extra charge to Spectrum Mobile’s $45 per month unlimited data customers.

“We already provide the fastest mobile experience from coast to coast,” Bowman said. “This is just another proof point that we’re always going to have the fastest mobile experience for our customers. We’re keeping it super simple. We’re not creating some high premium rate plan that you have to buy. I think it’ll be easy for our channels to sell. You pick a 5G device, you get a $45 rate plan; you pick a 4G device, you get a $45 rate plan.”

Also helping with sales of the 5G product, as well Charter’s other offerings, are the more than 350 Spectrum retail stores with mobile service across the country. More are planned, Bowman said, adding the stores have played a key role in mobile’s success.

The stores are just another choice on a long list of options customers have for buying mobile service, including online, or by making a phone call and having a device or a SIM card shipped to their home.

“We’ve made it really easy for a customer to do business with us,” Bowman said. “Whether you want to say, call, click or visit, we’ve made it very simple and we can be very disruptive because of how we support our customers and what channel they want to use.”

Altice Mobile

Altice USA, the newest cable player on the wireless block, launched its mobile service in September 2019 and finished the year with about 69,000 customers, an initial pace the company claimed was twice that of its peers. The smallest of the three cable players, Altice — with about 4.2 million broadband customers, compared to 28.6 million for Comcast and 25 million for Charter — also has the most aggressive offering. Altice Mobile launched at a price point of $20 per line for life, less than half the $45 per line Comcast and Charter were charging. Altice Mobile has since said it ended that $20 promotion in March, increasing the price to $30 per line for new customers (legacy customers will still pay $20 for as long as they have the service). Still, even at the higher price point, Altice Mobile is cable’s best wireless bargain.

Altice’s ability to keep its prices so low is tied in part to its MVNO deal with Sprint (now T-Mobile). Altice USA CEO Dexter Goei has said its original MVNO deal will remain intact after the merger.

Analysts have pointed to Altice USA’s MVNO as the gold standard for such deals among cable operators. Based on the structure of that agreement, Altice pays less as more and more traffic moves off the MVNO to Altice’s network. Given the architecture of the Altice network, that won’t be as hard as it seems.

Under Altice’s deal, Sprint is allowed to build small cells on Altice’s network. Sprint pays nothing to Altice aside from construction costs. In turn, the cable company gets to ride on those small cells for free. The more cells there are, the lower the cost of the MVNO.

After the T-Mobile-Sprint close, Altice will have access to what Moffett called “a best-in-class network at a disruptively low price. It seems a foregone conclusion that they will attract subscribers. They already believe they can offload enough traffic from the network that they will be profitable even at super-low prices.”

Altice USA added about 69,000 mobile customers in Q4 — about twice the quarterly pace of its peers’ initial offerings — and is expected to end 2024 with 876,000 customers, according to MoffettNathanson, or about 17% of its total broadband base, inline with its larger peers.

At the Morgan Stanley Technology, Media and Telecom conference on March 3, Goei said Altice counts about 100,000 wireless customers, a signup pace about 2.5 times faster than its peers at launch.

Altice USA also will have access to 5G tech through its T-Mobile-Sprint MVNO, Goei added. While 5G could be perceived as a threat to Altice’s own wireless business, Goei said he views it more as an opportunity, especially since the technology is expected to be deployed over time.

“There’s obviously different strategies amongst different operators, but by and large, it’s an opportunity for MVPDs to work with wireless operators, particularly those who want a small cell,” Goei said. “And for those who want to go deep into the residential neighborhoods with fiber, good luck, have fun.”

After several failed tries at the wireless business in the past few decades, cable operators appear to have found the right formula, adding customers at a record clip and evolving the offerings from a retention tool to one that could start turning a profit.

Two years after launching Xfinity Mobile, Comcast has about 2 million wireless customers, generating $1.2 billion in annual revenue. Charter Communications, which launched wireless product Spectrum Mobile in July 2018, crossed the 1 million subscriber milestone in 2019.

Neither offering is expected to be a threat to the Big Three wireless carriers, Verizon Communications, AT&T or T-Mobile/Sprint, which each have well more than 100 million mobile customers. But for cable, a business that was once believed to be an afterthought is now being considered alongside broadband as a possible profit center.

No Drag Anymore

“Wireless, within the next few years, will be a contributor rather than a drag,” MoffettNathanson principal and senior analyst Craig Moffett wrote.

Cable’s forays into wireless are legendary. The first joint venture between cable and wireless can be traced back to the Sprint PCS partnership in the 1990s, in which the cable partners cashed out at a considerable profit. But the next two attempts to create a quad play — the Pivot joint venture with Sprint and a wireless broadband JV with WiMax pioneer Clearwire — failed miserably.

Cable operators, mainly Comcast and Time Warner Cable (now part of Charter), continued to accumulate wireless spectrum in various federal auctions, selling those licenses to Verizon Communications in 2015 for $3.6 billion. As part of that deal, the cable operators retained the right to form a mobile virtual network operator (MVNO) agreement with Verizon, that would allow them to offer wireless service in their respective footprints.

Comcast was the first to launch its MVNO, Xfinity Mobile, in April 2017. Charter’s Spectrum Mobile followed about 18 months later. Both companies saw the services as mainly retention tools for their broadband and video offerings, not as standalone services or as cogs in a larger quad-play wheel of video, voice, data and wireless. Now that attitude seems to be changing.

In 2019, Comcast grew mobile revenue by 31.2% to $1.167 billion, ending the year with just over 2 million customers, compared to 1.2 million in the prior year. On its conference call with analysts to discuss Q4 results, Comcast chief financial officer Mike Cavanagh, who, like the overall company, had been cautious about wireless predictions in the past, seemed more than optimistic about the service, adding that he expected the wireless subscriber momentum to continue into 2020.

“Our results to date indicate that adding mobile improves broadband customer retention and increases prospective customers’ consideration,” Cavanagh said on the call. “And importantly, we continue to see a significant improvement in the financial performance at Xfinity Mobile. We reduced our quarterly adjusted EBITDA losses at Xfinity Mobile to $116 million, a 40% improvement compared to last year’s fourth quarter, and we expect Xfinity Mobile to be EBITDA positive for the full year in 2021.”

Charter, which launched Spectrum Mobile about a year after Comcast, did even better. It added 288,000 wireless subscribers in Q4, ahead of bullish consensus estimates of 260,000 additions. Management appears to be taking a more aggressive stance concerning mobile, with predictions of meaningful profitability by 2021.

On a conference call with analysts, Charter chief financial officer Christopher Winfrey said the company expects mobile service revenue to “exceed all operating costs” in 2021, adding that by that time, mobile capex should “decline meaningfully.”

Charter Changes the Narrative

Sanford Bernstein media analyst Peter Supino wrote that the wireless performance, coupled with stronger-than-expected results in just about every metric — revenue was up 5% and cash flow rose 8% in the quarter — have helped change Wall Street’s perception of Charter and its $80 billion purchase of Time Warner Cable in 2015.

“Thirteen months ago, we perceived that the market assessed the Time Warner Cable merger as a failure and heard rumors of risk to Charter CEO Tom Rutledge’s job,” Supino wrote. “Today, 81% higher on the stock, that consensus is a skeleton in some closets, and investors are happily adding risk while scrutinizing Charter’s outlook in search of the next thing that ‘we know for sure that just ain’t so.’ To be clear, we still see more to hope for than to fear.”

MoffettNathanson analyst Craig Moffett has declared cable operators relevant in the U.S. wireless industry.

Titling his quarterly Wireless Q3 2019 report “Cable Starts to Matter,” Moffett noted that Comcast and Charter Communications have added about 2.5 million mobile subscribers since launching their respective services. Factoring in the nascent Altice Mobile service, cable has accounted for 31% of total U.S. pre- and post-paid additions in each of the last two quarters.

“That market-share gain, which is almost certain to accelerate, has already been enough to alter the competitive dynamics of the wireless industry,” Moffett wrote.

Noting that the interjection of the cable as a competitive dynamic has already started to impact Verizon, AT&T, T-Mobile and Sprint, “AT&T has signaled its willingness to at last become an arms dealer,” the analyst said.

Indeed, AT&T chairman and CEO Randall Stephenson indicated on a recent conference call that his company may become a mobile virtual network supplier, ushering other cable operators into wireless in the same way that Verizon has enabled Comcast and Charter.

Giving Comcast and Charter choice beyond Verizon in the MVNO market would change the game.

Paying Verizon around $3.50 a Gigabyte to use its network, the top two U.S. cable operators are currently constrained in terms of just how aggressive and disruptive they can be. But as other MVNO options enter the market — and Comcast and Charter build out their own infrastructure — the Verizon MVNO deal looks like only a “beginning” for the two companies, Moffett said.

MoffettNathanson analyst Craig Moffett said cable operators are relevant in the U.S. wireless industry.

Titling his quarterly “Wireless Q3 2019” report, released Thursday, “Cable Starts to Matter,” Moffett noted that Comcast and Charter have acquired around 2.5 million wireless users since launching their respective mobile services. And notably, adding in the contribution of Altice USA’s nascent service, cable has accounted for 31% of total U.S. pre- and post-paid additions in each of the last two quarters.

