Comcast's CEO Brian Roberts publicly acknowledges for the first time that the cable company will exercise a provision in a contract with Verizon to resell the wireless operator's service under its own brand.
Get ready for Comcast, your neighborhood wireless service provider.
CEO Brian Roberts confirmed during the company's quarterly earnings conference call Tuesday that the cable television giant will activate an agreement it struck with Verizon back in 2011 to sell Comcast-branded wireless service using its network.
Roberts didn't divulge details about the new offer, but he said wireless is an important area for Comcast customers. He hinted that Comcast may develop an offer that combines Verizon's cellular service with Comcast's network of millions of free and low-cost Wi-Fi hotspots.
"It's an opportunity to take the network and the successful investments we've made and try to see if we can continue relationships and product innovation that the team is working on," he said.
The Philadelphia-based company's move could shake up the wireless industry by giving consumers a new option from an old name. The nation's largest cable provider could use Verizon's network and its own collection of Wi-Fi hotspots to create a credible and potentially lower cost alternative to the four national wireless carriers.
The idea is similar to Google's Project Fi experiment, which also uses a combination of Wi-Fi and cellular connectivity from Sprint and T-Mobile to provide consumers with voice and data service.
Roberts' comments come after a top Verizon executive said last week on Verizon's earnings conference call that one of the cable companies involved in a 2011 spectrum deal, which also allows these cable companies to resell Verizon wireless service, had decided to exercise this part of the contract. Verizon spent $3.6 billions to buy wireless spectrum from a consortium of cable operators that included Comcast, Time Warner Cable, and Bright House Networks.
There has also been speculation that Comcast will participate in the government's upcoming auction of broadcast spectrum, which the company could use to further develop its wireless network. Roberts confirmed that the company's broadcast arm, NBC Universal, will sell its spectrum in the auction. But he was noncommittal when it came to Comcast as a buyer of spectrum, saying the company is still examining its options. The auction is set to begin in late March, but companies have until December to express interest in bidding on spectrum.
Comcast doesn't appear to be in a hurry to launch a new service or reveal details of its wireless strategy. Roberts said the company will not even be able to begin testing its new service for another six months.
"Comcast's exercise of its contract option is likely the first domino to fall in a series," Craig Moffett, an analyst with MoffettNathanson said. And he added the process "is likely to be a rather long and slow evolution."
For now the wireless industry is keeping a close eye on Comcast. T-Mobile, the third largest wireless operator in the US, said it is "curious and intrigued." And executives think a successful wireless bid from Comcast could be a positive for the company, opening up potential merger possibilities.
"The current administration has said it wants five national wireless competitors," Mike Sievert, chief operating officer for T-Mobile, said in an interview. "If Comcast can create a Wi-Fi-first option that is highly successful, that's the fifth carrier. And that opens up a lot of opportunities for us."