Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR) announced in May that the two companies would partner together in their efforts to enter the wireless industry.
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On this episode ofIndustry Focus: Consumer Goods, Vincent Shen and Daniel Kline share some thoughts on the arrangement, including what the deal could mean for the reigning Big Four wireless companies.
So will their efforts succeed? Tune in to find out more.
A full transcript follows the video.
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This video was recorded on May 16, 2017.
Vincent Shen: Dan,you cover a ton of wireless companies and cable companies, too. You cover themquite extensively. Last week, I spoke with Asit a little bit about thepartnership thatComcastentered withCharterto unite their very significant resources, as they get into the wirelessbusiness. Xfinity Mobile from Comcast is expected to hit the market soon. What are your thoughts?
Dan Kline:I think it's a majoruphill battle. On paper, it makes sense. Just like when any of those companies,any of the cable companies, decide to sell home alarms, there's a logic of, they have the customer base, they already have an install force. But it never works that well, because the reality is, all Americans that want mobile phones have mobile phones. And while there is some churn, the four major wireless carriers are really well setup to bring your number over, to bribe you to make the change. So just because you'regoing to pay a little less, you'regoing to get $5 or $10 back in credit, whatever it works out being with the bundling, I just don't see too many people. And whilenot all the details are out, these systems tend to be limited, where it's just the iPhone. I think in this case, it is just the iPhone so far. Andconsumers are used to choices. So I don't think it's necessarily going to be a failure in terms of, will it add some bottom line for these companies for relatively little effort on their part. ButI don't think this becomes the fifthwireless carrier that gets up to,T-Mobileis in 70-something million homes,I'm guessing at that number, butT-Mobile plusSprintis right around whereAT&TandVerizonare. I don't think itbecomes even a blip on that. It'll be a few millionpeople if they're lucky.
Shen:Sure. Asfar as I know,from what I could find out about the offering,iPhone is definitely the focus, butthey mentioned a few other flagship devices will be available fromcompetinghandset makers likeSamsung. But,don't you feel like,in terms of sheer resources,if there's any company that's going to try andget into the very competitive wireless space,Comcast is in a position where they can throw their weight around.
Kline:I think they should buy Sprint. If youwant to get into this space and you'reComcast, just get into this space. Thenmake a Sprint movie andhave a Sprint ride at Universal Studios, have thecan you hear me now guy, where he saysnow I'm talking, or whatever it is,have him in a TV series on NBC.I don't really get this playing around the edges.Cablevisiondid this.When Cablevision did it,it was much more based on wifi and beingas cheap as possible in terms of using the airwaves,which is part of what Comcast and Charter are doing but only part of it. Andit was very incremental. It was for parents who wanted athird phone for their child butdidn't necessarily want to spend the real money. It's very hard to make people switch fromsomething that works. I haveT-Mobile, I'm not sure what you have.
Shen:I have Straight Talk,which is essentially AT&T, similar service to this, in a way,piggybacking off of a major carrier.
Kline:Right. I know that I get better offers.Sprint and T-Mobile are perpetually battling each other. If I'm happy, I'mnot going to change. You have to mail your phones back andgo to a store and fill out paperwork, it's not simple,and I'm not going to deal with it just to give Charter more money.Charteris still one of the least likedcompanies out there. I don't think people are clamoring to do more business --
Shen:Alongwith Comcast, no less.
Kline:Yeah,I don't think people are going, "Oh,I really want to give these guys a bigger chunk of my business!"
Shen:OK. Well,I wanted to get your first impressions on this. Once itlaunches and we have more information, maybe somefirst-hand experience fromsubscribers, we'll talk about it more, seeif it's having any impact for the business --
Kline:Yeah, we'lltest it. My mom livesin a Comcast van at home, so we'lltry to get a phone and see what it looks like.
Shen:There you go.
Daniel Kline has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.