“That market share gain, which is almost certain to accelerate, has already been enough to alter the competitive dynamics of the wireless industry,” Moffett wrote. “Total phone growth for the carriers is now unmistakably slowing. It is unclear whether consensus expectations for the Big Four will accommodate the combination of slowing market growth and falling market share.”

Notably, as the interjection of the cable competitive dynamic begins to impact Verizon, AT&T, T-Mobile and Sprint, “AT&T has signaled its willingness to at last become an arms dealer,” the analyst added.

Indeed, AT&T CEO Randall Stephenson indicated on a recent conference call that his company might enter the MVNO market, ushering other cable operators into the wireless business in the same way, say, Verizon has enabled Comcast and Charter.

Paying Verizon around $3.50 a gigabyte to use its network, the top two U.S. cable operators are currently constrained in terms of just how aggressive and disruptive they can be. But as other MVNO options enter the market—and Comcast and Charter build out their own infrastructure—the Verizon MVNO deal looks like only a “beginning” for the two companies, Moffett said. 

Xfinity Mobile added 204,000 lines of service in the third quarter, giving Comcast’s wireless service just over 1.7 million total customer lines.

The service grew by 228,000 lines in the third quarter of 2018.

Comcast reported third-quarter losses of $94 million for Xfinity mobile, compared to a loss of $178,000 in the third quarter of 2018. The improvement, reflected Comcast’s “progress in scaling and further improving our operations,” said Comcast CFO Michael Cavanagh to investors.

Related: Broadband Drives Comcast Q3

Added Jeremy Darroch, group chief executive for Sky: I'm very pleased with the progress, in particular, we're making on mobile, where we're seen now as a service leader against all of the mobile operators. So I think our growth from commerce business should be pretty strong, I hope, over the next 13 weeks. And again, mobile, continuing with handsets is quite a good Christmas product, so we'll get behind that.”

Meanwhile, Comcast Cable CEO Dave Watson confirmed the company is testing dual-SIM capability on Apple iPhones and Android devices as a means of offloading traffic from its Verizon MVNO agreement.

“We think that is an opportunity, and we'll continue to look at that,” Watson said. “And that does go with any offload strategy, so we're very active in thinking through that. And whatever -- in terms of the business model and the business planning around it, any potential shift will be a positive net economic outcome for us as we look at, but it's early still. But I do think that there's promising opportunities when you combine dual SIM with the cable infrastructure.”

Count Cowen as being particularly bullish about Comcast and Charter’s respective and fledgling consumer wireless services.

Declaring cable-wireless convergence a “‘when' and not ‘if’ story,” the equity research firm sketched out in a note to investors this morning all the different approaches the two companies could take to slowly build out their wireless infrastructure, as they continue to steadily grow the respective Xfinity Mobile and Spectrum Mobile leveraging the continuing economics of their Verizon MVNO wholesale network lease deals.

Cowen’s modeling, based on a variety of data sources, yielded some interesting snapshots and projections of the two mobile businesses.

> Comcast’s Xfinity Mobile, which currently has 1.6 million subscribers, will control around 6% of the U.S. wireless market by 2023 and generate $266 million in earnings before interest, taxes, depreciation and amortization (EBITDA), Cowen predicted.

> Charter’s Spectrum Mobile will generated $201 million in EBITDA by 2023.

> Xfinity Mobile Unlimited subscribers use, on average, 8.75 gigabytes of cellular data each month

> Comcast is currently paying $3.09 per GB of cellular data used on Verizon’s network, Cowen said.

> Around 80% of data used on Xfinity Mobile comes over Wi-Fi.

“We believe that there is a distinct possibility that the MVNO model could be a springboard for cable to build out their own in-footprint networks,” reads the Cowen report, which was lead authored by analyst Gregory Williams. “Cable can lean on the MVNO agreement and build out at a more measured pace, deploying pockets of network, starting with the denser/urban markets with an ‘inside out’ strategy, migrating to a hybrid roaming/facilities-based model (somewhat similar to what Dish could do with New T-Mobile).

“Furthermore, cable could build an SDN/cloud-native network and leverage plant rooftops or MDU’s to deploy cheaply,” the reported added. “We especially find the Comcast set-up as compelling, acquiring 5x5 600 MHz spectrum in 72 markets. We envision Comcast cheaply deploying the 600 on head-end/plant/MDU rooftops for coverage, then add CBRS and Wi-Fi access points on poles and strand mounts for capacity, all backhauled on DOCSIS 3.1 cable plant. If Comcast links networks with Charter at some point, and/or brings Dish into the mix (depending on the T-Mobile/Sprint outcome), even better.”

Williams pointed to Altice USA, which has been steadily building out wireless network infrastructure as it launches Altice Mobile.

“We believe Comcast and Charter are looking at the Altice model, and if proven successful, could also look to migrate to an infrastructure-based strategy and lower their roaming costs,” the report said. 

Amdocs says it has been contracted by Comcast and Charter to provide ordering, billing and monetization software support for the cable operators’ respective mobile services, Xfinity Mobile and Spectrum Mobile.

Amdocs will supply systems spanning multi-channel sales, ordering, care and monetization. Amdocs did not disclose the terms of these multi-year deals. The vendor also didn't say how long it's already been working with these mobile services. 

Comcast and Charter, which both base their consumer wireless businesses on wholesale network usage agreements with Verizon, collaborate closely on issues related to technology and business systems.

Amdocs made its announcement in the form of two distinct press releases.

For Xfinity Mobile, it said that “the Comcast and Amdocs DevOps teams work collaboratively to launch new mobile offers and service enhancements via agile methodologies that drive increased business value and economics and provide a simpler and more consistent digital customer experience.”

As far as Charter is concerned, Amdocs said that it’s “suite of integrated and modular solutions will help Charter increase time to market of new Spectrum Mobile service offers and bundles that enhance the consumer experience.”

Comcast said Xfinity Mobile added 181,000 service lines in the second quarter, bringing its total to 1.5 million lines after a little more than two years on the market.

Charter said Spectrum Mobile added 208,000 lines in the second quarter, bringing it to 518,000 lines since launching at the end of June of last year.

Comcast has announced changes to Xfinity Mobile that will incentivize users to take limited cellular plans.

The operator will now charge unlimited users $20 a month if they want to stream HD video. According to The Verge, the policy has actually been in place for about a year, but users had previously been able waive the charge by calling Comcast and making an ask.

Simultaneously, Comcast is removing the cap that limits video resolution to 480p on its “By the Gig” plan. Users can stream all the video they want in 720p format on smart phones and full 1080p on tablets. (It claims those latter limitations are provisioned by Verizon, from which it leases mobile network usage via MVNO deal.)

Notably, By the Gig is being tweaked to make it more of a traditional limited plan and less of an a la carte option. The plan lets users pay as they go for each gigabyte of cellular data they use in $12 increments. However, now they can pre-select buckets of 3GB and 10GB, which can be shared across users in family plans.

The buckets offer significant savings—for example, the 3GB plan is only $30 vs. $36 via the traditional a la carte system. The 10GB bucket, meanwhile, is $60 vs. $120 if you used that much data without selecting the new “By the Gig Shared Data” option. But you have to choose this option before you use the data, not after.

Comcast hasn't disclosed the economics of its mobile virtual network operator agreement with Verizon. But it's probably not too much of a leap to say that wholesale usage of the Verizon network must be as limited as much as possible in order for Xfinity Mobile to be profitable. 

“We saw an opportunity to better serve groups of friends and families who don’t need unlimited but want more than a pay per GB plan, so we’re introducing shared data options whereby the more data you purchase, the less you pay per gigabyte,” said Rui Costa, VP of product management and customer experience for Xfinity Mobile. “It’s a natural evolution of our service that puts each individual in control of building the mobile data plan that works for them and then easily adjusting it with one click of the app – whether to switch data plans mid-billing cycle based on usage, or turn on HD to watch a show and then immediately turn it off to lower data consumption.”

Charter Communications said Friday that its new consumer wireless service, Spectrum Mobile, added 208,000 lines in the second quarter, bringing it to 518,000 lines since launching at the end of June of last year.

The service also generated $158 million in revenue in Q2, up from $140 million in the first quarter. Spectrum Mobile is on track to generate at least $600 million in revenue this year, Charter said.

Expenses from the mobile operation totaled $277 million in Q2, slightly up over $260 million in the first quarter as Charter ramps up marketing for the service. The adjusted EBITDA loss for mobile was $119 million during the quarter. 

(Seeking Alpha has Charter’s complete Q2 slide deck here.)

Spectrum Mobile wasn’t in the market in the second quarter of 2018, so there’s no direct year-over-year figure to compare that loss to.

Notably, however, Comcast, which partners its Xfinity Mobile service with Spectrum Mobile for key operations, and also bases its platform on a very similar MVNO agreement with Verizon, reported an EBITDA loss on mobile of $185 million in Q2 2018—that was also just under a year after launch.

