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Why Comcast's New Wireless Service Could Threaten T-Mobile – Market Realist

Why Comcast's New Wireless Service Could Threaten T-Mobile – Market Realist

What T-Mobile’s Performance Suggests about Its 1Q17 Results PART 5 OF 10

MVNO agreement with Verizon

Cable companies such as Comcast (CMCSA) and Charter (CHTR) are still upbeat about the prospects for their MVNO (mobile virtual network operator) businesses with Verizon Communications (VZ). The relationship between Verizon and Comcast, of course, dates back to 2011.

According to the FierceCable report, in 2011, Verizon purchased an AWS-1 (advanced wireless services) spectrum from Comcast, Bright House Networks, Cox, and Time Warner Cable. As a part of this agreement, Verizon had offered access to use the company’s wireless network “in a potential MVNO offering.”

As a result, Comcast is planning to enter the intensely competitive wireless phone market in mid-2017 with the launch of Xfinity Mobile, its wireless product. Comcast recently unveiled plans for Xfinity Mobile, with unlimited pricing at $45–$65 for a single line of service.

Solid footing?

According to a FierceWireless report on April 6, 2017, “Comcast’s Xfinity Mobile pricing does put the company on relatively solid competitive footing. Sprint just today reduced the cost of its unlimited service to $50 for a single line of service, which puts Comcast’s offer just below the cheapest of the nation’s tier-1 carriers. T-Mobile’s unlimited service clocks in at $70 per month, while Verizon charges $80 and AT&T charges $90 per month for a single line of service.”

If Comcast is successful, we could see more risks to big wireless carriers like AT&T (T), Verizon, T-Mobile (TMUS), and Sprint (S) as it will further intensify competition. However, T-Mobile’s management indicated that T-Mobile is not concerned about cable MVNOs as competitors, and so it will be interesting to see what the company does in this space in 2017.

Charter has also activated the MVNO agreement with Verizon and plans to launch a mobile offering in 2018 under that agreement.

Rise in video traffic

According to Cisco Systems’ (CSCO) VNI (visual networking index) at the end of 2015, video constituted ~61% of mobile data traffic in the US. It’s anticipated that by the end of 2020, this figure could expand to ~77% of mobile data traffic in the US.

In the next part of this series, we’ll discuss what appears to have been a successful strategy for T-Mobile so far in 2017.

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