Comcast Xfinity Mobile May Enter Small Business Space: Jeff Kagan

Jeff Kagan  |

Word is Comcast is thinking about entering the small business market with Xfinity Mobile. Let’s take a closer look at what that means, both good and bad.

Comcast saw the writing on the wall a decade ago that the cable TV industry was changing. Now that the transformation is fully underway, the Comcast growth strategy is a little confusing.

First, Comcast has been trying to break into the wireless space for a decade, and the company's end goal was very different from what you would expect.

Its first attempt completely failed. In fact, every other cable TV company's first attempt to enter wireless failed as well.

Since then, it has re-entered wireless with Xfinity Mobile. Today, Comcast's wireless offering is a consumer play.

Now, the company is considering entering the small business sector.

While this sounds great on the surface, we must recognize the real goal. It is not to compete with Verizon Wireless, AT&T Mobility and T-Mobile. Rather, it is to slow the customer loss by its older and more traditional cable TV services.

It seems Comcast wants to slow the loss for as long as possible.

Comcast needs to focus on reducing loss and accelerating growth

There are two things on which a company needs to focus. One is to reduce any loss. Two is to grow.

Comcast seems to be doing both but is focusing more on slowing the loss and not enough on transforming the company and the entire cable television industry to make sure it remains valid a decade from now.

Trying to hang onto yesterday is keeping Comcast from preparing for tomorrow.

Comcast is hanging onto yesterday, not preparing for tomorrow

You see, traditional cable TV has been declining for years. So, Comcast, Charter Spectrum, Altice and every cable TV company must find a way to invigorate the industry and slow the decline.

That’s Comcast's focus with wireless. Not to be profitable. Not to be a competitor in the space. No, its focus is simply defensive. The company wants to hang onto its cable TV customers for as long as possible.

The problem is, the pay TV industry is changing, and companies need to focus on tomorrow, not yesterday.

The good news is that wireless has helped Comcast slow the loss with consumers, and it hopes it will do the same in other segments. The problem is, this is merely a short-term, temporary fix.

Xfinity Mobile, Spectrum Mobile, Altice Mobile is wireless from cable TV

Today, every major cable TV provider offers a wireless service. Xfinity Mobile, Spectrum Mobile and Altice Mobile are their names.

One wonders why Cox and other cable TV companies have not joined them.

These three companies seem to be doing much better this time around. Still, they are not really competing with Verizon, AT&T and T-Mobile. Remember, that’s not the goal.

Instead, they are trying to slow customer loss on the pay TV side of the business.

Next, Xfinity Mobile is considering expanding to business services

Next, Comcast is considering entering the small business marketplace with its wireless Xfinity Mobile service. This sounds encouraging and could help the company grow.

As an investor, customer, worker or executive, there is so much you need to be know and understand as the cable TV and wireless industries continue to change.

Based on what I've read, Spectrum Mobile seems to be doing best among the cable television entries into wireless, although Xfinity Mobile and Altice Mobile are very active in this space as well.

Cable TV customer loss is only accelerating. This change is impacting every traditional cable TV company.

Wireless post-paid and pre-paid segments

Wireless has two main segments, post-paid and pre-paid.

Post-paid is what is sold by majors like Verizon and AT&T when you pay for the month after you use it.

Pre-paid is when you pre-pay your monthly fee. Post-paid carriers also offer pre-paid services. Cricket Wireless is the leader in the pre-paid space and is owned by AT&T.

There are many differences to these two different ways of doing business.

Post-paid typically requires a contract. Pre-paid does not.

Using your smartphone and wireless service when traveling internationally is another problem. While typical post-paid customers can use their device when traveling internationally, generally speaking, pre-paid customers cannot.

Verizon trying to acquire TracFone to grow pre-paid service

The pre-paid segment is growing rapidly. Verizon has not been aggressive at growth in this sector and is falling behind.

That is why Verizon is trying to acquire TracFone. This is a pre-paid service and would enable Verizon to become relevant overnight if the parties can make it happen.