Both Comcast and Charter have said their respective mobile services will reach profitability when the percentage of their customers taking mobile service reaches mid to high single digits.

MoffettNathanson analyst Craig Moffett said in his report on Charter Friday that he remains “skeptical” that Comcast and Charter’s Verizon MVNO model will ever be profitable.

However, with Comcast revealing narrowing Xfinity Mobile losses in its own Q2 earnings report Thursday, “the worst of the losses will be felt this year, and then should begin to moderate as the business reaches something closer to steady state.” 

Comcast’s wireless service Xfinity Mobile added 181,000 service lines in the second quarter, bringing its total to 1.5 million lines after a little more than two years on the market.

Notably, Comcast reported an $88 million EBITDA loss for the service in the second quarter, a big improvement over the $185 million loss reported in Q2 2018.

“We’re really pleased with the wireless, Xfinity Mobile, the first several years we've been in business,” said Comcast Chairman and CEO Brian Roberts, speaking to investment analysts this morning.

“We're offering a great suite of products with value to our best broadband customers. It's got a strategic focus for how we're operating the company. And now it's beginning to have real volume and scale and getting us closer to that point where, economically, it's not a drag and it's a contributor,” Roberts added.

Related: Comcast Lost $743 Million on Xfinity Mobile in 2018

Comcast leverages a mobile network virtual user agreement with Verizon to support Xfinity Mobile. From launch, the cable operator has said that it will drive Xfinity Mobile users to its public Wi-Fi network in order to limit the unprofitable wholesale usage of Verizon’s wireless network.

Analyts, most notably MoffettNathanson’s Craig Moffett, have cast doubts on that strategy, which is also deployed by Charter Communications for Spectrum Mobile.

"It should be clear by this point that the current [MVNO] deal is a money loser for the cable operators; it's not profitable and it likely never will be," Moffett wrote in April.

The analysts based his claim on what he believes is the failed premise that Wi-Fi is a significant option for offloading.

However, according to new research published by Tutela, 69.2% of Xfinity Mobile usage is through private Wi-Fi, even if only 6.6% is based on public Wi-Fi. Only 24.2% of Xfinity Mobile usage leverages the Verizon network. For the younger Spectrum Mobile, only 26.8% of usage comes from the Verizon MVNO.

There has been very recent speculation that, given the perceived poor economics of their respective Verizon MVNO deals, either Comcast or Charter—or both—might move in and buy Dish Network, once the satellite TV operator is set-up by T-Mobile to replace Sprint as the No. 4 U.S. wireless operator.

Related: Comcast and/or Charter Will Buy MVNO-Infused Dish, T-Mobile Frets

For his part, however, Roberts seemed to indicate today that Comcast is pretty happy with the wireless status quo.

“I don't know why we would change direction,” he said. 

Xfinity Mobile is opening up its BYOD availability, at least just a little.

Previously confined to recent Apple iPhone models, Comcast’s MVNO-based mobile service will now be open to unlocked Samsung Galaxy models S9, S9 Plus, S8, S8 Plus, Note 9 and Note 8.

There are some caveats. Many phones sold through T-Mobile and AT&T won’t work on the service, which is based on a mobile virtual network operator agreement with Verizon. Comcast did say that owners of ineligible Android phones who trade them in, and port over their existing phone number, before Aug. 4 will receive a $100 gift card.

Related: Xfinity Mobile Offering iPads and Apple Watches

Comcast said it will add BYOD capability to additional Android handsets later this year. 

Comcast has added new Apple mobile devices to its Xfinity Mobile service.

The Apple Watch Series 4 with built-in cellular will be available for purchase beginning Friday in Xfinity stores, with customers able to pre-register for the device immediately. The Apple Watch will add $10 a month to the cost of a mobile plan.

The 9.7-inch iPad mini, the 10.5-inch iPad Air and the 10.5-inch iPad Pro are available now from Xfinity Stores nationwide. Tablet prices start at $17.62 for 24 months at zero percent APR for the mini, with no money down.

Related: Comcast Lost $743 Million on Xfinity Mobile in 2018

“We’re excited to expand our lineup of Apple devices to include the advanced Apple Watch Series 4 with built-in cellular as well as the new iPad Air and iPad mini with LTE, helping support the growing mobile lifestyle of our customers,” said Billy Stephens, senior VP of wireless devices and supply chain for Xfinity Mobile. “Combined with the range of iPhone models we currently offer, we’re bringing more value to Xfinity users with our mobile offering by providing the device that best suits their way of living.”

Comcast said that Xfinity Mobile users can now download the Hiya app to get alerts on which incoming calls are spam.

The free app also identifies calls from common businesses, and it also allows users to block calls from entire area codes.

The collaboration with the robocall-blocking app maker Hiya represents the cable operator’s latest move to combat the robocalling problem. The activity comes as the FCC is putting pressure on communications companies to find solutions.

Comcast also said that it will implement SHAKEN/STIR techniques in areas where it is enabled by MVNO partner Verizon for an additional layer of security.

RELATED: Comcast and AT&T Successfully Test Solution to Stop Robocalling

STIR is short for Secure Telephony Identity Revisited. The SHAKEN acronym is a bit more of a reach — it stands for Secure Handling of Asserted (information using) Tokens. The “ken” in token comprises the last part of the acronym. The protocol seeks to authenticate calls by using digital certificates that determine where the call actually originates from.

In March, Comcast said it has partnered with AT&T to successfully test a solution — based on the SHAKEN/STIR protocols — to stop robocalling between various landline services.

In April, T-Mobile and Comcast announced another partnership to combat robocalling by using SHAKEN/STIR to authenticate calls made between their respective networks.

Comcast and Charter Communications lose money on their fledgling mobile services based on MVNO deals with Verizon.

Verizon, meanwhile, faces massive buildout challenges in terms of making millimeter wave distribution of fixed 5G services a reality.

But what if the three companies truly worked together, beyond a mere MVNO leasing deal, and shared wireless infrastructure?

That is the scenario put forth in a paper published late last week by equity research company Moffett Nathanson. The analysts point to the model of Altice USA and Sprint, which they say have created an “elegant solution” for sharing network resources.

Within Altice’s northeast Optimum footprint, the cable operator is allowing Sprint to add strand-mounted small cells onto its fiber network. The wireless operator has a pathway to the densification it needs to make millimeter wave 5G a reality. Altice, meanwhile, can leverage a greater and greater share of small cells for free as the buildout continues, thus decreasing the MVNO cost of its wireless service over time.

The Challenges

Moffett Nathanson estimates that Comcast and Charter, which collaborate on their wireless services and have similar MVNO deals, pay around $5 to Verizon for every gigabyte a mobile customer uses on the Verizon wireless network. The cable companies thus lose money on every wireless subscription.

While introducing their services, both cable companies touted the ability to offload usage to their own public Wi-Fi networks. But scheme hasn’t worked as planned. “Cable’s out-of-home Wi-Fi network is a bust,” Moffett Nathanson said. “The industry stopped expanding it years ago after it became clear that it was never going to provide a robust out-of-home user experience.”

Worse, it’s Verizon—and not Comcast or Charter—which determines when a customer switches from cellular to Wi-Fi. “Why would Verizon want to help Comcast and Charter divert money away from its own network?” the research firmed noted.

Meanwhile, as Moffett Nathanson pointed out in detail in an earlier report, Verizon—and the other three major U.S. wireless network operators—face a seemingly impossible task in creating enough small-cell density to achieve ubiquitous millimeter wave coverage of fixed 5G services.

As the the company’s report on Verizon’s early deployment of fixed 5G services in Sacramento shows (see graphic below), “even a 100-fold improvement in their current coverage and penetration wouldn’t be enough to make their existing architecture economically interesting.”

Pondering the solutions to all of these problems associated with cable-wireless convergence, Moffett Nathanson doesn’t see M&A as a feasible path to circumventing arduous infrastructural buildout needs. Not only is it not enticing to the stakeholders, it would not be appealing to regulators, either.

So what of the idea that the companies working together on infrastructure? Well, it was the 2011 arrangement that led to Comcast and Charter’s current MVNO deal with Verizon that supplies the blueprint, the research company noted.

Under that deal, Comcast, Time Warner Cable and Bright House Networks entered into negotiations with Verizon over the sale of the cable consortium’s AWS-1 spectrum.

“What started as a simple spectrum sale ended with a strategic alliance that didn’t just create the cable MVNO we know today, it also envisioned a future where Verizon would resell cable broadband across their footprint (astonishingly, even in markets where Verizon was selling FiOS service). The latter initiative never fully materialized for a variety of reasons,” Moffett Nathanson wrote. “But the companies, even then, evidenced a clear understanding that they would be better off together than apart.”

Comcast said a security hole that allowed an identity thief to steal a California Xfinity Mobile customer’s phone number is being addressed and has only impacted a “very small number” of subscribers.

“We have also implemented a solution that provides additional safeguards around our porting process, and we’re working aggressively towards a PIN-based solution,” Comcast said in a statement, which didn’t outline the safeguard procedures.

“We are reaching out to impacted customers to apologize and work with them to address the issue,” Comcast added. “We take this very seriously, and our fraud detection and prevention methods, policies and procedures are continually being reviewed, tested and refined.”

