Comcast’s Cavanaugh says wireless is a lever in its convergence strategy

Customers only pay the monthly taxes and fees. After the 12-month promotional period, the plans renews at its regular rate (currently $40/month) unless canceled. 

“Our free line offer continues to perform well and is doing exactly what we intended, building awareness, increasing attachment, and expanding the top of the funnel across our broadband base,” Cavanagh said. “We're managing that base of customers with a clear lifecycle playbook focused on usage, engagement, and the overall product experience to convert a meaningful portion to paid relationships starting in the second half of the year.”

While the Mobile Select offer has gained momentum, Comcast is seeing continued customer momentum with its Premium Unlimited plan. With a focus on customers who desire a more feature-rich wireless experience, Premium Unlimited offers unlimited talk, text, and data in the US and internationally.

“Since the launch of Mobile Select, adoption has increased meaningfully,” Cavanagh said. “Uptake is now around 30%, and the premium base is up roughly fivefold.”

But the company is not stopping there.

With the launch of Xfinity Mobile's Mobile Plus, a premium flat-rate wireless plan at $45 per line per month. It bundles unlimited 5G/Wi-Fi data, 4K streaming, and the Global Travel Pass, along with exclusive perks like Lifetime Device Protection (covering loss, theft, and damage for eligible phones, tablets, and smartwatches) and upgrades anytime without inspection

“Mobile Plus includes everything customers already value and adds lifetime device protection for all devices,” Cavanagh said. “We're the first in the industry to include this feature at no additional charge as part of the core offering, a disruptive shift away from the traditional pay-per-device model used by incumbent carriers. Mobile Plus strengthens our value proposition and reinforces our product and pricing advantage.”

As the free lines come up for monetization in the second half of the year, Cavanagh said it expects “to convert the significant majority of free lines into paying relationships, which should provide a tailwind to convergence revenue and ARPA growth over time.”

Convergence opportunities, challenges

While Comcast appears to have a strategy in place for wireless/wireline broadband convergence, the service provider continued to see headwinds during the first quarter.

Convergence revenue declined 2.8% with convergence average revenue per account (APRA) down 0.8%, reflecting what Comcast said was the pressure on broadband revenue and partially offset by 15% growth in wireless service revenue.

This comes as its main ILEC competitors, AT&T and Verizon, two of the largest fiber broadband and wireless operators, are moving quickly on their own convergence strategies.

AT&T noted in its first-quarter earnings call that 42% of households with its fiber-based home internet services also chose AT&T wireless.

Likewise, Verizon’s CEO, Dan Schulman, said on the company’s first-quarter earnings call that it will leverage its growing fiber footprint, including the assets it purchased from Frontier, to meet its goals. It sees an opportunity to upsell broadband to wireless customers. “Only approximately 20% of our postpaid consumer base has broadband, so we see significant go-to-market opportunities there,” he said.

Regardless of its challenges, Comcast sees that an initial and important move on converged services begins with a bundled wireless-wireline broadband offering.

“Our convergence APRA currently stands at roughly $85,” said Jason Armstrong, CEO of Comcast. “For context, our telecom competitors are roughly double this amount on the same metric. This really underscores the significant growth opportunity in front of us, especially as we stabilize broadband and look to accelerate growth through wireless.”

FWA, fiber pressures broadband

Comcast continues to navigate broadband challenges amid competitive challenges from fiber broadband and fixed wireless access (FWA) competitors, a trend that continued into the first quarter.

AT&T and Verizon continued to enhance the reach of their fiber and fixed wireless subscriber base. During the quarter, AT&T added 584,000 net advanced Internet customers across its fiber and fixed wireless networks, while Verizon added 341,000 broadband net customers.

Cavanaugh noted that the “competitive broadband environment remains intense.”

“Fixed wireless continues to market aggressively across our footprint,” he said. “Fiber overbuilders are moving at a rapid pace, and promotional convergence offers remain elevated.”

And while broadband losses continued in the first quarter, the cable MSO narrowed its broadband losses by 117,000 year-over-year to 65,000.

Armstrong said the “improvement reflects traction from our new go-to-market strategy, including improved connects year-over-year, lower voluntary churn, a step-up in take rates on gig plus speeds, and the continued uptake of our free wireless line offer.”

Comcast’s broadband ARPU also took a hit during the first quarter, declining 3.1%. The ARPU decline is a reflection of competitive pressures from FWA and fiber broadband providers, the lack of a new rate increase, and the impact of the adoption of its free wireless lines, which initially dilute broadband ARPU.

Armstrong said the APRU decline will reverse as it converts free-wireless customers to paid plans later in the year.

“We expect incremental pressure on broadband ARPU for another quarter until we start to anniversary early go-to-market transition efforts as well as the impact of free lines starting to roll into paying relationships, which will happen in greater volumes as we exit this year,” Armstrong said.

Comcast’s overall revenue rose 5.3% year-over-year to $31.5 billion.

For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.