One main reason for pre-paid growth is the cost to the customer. Pre-paid services generally cost less. Sometimes significantly less. Another reason is no long-term contract.

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The trade-off is pre-paid customers don’t get the same level of service and features as post-paid customers do.

Pre-paid wireless does not typically work outside of USA

For example, when the network is busy, post-paid customers get the edge. International usage is another difference. When users travel globally, their post-paid service can work while their pre-paid service generally does not.

That being said, the pre-paid marketplace has really been a rapidly growing sector over the last decade.

The part of the marketplace that wants to save money is strong and getting stronger.

Xfinity Mobile is reseller of Verizon Wireless as MVNO

Xfinity Mobile is part of that pre-paid marketplace as an MVNO reseller, reselling Verizon Wireless mobile services.

There are quite a few sizable players and many smaller ones as well in the pre-paid world.

There are countless mid-size and smaller players as well. Smaller brands are not as familiar because they don’t market and advertise the same as the big guys do.

Pre-paid services resell Verizon, AT&T or T-Mobile

Most pre-paid services resell one of the big three wireless networks, Verizon Wireless, AT&T Mobility and T-Mobile. Sprint is now part of T-Mobile.

That being said, the quality of the call, speed of the wireless data connection and consistency of the experience is all over the board.

For example, when testing a Cricket Wireless service, I found the sound quality and wireless data speed and constancy were generally as good as AT&T’s.

Quality, reliability of pre-paid varies

When testing other, lesser-known services, however, the speed and quality are not the same by any stretch of the imagination. This will be a problem with many customers.

Basically, you will have to test the service in the areas where you use it to see if the quality and speed is good enough for you.

So, the MVNO reseller marketplace is very uneven when it comes to customer experience and customer satisfaction.

Are Xfinity Mobile quality and speed reliable enough?

So, Xfinity Mobile is considering moving to the small business marketplace.

Remember, Comcast only saw wireless as a tool to reduce customer loss or churn. The company figured, every customer who signed up for wireless would be a “sticky customer.”

In fact, for quite a long time, wireless was not profitable for Comcast.

Are things changing? Is wireless suddenly a growth engine for Comcast? I would hope so, but do not know.

Is wireless growth now part of the strategy for Xfinity Mobile?

Perhaps, this just a way to help Comcast stabilize its customer loss. You know, hang onto existing business. This was always their strategy in wireless.

The problem is traditional cable TV has been on a downturn for many years already.

Something dramatic has to be done now, if Comcast is to hang onto its leadership position.

That’s why Comcast needs to be aggressive at creating more reasons for existing customers to stay put. It needs to create new services and products for customers to buy.

Comcast must create “sticky bundles” to hang onto customers

They must create a sticky customer with a sticky bundle in order to survive and grow long-term.

While I don’t yet know the direction the company will be heading, I do think it is important for every investor, worker, customer and executive to have a good understanding of how the ground beneath them is changing and to prepare.

Remember the Growth Curve. Every company and every product or service is somewhere on the Growth Curve. Either they are on the growing side, or they have crested, or they are on the falling side.

Remember the Growth Curve is now impacting Comcast

Where the company and product mix are on the Growth Wave is critical to understand.

Traditional cable TV services are on the falling side of the Growth Wave. That’s new over the last decade.

This is not a good place to be.

They have done a good job hanging on for dear life as the ground beneath them has been shifting, crumbling and changing over recent years.

This is the real pressure Comcast faces today

So, this potential next move into the small business marketplace could be a good move, if Comcast goes there.  This will help the company battle the real pressure they face today… customer loss.

Comcast needs to update its strategies for continued growth. Peacock streaming service is a good move, but it needs more of these good moves if it is to transform for tomorrow.

Too much of Comcast's traditional core services are on the falling side of the Growth Curve. It needs to have its key services on the growing side of the Growth Curve.

There is no other choice.

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Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at jeff@jeffKAGAN.com. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/

DISCLOSURE: The views and opinions expressed in this article are those of the author, and do not represent the views of equities.com.


The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer. The author of this article, or a firm that employs the author, is a holder of the following securities mentioned in this article : none

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