The issue surfaced last week, when a Lodi, California Xfinity Mobile customer detailed what he called “a security breach large enough to drive a truck through” to the Washington Post.

Wireless carriers typically assign a four-digit personal identification code (PIN) to customers, who use it for authentication when they want to move their phone number from one carrier to another. For convenience, Comcast had each customer assigned to “0000” PIN code.

Armed with a the Lodi customer’s credit card data, an identity thief was able to also steal his phone number using this 0000 code. With that phone number and the credit card info, the thief reportedly created a Samsung Pay account and purchased a computer at an Apple Store in Atlanta.

Comcast reps noted that in order to steal the phone number, the thief had to also have the customer’s full Xfinity Mobile account number. And to get that number, the thief would have to access Comcast’s password-protected online customer portal.

Comcast blamed the issue on bad password management by the customer. 

In the Lodi case, Comcast said the customer used the same password for multiple accounts involving numerous companies.

“We believe this has only affected customers whose passwords might have been included in previous, non-Comcast related breaches. We recommend that customers use unique, strong passwords,” the Comcast statement added.

Comcast also attempted to paint the picture of a broader industry security problem. 

“The fraudulent porting of mobile numbers is a well-known industry issue and not unique to Xfinity Mobile,” Comcast also said.

That may be true, but Comcast is once again in crises communications mode, playing defense on a bad-looking story proliferating across the viral internet. Indeed, with Xfinity Mobile now boasting 1.2 million customers, and many financial institutions now using mobile numbers as a lynchpin to two-factor authentication, stories about protecting numbers with default PIN codes don’t have the best optics. 

Comcast said that its fledgling consumer wireless service Xfinity mobile lost $191 million in the fourth quarter, up from a loss of $176 million in Q4 2017.

The full-year loss for the mobile service, which launched in early 2017, was $743 million. Coupled with a 2017 fiscal-year loss of $480 million, Xfinity Mobile has lost around $1.223 billion for Comcast in its first two years of operation.

Comcast also said that the service added 227,000 subscriber lines in the fourth quarter, bringing its total base to 1.2 million lines.

Like Charter Communications, with which it has closely aligned its mobile service with, Comcast bases the wireless product on an MVNO leasing agreement with Verizon.

Comcast’s Q4 earnings report came a day after equity research company published some notable findings about Xfinity Mobile.

For one, the service skews older than the incumbent wireless services, with an average subscriber age of 50.8 (see chart below).

For another, with the average Xfinity Mobile subscriber backed by a household income of $82,103, the service’s customers are poorer than those for wireless market leaders Verizon and AT&T, but richer than those of Sprint and T-Mobile.

Notably for Comcast, which sees Xfinity Mobile as an augment to it broader bundle of services, Xfinity Mobile customers say they pay, on average, $107 a month on their cable bills. That’s higher than any customers for any of the entrenched mobile services. 

Comcast reported the addition of 228,000 lines of service for Xfinity Mobile in the third quarter, bringing the wireless service’s distribution to 1 million lines.

Comcast launched its mobile service in early 2017, leveraging an MVNO relationship with Verizon and supplementing coverage with its network of millions of Wi-Fi hotspots.

Related: Broadband Sub Adds Nearly Double in Q3 for Comcast

The No. 1 U.S. cable operator ended 2017 with 380,000 lines deployed. Comcast executives said the growth is occurring in relationship with the steep spike in Comcast wireline broadband sales, which tallied a remarkable 366,000 customer additions in Q3.

"We are pleased with our progress in mobile, and while it's still relatively early, the results we see are supportive of our key objectives when we entered the wireless business, including deepening the relationship with, and improving the retention of, broadband customers," Comcast CFO Michael Cavanagh said during Thursday’s earnings call.

Comcast’s Xfinity Mobile began taking pre-orders Friday for the $999 Samsung Galaxy Note9 smart phone, enticing customers with an offer of a $300 prepaid card.

The pricey device will begin shipping Aug. 24 in Ocean Blue and Lavender Purple. It will include the S Pen styles, a 4000 mAh battery, Bluetooth Low Energy support, a dual aperture lens camera and 128 GB of storage. (A 512 GB version is available for $1,245.)

Xfinity Mobile is one of six U.S. wireless carriers to sell the 128 GB version online and in stores, with Verizon, AT&T, Sprint, T-Mobile and U.S. Cellular also carrying the device. Charter’s Spectrum Mobile has not yet announced plans to sell the Galaxy Note9.

Comcast is offering 0% APR for 24 months on the phone, with payments set at $41.67 a month. Customers can capitalize on the promotion by buying the Galaxy Note9 and opening a line.

Other operators are offering aggressive promotions, as well.

Verizon, for example, will deliver another 128 GB Galaxy Note 9, or a free Galaxy S9 or S9+, for purchasers who open an additional line of service.

AT&T is offering 30 months of zero-interest financing (reducing the monthly payment to $33.34). And customers who open an additional line can also get a free additional Galaxy Note9, or an S9 or S9+.

Sprint, meanwhile, is offering 50% off with its Sprint Flex Lease plan, rendering the monthly payment to $20.83.

For its part, Comcast reported additions of 204,000 Xfinity Mobile lines in the second quarter, bringing its total served lines 781,000

“By combining the nation’s largest and most reliable 4G LTE with 19 million Wi-Fi hotspots, Xfinity Mobile provides a network built for consumers to take full advantage of the advanced features Samsung has built into the new Galaxy Note9,” said Billy Stephens, senior VP of wireless devices and supply chain for Xfinity Mobile, in a statement. “We’re uniquely positioned to help customers save on their cellular data charges as they enjoy streaming, gaming or surfing on the Galaxy Note9’s beautiful infinity display.”

As Comcast flirts with 600,000 customer lines for its year-old Xfinity Mobile service, the bulk of them are coming way of Verizon Wireless and AT&T, according to a new study.

RELATED: Comcast Adds 197K Xfinity Mobile Customer Lines in Q1

Among consumers who now use Xfinity Mobile as their primary mobile carrier, 27% are former Verizon Wireless customers, and 20% came from AT&T, versus just 12% from Sprint, MarketStrategies International found in a study focused on what the firm calls the “Xfinity Mobile Effect.”

The study was based on an online survey of 1,044 adults conducted in March that included Xfinity Mobile customers, Comcast customers without Xfinity Mobile, and non-Comcast customers. Data was weighted to reflect current wireless carrier market share.

Xfinity Mobile leans on an MVNO deal with Verizon Wireless and tied into Comcast’s WiFi network. Comcast added 197,000 Xfinity Mobile customer lines in Q1 2018, ending the period with 577,000. Charter Communications plans to launch Spectrum Mobile, a service that also relies on a Verizon MVNO deal, by mid-2018.

RELATED: Charter Eyes June 30 Debut for Spectrum Mobile: Report

As for drivers for those who did switch to Xfinity Mobile, 75% of the total said overall plan costs was the largest, compared to data costs and the use of WiFi hotspots to save on data usage and costs (38% each), and 28% cited free talk and text on up to five lines.

More detail about the study and Comcast’s mobile offering, including how it is faring in the early going from a Net Promoter Score perspective, will be featured in the May 7 issue of MultichannelNews. 

Comcast said Xfinity Mobile added 197,000 customer lines in Q1 2018, ending the period with about 577,000.

Those Q1 additions were just a tick ahead of the 187,000 lines that Xfinity Mobile tacked on in the previous quarter. Comcast launched the mobile service last May using its MVNO agreement with Verizon Wireless.

RELATED: Despite Video Losses, Comcast Has Strong Q1

Comcast said it’s happy with the results so far as it weaves Xfinity Mobile into its broadband service bundling strategy.

“We think Xfinity Mobile is a big opportunity to continue to drive the bundling strategy of the cable business and provide more value to our broadband customer,” Michael Cavanagh, Comcast’s senior EVP and CFO, said.

Xfinity Mobile also generated an EBIDTA loss of $189 million in the quarter as the company ramped up subscriber acquisition activities and absorbed other costs associated with getting the new business launched.

Cavanagh noted that those EBIDTA losses are in-line with guidance, adding that Comcast expects them to “be a few hundred more this year.”

At the same time, Comcast expects to get some benefits from the 50/50 mobile operations partnership formed with Charter, as both MSOs will bear those costs together as they scale up that business.

RELATED: Comcast, Charter Form Mobile Platform Partnership

Dave Watson, Comcast Cable’s president and CEO, said the partnership and its focus on backoffice operations is “critical” to how that business scales, and that it represents a “logical next step,” given the amount of alignment to how Comcast and Charter are looking at the mobile business.

“It’s relatively early, but we like the early trajectory” of the Xfinity Mobile business, Watson said.

RELATED: Xfinity Mobile Launches Bring Your Own Device Option

Though the rate of broadband subscriber growth is starting to slow, Comcast remains confident that its mix of speed, coverage and service control elements (such as its relatively new xFi offering) will enable it to take share.

