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New Comcast services threaten wireless text and data revenue

Comcast is taking aim at traditional SMS text messaging and wireless data revenue with two new services introduced this week at the Cable Show.

BOSTON -- Comcast is taking aim at wireless operators with new services introduced here at the NCTA's Cable Show that will undercut mobile carrier fees for text messaging and offer an alternative to mobile data services.

Over the past two days Comcast has made two new product announcements that could threaten revenue for wireless companies. At the same time, though, the company is also partnering with the nation's largest wireless provider, Verizon Wireless.

In the latest Comcast product announcement, the company said it will allow its voice subscribers to make phone calls and send text messages for free using either Wi-Fi or 3G/4G cellular networks.

The new service, called Voice 2Go, will be available through the Xfinity Connect Mobile app, which can be installed on Apple iOS and Google Android devices. Users can make phone calls and send text messages through the app using their home phone number. The calls do not count against their wireless minutes. And text messages bypass the carrier SMS network and are free. (Calls and texts sent over 3G and 4G networks do consume data services.)

And because the feature can be used via Wi-Fi, it also allows users who don't want to subscribe to a smartphone plan to turn their iPads or iPod Touch devices into mobile phones that can be used to make and receive phone calls as well as send text messages. Of course, the limitation is that the service can only be used in Wi-Fi hotspots.

While many other companies already offer voice-over-IP and Wi-Fi texting apps for iOS and Android, Comcast's service allows people to use their existing home phone numbers. So it could present even more of a threat to carrier SMS texting revenue. Currently, major wireless operators make huge profit margins on SMS texting services. AT&T and Verizon Wireless charge $20 extra for unlimited texting.

The news comes a day after Comcast and four other cable operators said they will soon allow their customers to roam onto each other's public Wi-Fi networks. The CableWiFi network provides acces to more than 50,000 hotspots across the country. And the companies say they will be adding more hotspots. And more cable operators may join the coalition.

So far Comcast, Time Warner Cable, Cablevision, Cox Communications, and Bright House Communications are all participating.

During a panel discussion on Monday where representatives from Comcast, Time Warner Cable and Cox were present, executives said the sharing agreement was meant to drive more mobile traffic onto the cable broadband network. And indeed, consumers looking to avoid high overage fees from wireless carriers, such as AT&T and Verizon, seek out public Wi-Fi as a way to save money while consuming data heavy applications and services.

Tom Nagel of Comast said that the network isn't intended to provide ubiquitous access for wireless users, but he and the other executives acknowledged that through more partnerships with other cable operators, the network could vastly extended.

Comcast's Cathy Avgiris, who heads up the Xfinity Voice service, downplayed the threat the new Voice 2Go functionality may have on wireless operators and indicated the new feature is really meant to compete against phone companies' traditional voice businesses. And it's also meant to give home phone users a reason to keep their home phone lines.

"It's an extension of your home phone when you're not at home," Cathy Avgiris, executive vice president of Xfinity Voice said in an interview. "But it's also allowing people to add new features to their home phone service like text messaging."

Avgris added that the new functionality is meant to give home phone subscribers another reason to keep their home phone lines at a time when many people are cutting their old phone service and subscribing only to wireless phone service.

"We want to go after the 70 percent of people in our cable footprint that have a home phone," she said. "And we want to show them that Comcast's Xfinity Voice service does much more than make your phone ring at home."

Competitors as well as partners
In another announcement Tuesday, Verizon Wireless unveiled that Comcast would be one of its first partners to use a new video aggregation app called "Viewdini." The new app, which was being shown off at Comcast's booth, allows Verizon Wireless subscribers to search for video content to stream to wireless devices. Comcast's Xfinity streaming video catalog will be included in the launch.

Comcast and other cable companies involved in the joint venture Spectrum Co. have also put together a joint marketing arrangement with Verizon as part of a spectrum sale. Verizon is trying to buy 20 MHz of wireless spectrum from the cable companies in a deal worth about $3.6 billion. As part of the marketing deal, the cable companies will resell Verizon's wireless services and Verizon Wireless will also resell cable services.