Comcast can build a profitable wireless biz all on the back of Verizon MVNO deal, Roberts insists

by Daniel Frankel

Comcast’s MVNO deal with Verizon, combined with its bases of 15 million Wi-Fi hot spots and more than 28 million customers, are enough to build a profitable wireless business.

That was the response from Comcast CEO Brian Roberts today during the company’s third-quarter earnings call, when he was asked by MoffettNathanson analyst Craig Moffett for more specifics about the MVNO relationship with Verizon. Moffett was essentially asking if it provided enough wherewithal to build a wireless business, or if Comcast needed to build its own wireless infrastructure to build a successful business.

With AT&T’s proposed $85.4 billion takeover of Time Warner Inc., a number of analysts see the telco now matching Comcast’s strength in vertical integration of media … and having a key advantage over Comcast in the area of wireless communications. That raises the question of whether Comcast might need more than a mere MVNO deal to compete with AT&T.

Roberts was coy in his response.

“On the big-picture level, what I said before is we’re going to launch this next year,” he said. “We don’t have any new news today … We fundamentally believe we can make money for shareholders with the relationship we already have with wireless MVNO. I can’t go into the relationship, but we have the ability to make that statement come true and create real value for shareholders along the way.”

Also revealing little data but copious belief, Comcast Cable CEO Neil Smit said the addition of a wireless product and resulting “quad-play” bundling will further reduce churn for Comcast.

“We’re going to do this because we think it will add value to our customer relationships,” Smit said. “In a way, we’re already in the wireless business, given that we deploy millions of wireless gateways that are the fastest in the market. We think that by reaching 28 million customers, an with 15 million hot spots and the MVNO, we can offer a great customer experience.”

Over the summer, Comcast promoted former Comcast Cellular Communications executive Greg Butz to oversee the new Comcast Mobile unit, which now employs around 150 workers.

To launch its wireless service, Comcast is leveraging an MVNO relationship with Verizon that will allow the MSO to resell the carrier's mobile service. It will then couple that service with robust Wi-Fi coverage.

Comcast, Time Warner Cable and Bright House Networks were part of a 2012 deal to sell AWS spectrum licenses to Verizon for $3.6 billion. That transaction included the option for the cable companies to resell Verizon's wireless services under an MVNO model.