Cavanagh said 75% of Comcast’s residential high-speed internet subs take speeds of 75 Mbps (downstream) or higher, and that Comcast has 1-gig services available to 90% of its footprint amid its ongoing deployment of DOCSIS 3.1

A sore point for Comcast and other cable operators continues to be the slow erosion of the pay TV subscriber base.

Comcast is trying to address that trend by segmenting the market with new skinny TV services, such as the new Xfinity Instant TV, but will continue to lead with its flagship X1 service, which is now taken by about 61% of Comcast’s residential video sub base and continues to integrate and aggregate OTT services such as YouTube, Netflix and Pandora and support other Comcast services such as Xfinity Home.

RELATED: Comcast Rolls Out ‘Xfinity Instant TV’ Beta

“We have pivoted X1 to be a whole-home platform that aggregates the best content, not just linear TV,” Brian Roberts, Comcast Corp.’s chairman and CEO, said, noting that it also serves as a “dashboard” for WiFi connect and home automation.

“It’s still early for Instant TV,” Watson said. But as virtual MVPDs start to build scale and add subscribers, Comcast has a “real opportunity to win them back,” he added.

Comcast said cable capital expenditures were down 5.2%, to $1.7 billion, reflecting a lower level of spending on consumer premises equipment (CPE), particularly for X1.

Looking ahead, Comcast expects to shift further away from video-centric CPE and more towards connectivity-driven broadband infrastructure spending, Cavanagh said.

Comcast’s early results with Xfinity Mobile have raised some eyebrows, but they haven’t been strong enough to elicit a significant response from incumbent mobile services providers, according to a top industry analyst.

Powered by its MVNO agreement with Verizon, Comcast added about 187,000 Xfinity Mobile customer lines in Q4 2017, ending the year with about 380,000. Comcast launched the offering in May, and has so far seen the bulk of those customers opt for its by-the-Gig option, rather than its unlimited data option.

RELATED: Xfinity Mobile Starting to See ‘Real Momentum’

“Comcast’s early wireless subscriber growth is certainly impressive, but not conclusive,” Walter Piecyk, analyst with BTIG, explained in this blog post (registration required), noting that Comcast is essentially posting gross additions and will be challenged to retain those customers over multiple years.  

“If Comcast added more than 325,000 subscribers in a quarter, we believe it would merit more attention,” Piecyk wrote. “However, we don’t think its current level of growth, which was only 187,000 in Q4, will evoke a response from the incumbent wireless operators, especially as growth appeared to have moderated since the initial launch.”

He also calculated that, based on Comcast’s $480 million EBITDA losses in 2017 tied to Xfinity Mobile, that it’s costing the company $1,260 per gross addition, while acknowledging that this number includes startup costs that won’t repeat. He also expects Comcast to tweak pricing and advertising as it learns more about the business.

And he also pointed out that, despite  Comcast’s weaker than expected Q4 wireless results, they have not dampened expectations that Comcast could add more than 1 million wireless subs this year, adding that Charter  Communications, when it launches service by mid-2018, could represent an incremental 500,000 to 750,000 wireless subs per year.

He said the concern for incumbent mobile providers is that cable, as new wireless entrants, could cut into a highly penetrated sector that’s adding about 3 million post-paid voice lines per year. The “worst-case scenario” for them is that Comcast’s efforts force incumbents into price cuts.

But, for now, there hasn’t been a material impact, Piecyk said, pointing out that T-Mobile (its CEO, John Legere, characterized cable’s latest foray into mobile as irrelevant) and Verizon have realized better than expected post-paid adds, while AT&T also beat estimates.

"These are not data points that provide convincing evidence of cable having its long-awaited impact on the wireless industry,” Piecyk wrote

He also reiterated his skepticism about the MVNO business model, costs that Comcast and other cable operators intend to offset as much as possible by tapping into the shared CBRS band.

RELATED: CBRS Spectrum to Open Windows of Opportunity for Cable Ops

Piecyk also isn’t ruling out potential M&A.

“We believe T-Mobile and Sprint will likely remain as an acquisition option for Comcast for the foreseeable future, if Comcast decides to abandon its MVNO strategy,” he wrote. “We would also not be surprised to see Comcast or Charter build some network underneath the MVNO in the interim, particularly with the availability of CBRS spectrum for hotspot offload.”

It’s still early days, but Xfinity Mobile, a service launched by Comcast last May, is showing “real momentum,” Brian Roberts, Comcast’s chairman and CEO, said Wednesday on the company’s Q4 2017 earnings call.

Comcast added 187,000 Xfinity Mobile customer lines in Q4, ending 2017 with more than 380,000.

“We are enthusiastic about what’s coming in 2018,” Roberts said, noting that the product is now rolled out fully to Comcast’s retail stores and has introduced a bring-your-own-device option (initially for select iPhone models).

RELATED: Xfinity Mobile Launches Bring Your Own Device Option

“We’re really pleased with the early stage results” for Xfinity Mobile, Dave Watson, Comcast Cable’s president and CEO, said. “We like our game plan. We like the fact that it’s connected to our existing business lines. It’s a really simple approach that can scale.”

Though Comcast is starting to gain momentum with Xfinity Mobile subscribers, that part of the business is pulling in a profit due to costs tied to its scaling up phase. Xfinity Mobile generated a $480 million EBIDTA loss for 2017, with a loss that could reach a couple of hundred million dollars higher in 2018, “reflecting our expectation of a successful ramp in subscriber acquisitions,” Michael Cavanagh, Comcast’s senior executive VP and CFO, said.

For now, Xfinity Mobile results are being factored into Comcast’s corporate results, rather than tying it to the cable communications unit. Cavanagh expects it to stay that way likely through 2019 during the ramp up so it does not “distort” the business results of the cable unit during the ramp-up phase of the Xfinity Mobile product.

Turning to video, aggressive offers from new OTT entrants and traditional competitors continue to create headwinds for Comcast’s pay TV business, which shed 33,000 subs in Q4.

RELATED: Comcast Sheds 33K Video Customers in Q4

“It is definitely a very competitive video environment,” Watson said, adding that Comcast will continue to fight for “profitable video relationships.”

He noted that Comcast continues to make “moderate” adjustments to its video strategy, segmenting that market with products like X1, its flagship offering, and Xfinity Instant TV, a skinnier, IP-based package of channels that was launched in beta form in September 2017.

Comcast ended 2017 with about 60% of its residential video sub base on X1, and with nearly 20 million X1 voice remotes deployed.

 "While we’re going to compete aggressively across the board for good video customers, we have transitioned more and more toward broadband,” Watson said. “Broadband is a centerpiece for us.”

Comcast pulled in 350,000 new broadband subs in Q4 (down from 385,000 in the year-ago quarter), and believes there’s ample room to grow.

“The DSL base is still substantial,” Watson said.

He said Comcast’s deployment of gigabit-capable DOCSIS 3.1 technology now spans about 80% of the operator’s footprint, and that the rollout should be completed by the end of 2018.

Cavanagh said median data usage is up 48% year-on-year, and that about 75% of Comcast’s residential data customers get speeds of 100 Mbps or more, compared to about 50% a year ago. That’s reflected by Comcast’s efforts to lift baseline speeds across the customer base, he said.

Comcast Business Services remains a bright spot, as revenues there rose by 12.2% in the quarter, enabling the unit to exit 2017 with an annual revenue run rate of $6.5 billion.

Cable capex grew 2.8%, to $2.2 billion in Q4, and was up 4.7%, to $8 billion for the full year. That increase was driven by CPE investments for X1 and wireless gateways, and included investments in infrastructure to boost network capacity and line extensions to reach more residential and business customers.

Comcast has moved ahead with a BYOD (bring your own device) option for its Xfinity Mobile service, starting with select, unlocked iPhone models.

A web page about the BYOD program provides a way for consumers to see if their existing iPhone model (including the iPhone X, iPhone 7, iPhone 6 and 6s, iPhone SE, and iPhone 5, 5s and 5c) is eligible for the program.

Unlocked iPhone models (those that can be used on different carriers) that don’t qualify for Xfinity Mobile’s BYOD program may be eligible to be traded in for a gift card equal to the value of the phone, Comcast noted.

RELATED: Comcast Brings Find My Phone Feature to X1 Voice Remote

Comcast currently does not extend the BYOD option to Android phones, but notes in the FAQ that it’s “still working behind the scenes” to support that capability.  Comcast expects to bring the BYOD option to additional devices later in 2018.

The BYOD option should make it easier for more consumers to move to Xfinity Mobile, a service that Comcast launched in May for the MSO’s broadband customers that leans on Comcast’s WiFi network and the company’s MVNO agreement with Verizon Communications.

RELATED: Comcast Goes Wide With Xfinity Mobile

Last fall, Comcast announced that Xfinity Mobile had more than 250,000 customer lines activated. Comcast is scheduled to report Q4 2017 results on Wednesday, Jan. 24.

The company has previously noted that most Xfinity Mobile customers are opting for the offering's by-the-gigabyte plan ($12 per GB), rather than the unlimited data tier ($45 per month per line).

