After much speculation, Comcast (NASDAQ: CMCSA) has entered the wireless space with a new service that takes advantage of its Wi-Fi network, while piggybacking on Verizon's (NYSE: VZ) network when needed.
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Called Xfinity Mobile, the service will only be offered, at least at first, in markets the company already serves with cable and internet. Comcast is not looking to directly take on the national carriers, including Verizon, AT&T (NYSE: T), Sprint (NYSE: S), and T-Mobile (NASDAQ: TMUS). Instead, it's hoping to tighten its hold on its customer base by offering them one more product to bundle with cable and internet service. That's a strategy AT&T and Verizon have used as well, while Sprint and T-Mobile have stuck with being lower-priced wireless-only players.
"Our goal is to improve loyalty and drive customer growth," Comcast Mobile President Greg Butz told CNET, also noting that being in the wireless game could change the company's less-than-stellar reputation. "We see this as a halo to let customers think about cable differently."
Comcast promised, in the service's launch press release, to provide consumers with a "better wireless experience, for less money." Those are bold claims for a company that scored below industry averages as a pay television and internet service provider (ISP) in the most recent American Customer Satisfaction Index (ACSI) report (registration required).
To be fair, Comcast did improve its ACSI ratings in 2016, climbing by 15% in pay TV while showing a 5% jump as an ISP. It's fair to say that Comcast is now just one of the most-hated companies in America, which is better than being alone with that designation. Its ACSI ratings of 62 (pay TV), 59 (internet), and 64 (land-line phone) place it well behind T-Mobile's 74, AT&T's 71, Verizon's 71, and Sprint's 70 in the wireless category.
Comcast customers will also need to buy a phone. Image source: Getty Images.
How do the prices compare?
Comcast's goal is to make it more attractive for consumers to get all of its services by offering the best deals for customers who bundle more products. In the case of Xfinity Mobile, the cheapest priced unlimited deal is reserved for customers who subscribe to its "best X1 packages," according to a press release. Comcast is selling its new wireless service at two different unlimited price points, and on a per gigabyte basis. It is also offering a very limited amount of free service.
- Any existing Xfinity Internet customers who add the new service to their account get unlimited talk and text, and 100 MB of shared 4G LTE data for free.
- Low-use customers can opt to pay $12 per GB of cellular data across all lines on an account each month.
- Xfinity customers on lower tiers who want unlimited can pay $65 per line, for up to five lines.
- For customers with the highest-end X1 internet and cable packages (which the company did not define) the price drops to $45 per line, with the same five-line limit.
The first two offers sound nice, but 100 MB of data is an effectively useless deal, unless you are the type of person who only uses your phone for talking and texting or you want a phone just for emergencies. It's a proposition that may not work for many customers, but could have appeal to the older cable audience.The $12 per GB deal is similarly limited, though it might be a good offer for customers who use their phone mostly for calls
The unlimited deals, however, beat Verizon's and AT&T's prices at least for the first two lines, and the single $45 line for top-tier existing X1 customers is the lowest unlimited price offered by any major carrier.
Sprint currently has the lowest price for unlimited talk, text, and data service among the four major carriers, albeit through a limited-time offer for new customers. The No. 4 carrier charges $50 a month for one line, $80 for the second, $100 for the third, and $120 if you need four lines. T-Mobile comes in second at $70 for the first line, $100 for two, $140 for three, and $160 for four, but the Un-carrier does not charge any additional taxes or fees to its customers, while all the other carriers do.
AT&T and Verizon would both be more expensive than the $65 per line, per month Comcast plan for the first two lines, but a better deal if you need at least three. In the $45 Xfinity Mobile category, Comcast offers better pricing for three lines at $135 a month than T-Mobile ($140), Verizon ($160), and AT&T ($165). Once you get to four lines with the Xfinity $45 deal, the Comcast product is cheaper than AT&T, tied with Verizon, and as noted above, pricier than T-Mobile and Sprint.
Image source: Sprint.
Is Comcast really offering a good deal?
Comcast's pricing is set up to do exactly what the company said it wants to do. It's designed to make consumers consider upgrading their internet package in order to receive the best pricing if they also want wireless. In addition, the pricing should be attractive to existing customers already on the higher X1 tiers, tying them even closer to the brand, making it harder for them to leave.
It's hard to see this offer tempting too many people away from Sprint or T-Mobile, but some of Comcast's best customers might find the savings worth it if they have AT&T or Verizon. Consumers are likely to be skeptical of Xfinity Mobile, which the the company said will be available "soon," especially given Comcast's history of advertising one price, then pushing the actual cost higher with fees. This new service looks like a good deal for some Comcast subscribers, but even they should wait until the company actually takes signups to see what the potential hidden costs may be.
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Daniel Kline 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.