“With the introduction of BYOD, we now have a convenient way for iPhone users to switch to Xfinity Mobile and get access to the best 4G LTE network plus 18 million WiFi hotspots without having to purchase a new phone,” Rui Costa, vice president of product management and customer experience for Xfinity Mobile, said in a statement. “A core tenet of Xfinity Mobile is that it’s simple and easy, and our in-store BYOD experience will be no different.”

Adding a novel feature to its new Xfinity Mobile service, Comcast said those customers can now use their X1 voice remotes to locate lost smartphones.

To enable the Phone Finder, Xfinity Mobile customers can say, “Xfinity Mobile, find my phone,” into the X1 voice remote, or identify the phone by the user’s first name if the account uses multiple lines. Customers can also conduct the search by uttering their 10-digit phone number into the X1 voice remote.

During the search, the Xfinity Mobile phone number is called and a pre-recorded audio message from the service informs the user why they are receiving the call.

The feature is supported in all of X1 voice remotes, including the newly redesigned XR15 model. Comcast has deployed more than 18 million X1 voice remotes, and has activated more than 250,000 Xfinity Mobile customer lines since launching the service in May.

RELATED: Comcast Launches New Voice Remote

“At one point or another, everyone has lost their mobile phone in their home,” Amaya Capellan, senior director of product management and customer experience for Xfinity Mobile, said in a statement. “With Phone Finder we’ve made it easy to find it. There’s no set up required – you just ask Xfinity Mobile to find your phone using the X1 voice remote, and the phone rings. It’s simple and convenient – that’s what differentiates Xfinity Mobile, and we’ll continue to innovate and find ways to make our Xfinity services work better together.”

Comcast posted a video walk-through of the new Phone Finder feature:

Comcast and Charter are “arguably winners in the dissolution of the Sprint-T-Mobile deal,” MoffettNathanson analyst Craig Moffett said in a new report that ponders the wide-ranging implications of the scuttled M&A talks. 

RELATED: Sprint, T-Mobile Scrap Merger Talks

Moffett held that Comcast and Charter will benefit in part to the improved competitive dynamics that they’ll see with respect to their respective MVNO deals with Verizon. Comcast launched its offering, Xfinity Mobile, in May, and Charter plans to introduce a mobile service of its own sometime in 2018.

“A four player market is good news, on the margin, for Comcast and Charter, albeit less because of ‘deal opportunity’ for either one than because it creates a more hospitable dynamic for the wireless MVNO with Verizon,” Moffett wrote.

Without a Sprint-T-Mobile merger, “relations between Cable and Verizon are likely to be stronger,” he added, wondering if the MVNO agreements could “eventually blossom into a broader alliance” that wouldn’t lead to an outright merger due to the significant regulatory hurdles it would encounter.

Though Charter has not announced pricing and packaging for its coming service, Moffett believes that Comcast may have found a niche with its approach, and “raised some eyebrows” when it announced late last month that Xfinity Mobile had tucked away more than 250,000 customer lines in its first quarter of operation.  

RELATED: Comcast Goes Wide With Xfinity Mobile

Moffett noted that the Big 4 U.S. mobile providers (AT&T, Verizon, Sprint and T-Mobile) managed to add 1.4 million subscriber net adds in Q3, meaning that Comcast contributed about 18% of the industry’s net adds.

Comcast offers two plans for Xfinity Mobile (unlimited data for $45 per month per line, up to five lines); and By the Gig for $12 per GB of shared cellular data across all lines on an account each month), and has said that most of its mobile customers are gravitating to the By the Gig option.  

Comcast is complementing its MVNO with its own WiFi network, and could further augment its wireless data capabilities by tapping into the CBRS band opportunity.

RELATED: CBRS Spectrum to Open Windows of Opportunity for Cable Ops

“Comcast appears to have landed on a potentially significant unmet market need, and as such, their offering could turn out to be rather disruptive,” Moffett noted. “Their pricing attacks an important profit pool for the carriers: light users who pay average prices for far-below-average usage.”

He suggested that Comcast’s $12 per GB plan is “almost certainly profitable” for the MSO, estimating that Comcast is paying less than $8 per GB.

Moffett said Comcast’s early success is “bad for the optics” regarding sub growth rates for the Big 4 mobile providers (though Verizon sees some wholesale revenue gains from Xfinity Mobile), and could put more downward pressure on pricing.

Though Verizon gets some benefit, via the wholesale revenue gains coming way of Xfinity Mobile, “[f]or the other three operators, there is, of course, no corollary offset; Comcast is simply an unadulterated negative.”

Amid other implications from the scrubbed merger talks, Moffett believes that Verizon and T-Mobile are best positioned to benefit.

Moffett upgraded T-Mobile to “buy,” and raised the price target from $69 to $73, and maintained a “buy” rating on Verizon, raising the price target from $50 to $51.

He also maintained a “sell” rating on Sprint, and cut the price target to $2, from $6, noting that the dissolution of a T-Mobile merger means that Sprint will forgo its share in the synergies, which the firm “conservatively” estimated at $30 billion net.

Moffett also expects that Sprint will also adopt a less promotional pricing posture in order to balance the competing priorities of debt, service, and network investment. “Sprint’s path forward is treacherous,” he said.

Moffett currently has a “sell” rating on Dish and a target price of $37. The end of merger talks between Sprint and T-Mobile create “marginally higher probability of a deal” for Dish (mostly as a source of spectrum), but sees network construction and the emergence of a five-player market as a more likely eventuality. Another possible scenario, he said, is a partnership between Dish and Sprint or T-Mobile, which would reduce Dish’s network construction costs.

Comcast confirmed that Xfinity Mobile, a service that leans on an MVNO deal with Verizon and the MSO’s WiFi network, will offer the iPhone X, Apple’s new pricey, high-end smartphone that starts at $999.

Comcast said its customers can pre-order the iPhone X starting October 27 at XfinityMobile.com and at Xfinity Stores. The product will become available in Xfinity Stores across the country at 8 a.m. local time on November 3, the company said.

Xfinity Mobile also offers Apple’s recently introduced iPhone 8 and iPhone 8 Plus models.

Comcast, like other mobile service providers, will be looking for Apple's new device to give its sub base a boost.

Comcast launched Xfinity Mobile in May, but hasn’t announced sub figures. An industry source confirmed a Bloomberg report earlier this month that Comcast has amassed more than 200,000 Xfinity Mobile customers. Comcast is scheduled to release Q3 results on Thursday, Oct. 26.

RELATED: Comcast Has About 200K Xfinity Mobile Subs: Report

Comcast also announced that, through December 3, new customers who switch to Xfinity and buy an X1 triple-play with internet, TV and mobile service will receive a $500 gift card.

Xfinity Mobile, Comcast’s new mobile service that leans on its WiFi network and an MVNO agreement with Verizon, has signed up about 200,000 subscribers since launching the product in May, Bloomberg reported, citing sources familiar with the situation. 

Comcast isn’t commenting on Xfinity Mobile sub numbers, but an industry source told Multichannel News last month that the operator had indeed signed on about 200,000 so far.

Comcast completed the rollout of Xfinity Mobile across its footprint in August. Comcast is initially offering two Xfinity Mobile plans – unlimited data for $45 per month per line (for up to five lines), and a By the Gig option for $12 per GB of shared cellular data across all lines on an account each month.

RELATED: Comcast Goes Wide With Xfinity Mobile

Though Comcast’s sub figures for Xfinity Mobile are nowhere near what the nation’s mobile carriers have, the operator might be making a profit on the offering, Roger Entner, an analyst with Recon Analytics LLC, told Bloomberg.

"It's off to a great start…on the Verizon network with an MVNO,” Brian Roberts, Comcast’s chairman and CEO, said in September at the Goldman Sachs Communacopia Conference. “That relationship [with Verizon] is going well and the product works, and we are pleased with the early results.”

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There are no flukes in Cable.

Just ask Comcast, which was the first cable operator to report a full year of positive video subscriber growth in a decade, ending 2016 with 161,000 more customers than in the previous year. That Comcast managed to do that just as over-the-top and alternative video delivery systems were proliferating, gaining legitimacy and chipping away at traditional pay TV customer rolls was remarkable enough, but it was no fluke.

The Distributor of the Year Issue:Comcast's Makeover Yields Results|Five Ways Comcast Is Leading in Tech

That growth was a planned, concerted effort that not only yielded a video customer surplus, but was also profitable. Comcast finished the year with a 6.6% increase in cable-systems revenue and a 5.6% rise in cash flow. And it did it all the hard way, with no aggressive promotional pricing or special deals to attract customers that will drop the service in six months.

Instead, Comcast put its collective head down and focused on the fundamentals, rolling out new products like Xfinity Home and Xfinity Mobile at a steady pace and pumping hundreds of millions of dollars to beef up customer service.

The path to positive subscriber growth was a multiyear process, starting with the hiring of former Charter Communications CEO Neil Smit in 2010. It was Smit who initiated a multipronged plan to improve customer service, beef up the network and steer the company on a path toward product innovation and network superiority.

Smit stepped away from day-to-day operations in April — he is now vice chairman of Comcast Corp. — and handed the reins to 20-year Comcast veteran Dave Watson, who moves up to Comcast Cable CEO after serving as the cable unit’s chief operating officer for the past seven years, implementing the plans that he and Smit developed. Watson takes over just as subscriber growth is expected to decline in the wake of two massive storms that devastated homes in Houston and Western Florida. Comcast has said it expects the impact of Hurricanes Harvey and Irma to result in the loss of 100,000 to 150,000 subscribers in the third quarter.

MoffettNathanson principal and senior analyst Craig Moffett observed that the declines weren’t that surprising given that the video subscriber estimates, even at best-in-class Comcast, will have to come down.

Infrastructure Advantage
“We’ve spent 18 years repeating a simple mantra: Cable operators are not media companies, they are infrastructure providers,” Moffett wrote in a research note. “Their infrastructure is still advantaged. Comcast will be just fine.”

But the company is confident that it will continue to hit its financial targets, as well as continue its pace of innovation. For those reasons and more, Comcast is the 2017 Multichannel News Distributor of the Year.

For Watson, Comcast’s success has been the result of the company’s decision to stick to three basic tenets.

“The key for us is that we’re very focused on our core set of operating principles,” Watson said. “Staying focused on sustainable, profitable growth, driving innovation, that’s a big part; and third is to continue to improve the customer experience.”

While that may sound oversimplistic, Comcast has managed to make it work. In the past five years (2012-2016), overall revenue has grown at a 6.2% annual clip while cash flow has risen 7.2% per year. This year, the growth is even more dramatic — in the last 12 months between the first half of 2016 and the first half of 2017, revenue has grown 9.4% to $41.6 billion and cash flow is up 10.2% to $14.1 billion. This in a year that has seen competitive pressures increase as Hulu (25% owned by NBCUniversal) launched its Hulu Live offering, AT&T unveiled its over-the-top product DirecTV Now and networks are queuing up to release direct-to-consumer versions of their channels.

Comcast has used the X1 platform expertly in driving forward what Watson said is its newest mantra — becoming an “aggregator of aggregators.” That means not only offering access to subscription video on demand and over-the-top competitors, but embracing them.

Xfinity subscribers can access Netflix directly from their set-top boxes and over the years Hulu, YouTube and music service Pandora have been added to the lineup. Earlier this year, Comcast reached a deal where Sling TV — the over-the-top MVPD service from Dish Network — received a coveted spot on the set-top (mainly for international and multicultural programming). Just last week the cable operator expanded its relationship with YouTube, allowing customers to launch the online video app merely by speaking “YouTube” into their X1 voice remote.

Including those products is all part of the overall strategy of offering customers best-in-class products in almost every category, Watson said.

‘Aggregator of Aggregators’
“We look at each part of our business, every major product area, and we look at innovation opportunities at each one,” Watson said. “With X1, I think we are delivering in its early stages the promise of being an aggregator of aggregators — the best in linear, the best of on-demand, a terrific DVR, a great app, data and applications integrated. Netflix is a good example and soon-to-come will be You Tube. … To me this is constant improvement of our major product areas.”

That’s a far cry from the past, when a Netflix app embedded in any cable operator’s set-top box would have signaled the end of the world. But the evidence continues to mount that SVOD services like Netflix, Hulu and YouTube aren’t replacements for cable, but can complement the service. And making it easier for an X1 customer to access their SVOD subscriptions only enhances the cable operator’s stature in the customer’s mind.

That shift, along with a continued focus on innovation — Comcast still has a mandate to roll out a new product or product enhancement at least once per quarter — has been a key part of Comcast’s success. In the past five months, Comcast has rolled out a new wireless service, Xfinity Mobile, part of its mobile virtual network operator agreement with Verizon Communications; xFi, a cloud-based home WiFi management platform; and enhancements to XFinity Home that allow consumers to remotely control home functions like heating, cooling, lighting and security cameras through their voice remote.

The voice remote, launched in 2015, is one of those product enhancements that has fared even better than its staunchest proponents had hoped. Comcast has deployed about 17 million voice-remote devices and customers now make about 1 billion voice commands per quarter.

“It’s just remarkable,” Watson said of the product.

Comcast has also embraced products from programmers such as AMC Premier from AMC Networks and 21st Century Fox’s FX+, ad-free versions of the AMC and FX pay TV networks available for an additional fee. In an interview, Comcast executive vice president of Xfinity Services Matt Strauss said the offerings are part of an overall evolution of the video product, and of the strategy to entice customers to buy into the entire Xfinity family of offerings, not just one or two things.

Strauss said the strategy could be traced back to Comcast’s initial investments in infrastructure that laid the foundation for the product suite that is available today.

“We’re now at a point where it’s really about scale, and how do we continue to deliver innovative products and services and accelerate how we get deeper and deeper into our base,” Strauss said.

The answer, Strauss said, is to provide elegant, easy solutions to customer problems even before subscribers know they are problems. For example, as the TV audience became more and more fragmented and finding shows grew more difficult, X1 provided a user interface that made it easier to navigate through the thousands of linear and on-demand content choices. Later, X1 added a voice remote, which made navigation even easier.

For high-speed data, the solution was faster speeds. Comcast has increased data speeds 17 times in the past 16 years and by the end of 2017 will have fully deployed DOCSIS 3.1, which will enable speeds of 1 Gigabit per second.

“Speed is important, but access is equally important,” Strauss said. “Most people now connect devices via WiFi. Ensuring we have the best WiFi in the home, as well as the best WiFi out of the home is also very core to the strategy and that’s where you’re seeing us deploy our newest wireless gateway, the XB6 (xFi) which can deliver the fastest in-home WiFi speeds.”

From there, xFi customers would naturally migrate to Comcast’s XFinity Home product, which again incorporates the aspects of other company products, like the voice remote, to control household functions. Comcast is truly selling a bundle, and that bundle is interconnected.

“When we look at the future, today we typically sell on price,” Strauss said. “And the more products you take, the better the price. The challenge there is when you sell on price, essentially you’re making yourself a commodity.

“What we really want to transition to is selling an experience,” Strauss added. “The more products you take from us, you will of course get a better price, but you will also get a better experience. Starting to weave together the portfolio and reinforcing that, I think, is a big opportunity. A lot of that you’re going to see solidly around the home. There is a big opportunity around the digital home.”

The company is obsessed with giving more choice in the video-on-demand side of the business. “We’re breathing new life into what it means to get video,” Strauss said. “Now we have 130,000 choices, the top 100 Nielsen-rated shows, 900 series fully stacked. We added Netflix, not just as an app, but integrating Netflix contextually.”

As a result, on-demand is growing again — this year, Comcast customers are spending an average of 32 hours a month watching on-demand shows, up 20%.

“When people have said video is in a decline, ratings are in a decline, we see something different,” Strauss said. “We see more and more video consumption moving to time-shifting, we see while live ratings may be declining, the total video consumption is increasing, instead that more is happening outside of traditional measurement. It’s like dark matter, people aren’t seeing it, but we think the total video pie is increasing. And we’re continuing to build the platforms and the capabilities to all people to watch TV smarter and on their terms.”

The emergence of over-the-top players has added to that shift and is continuing to challenge the model, Strauss said, but Comcast doesn’t see any compelling reason to join the OTT fray.

“Part of what is happening in the market, especially on the video side, is you are seeing a lot of increased competition, you’re seeing a lot of competitive offers — in some cases you’re even seeing some of these OTT players offer video at negative gross margins. We’re not going to chase that.”

But the evidence is mounting that younger consumers are increasingly looking outside the traditional pay TV ecosystem for their content needs. Pay TV subscribers fell by more than 900,000 in the second quarter, the worst Q2 performance in history. That’s after a record first-quarter loss of more than 750,000 video customers.

Moffett, who raised his rating on Comcast to “buy” earlier this month after downgrading the stock to “neutral” in June, said he sees the company as the standard for the pay TV business. But he also estimated that the MSO will lose almost 1 million video customers in the next five years, ending 2021 with 21.7 million subscribers, down from 22.5 million in 2016. The analyst does see Comcast adding about 5 million broadband customers in that same time frame, finishing 2021 with 31.1 million high-speed data customers compared to 26 million in 2016.

Competition is also heating up. Google’s YouTube TV expanded to eight additional markets earlier this month, growing its total markets to about 48 cities. In addition, AT&T began pricing its DirecTV Now service even more aggressively in the quarter, at $10 per month for any unlimited wireless subscriber, and returned to offering free Apple TV devices with a three-month commitment.

While weakening subscriber metrics shouldn’t come as a surprise, Moffett said, they aren’t a calamity, either. Pay TV companies, he said, still have broadband pricing power, which should help them in reaching financial targets. That’s just what Comcast said when it predicted the Q3 subscriber loss.

Strauss noted that all the panic over OTT and cord-cutting could be unwarranted. There is no doubt, he said that viewing habits are changing, but life stages and household economics also need to be considered.

As an example, Strauss pointed to Xfinity on Campus, Comcast’s multiscreen managed IPTV service for college students. When the product was in development, Strauss said Comcast realized that the last thing college students wanted was to be tied to a set-top box. So the MSO had to rethink the idea, creating a product that allowed students to download the Xfinity Stream app, offered a cloud-based DVR and would let them watch live TV anywhere on campus. The product has been highly successful and, as students returned for the most recent fall semester, it is deployed in more than 100 schools.

“Millennials do watch TV as much as any other segment,” Strauss said. “They just have different needs and how they want to consume and access it.”

That, Strauss said, has led to Xfinity Instant TV — an in-home, in-footprint, managed IPTV service slated for a Q3 launch — as well as ad-free versions of networks that consumers can buy for a fee. Comcast reached a deal with AMC Networks in August for AMC Premiere, an ad-free version of the popular AMC network for an additional $4.99 per month. A month later, FX Networks announced a deal to offer an ad-free version of its flagship FX channel — called FX+ — to Comcast customers for $5.99 per month.

Strauss said those channels and other services like it are just an example of how Comcast’s foresight in investing in content, infrastructure and innovation have translated into meeting needs even customers didn’t know they had.

“The future we’ve always talked about has finally come, at least for us,” Strauss said. “I think that is because of decisions that we made, not six, 12 or 24 months ago, but years ago, based on where we saw the puck going and ensuring that we would have the technology capabilities and the infrastructure in order to deliver upon the innovation that we believed we were going to need to stay competitive. As a result you’re seeing us deliver on a lot of these products and services. But this didn’t happen by accident. It really happened because of very important strategic decisions we made years ago.”

Taking advantage of a sales opportunity, Comcast said it is opening all of its Xfinity Stores a bit early – at 8 a.m. – on September 22 to herald the launch of the new iPhone 8 and iPhone 8 Plus.

Depending on the location, Xfinity Stores regularly open at times such as 9 a.m., 10:30 a.m. or 11 a.m.

Comcast said high-speed Internet customers who activate a new Xfinity Mobile line in those stores can get one of the new smartphones, and trade in their qualifying devices and receive a check for the value of that trade-in within 30 days.

Apple introduced the iPhone 8 and iPhone 8 Plus on September 13 at an event held at the Steve Jobs Theater in Cupertino. The new smartphones feature a new glass and aluminum design, dual 12 megapixel cameras, Retina HD displays and Apple’s A11 Bionic chip, powered by a six-core CPU. The new models are also optimized for Augmented Reality applications and support wireless charging based on the Qi standard. iPhone 8 and iPhone 8 Plus start at $699 and $799, respectively.  Pre-orders on those models started September 15.

Comcast has not announced its plans for the pricier iPhone X, which will be available on pre-order starting October 27, and hit stores on Friday, Nov. 3.

Xfinity Mobile, a service that leans on Comcast’s MVNO deal with Verizon and can be tied into Comcast’s WiFi network of 18 million hotspots, supports two data options – “By the Gig” for $12 per gigabyte shared data across all lines on their account per month, or Unlimited for $45 per month, per line.

Comcast chairman and CEO Brian Roberts tried to ease investor fears at the Goldman Sachs Communacopia conference Tuesday, telling an industry audience that despite expected video losses in the soon-to-be closed third quarter, the company is performing well financially and operationally.

Comcast stock took a hit Sept. 7 after executive vice president XFinity Services Matt Strauss said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Los Angeles that the nation’s largest cable operator would lose between 100,000 and 150,000 video customers in Q3 as a result of competitive issues and damage from Hurricane Harvey and Hurricane Irma. Strauss had said that despite the subscriber losses, Comcast was expected to meet its financial targets for the period, but that seemed to be lost on investors, who drove the stock down as much as 7% on Sept. 7. Comcast shares closed that day at $38.60 each, down 6.2%.

Comcast stock continued to fall in subsequent trading – it closed at $38.21 on Sept. 8 and $37.83 on Sept. 11. Roberts’ comments seemed to have some initial effect – the stock was up slightly in earlier trading – but was down later in the day, priced at $37.70 each at 2:30 p.m. on Sept. 12.

READ MORE: Charter's Rutledge says the battle is not against OTT video

Roberts started off his Communacopia presentation by addressing the issue, adding that Comcast was “in great shape,” and should end the third quarter with positive RGU growth as broadband subscribers continue to rise.

“Our investment in and focus on innovation is really paying off,” Roberts said. “We have the best products in the industry, our management team strong, and we have a good competitive position. We hit a competitive patch this quarter that was compounded by these two storms.”

The loss is particulary harsh as Comcast finished 2016 with positive growth in video (161,000 customers) for the first time in a decade. In the first half of the year, it continued to remain ahead of the curve, adding 41,000 video customers in the first quarter, while losing about 34,000 in Q2. It should also be noted that the third quarter is traditionally the weakest for cable operators, as college students and customers with summer residences disconnect service.

Roberts continued that the success of its X1 platform has become the company’s real asset, but video is the heart and soul of that platform,” he said. Comcast is expected to end the year with more than 1 million broadband additions, the eleventh straight year the company has added 1 million or more high margin high-speed data customers. Its business services unit is performing at a $6 billion revenue run rate and its newest product – XFinity Mobile – is proving popular with customers.

Comcast launched XFinity Mobile in May, as part of its Mobile Virtual Network Operator (MVNO) agreement with Verizon Communications. The product is available to existing XFinity customers and is characterized by its flexible plans – customers can opt for unlimited data, or can subscribe to a By the Gig plan that costs $12 per gigabyte per month. 

Roberts said that initially, most users are opting for the By the Gig plan.

“These prices we believe bring real value to the customer,” Roberts said.

Comcast said Xfinity Mobile will be among the services to carry Samsung's new Galaxy Note8 device.

Pricing and pre-order details on the device from Xfinity Mobile are to come, but Comcast, which relies on an MVNO deal with Verizon alongside the MSO’s growing WiFi Network for Xfinity Mobile, expects the new phone to go on sale in Xfinity Stores and online on September 15.

RELATED: Comcast Goes Wide With Xfinity Mobile

“We’re committed to offering our customers the most popular devices on the best network, for a great price, and adding the new Samsung Note8 delivers on that promise,” Randall Hounsell, vice president of product management for Xfinity Mobile, said in a statement.

AT&T also announced that its customers can pre-order the Galaxy Note8 starting tomorrow, and will be available in stores on September 15. T-Mobile’s also on board to introduce it then, offering it in Midnight Black and Orchid Gray for $210 down and $30 a month on T-Mobile’s Equipment Installment Plan, or $0 down and $39 a month on JUMP! on Demand (FRP: $930).

The water and dust-resistant Galaxy Note8, is the follow-up to the disastrous Galaxy Note 7, which was recalled because units were catching on fire. The new Note features a 6.3-inch “Infinity” HD screen, and an HDR Premium-certified Super AMOLED screen.

IHS Markit said its analysis indicates that the Note8 will be both the most advanced and most costly to manufacture Note smartphone ever, as it will push the flagship smartphone category past the $1,000 price point. IHS Markit estimates the bill of materials cost for the Note8 to exceed $300, equating to retail pricing of nearly $1,000 “given similar gross margin assumptions.”

The research firm also expects the Note8 to dramatically expand the market for Google’s Daydream VR platform because the new device “will be compatible out of the box.” By comparison, Samsung’s support for Daydream on the Galaxy S8 and S8+ required a software update, IHS Markit added.

Comcast said it has wrapped up the nationwide rollout of Xfinity Mobile across the MSO’s service footprint.

The service, launched in May, relies on Comcast’s MVNO deal with Verizon and on the MSO’s network of 18 million WiFi hotspots, comprised of a mix of access points deployed in metro areas, in business locations and inside customer gateways (sometimes called “homespots”).

RELATED: Xfinity Mobile is Open for Business

Early on, Comcast is offering two Xfinity Mobile plans – unlimited data for $45 per month per line (for up to five lines), and a By the Gig option for $12 per GB of shared cellular data across all lines on an account each month.

Comcast, which is selling Xfinity Mobile at its newly redesigned retail stores at online, reiterated that most customers are buying the By the Gig plan. Comcast also lets families mix and match those options, and said nearly 25% of Xfinity Mobile accounts have at least one line using By the Gig and one line using the Unlimited option.

Comcast hasn’t disclosed sub numbers for Xfinity Mobile, but the service is “operationally scaling well” and the company is “really pleased with the early  results,” Dave Watson, Comcast Cable’s president and CEO, said on the company’s Q2 call.

"We created a unique mobile experience that’s simple and saves customers money by connecting to our nationwide Wi-Fi network, and allows them to only pay for the data they use,” Greg Butz, president of Xfinity Mobile, said in a statement. “Now that we’re available across all of our distribution platforms, including our retail locations in all of our markets, we look forward to introducing even more customers to Xfinity Mobile.”

Xfinity Mobile curerntly works with Apple smartphones such as the iPhone 7, iPhone 7 Plus, iPhone 6s and iPhone 6s Plus, and iPhone SE, as well as several Samsung devices Galaxy S8, Galaxy S8+, Galaxy S7, and Galaxy S7 edge), and the LG X Charge. Comcast said it plans to support a bring-your-own-device policy soon.