Comcast on Thursday leapt into the cutthroat market for cellphone service by unveiling two wireless plans, a move that other cable companies are expected to follow.
Called Xfinity Mobile, the service offers customers the option of unlimited data, voice calls and texts for $45 to $65 a line per month, or a pay-as-you-go plan for $12 per gigabyte. The service will be available later this year, Comcast said.
The new offering aims to help Comcast compete outside the home as Americans’ Internet use increasingly shifts to mobile devices. Comcast’s service will allow users to surf the Web, watch videos and listen to streaming music on their phones primarily through its network of 16 million public WiFi hotspots.
Comcast's network differs from that of its rivals in the phone business. The cable company's service relies primarily on Comcast's network of 16 million public WiFi hotspots for connectivity, allowing users to surf the Web, watch video and listen to streaming music on their phones without paying for cellular data. When the company's WiFi signals are unavailable, Xfinity Mobile will connect to the traditional cellular network owned by Verizon, which Comcast is using as a result of an airwaves agreement signed several years ago. It's similar to the approach taken by Google when it launched its Project Fi wireless service.
Comcast views Xfinity Mobile as a way to expand the traditional cable bundle, adding a fourth service on top of residential Internet, landline phone service and cable television. A Comcast Internet subscription is required for Xfinity Mobile to work, the company said. And the wireless service's lowest rate (the $45 per month plan) will be available only to customers who subscribe to Comcast's Xfinity Premier Double Play or Triple Play, according to spokesmen.
The discounts for those high-paying customers underscore the role that Xfinity Mobile plays supporting Comcast's core television business, which faces rising competition from online alternatives.
The monthly wireless option includes unlimited data, in keeping with recent trends in the industry. A Comcast household can subscribe to multiple plans, meaning that a family of four could sign up two phones for unlimited data and two phones for pay-as-you-go. Switching between plans will be hassle-free, the company said during a presentation Thursday, adding that roughly 70 percent of customers today use less than 5 GB of wireless data per month.
Comcast's enormous scale will likely be its biggest advantage as it seeks to build a wireless powerhouse. Beyond the company's existing hotspot network, its 29 million customers represent a target audience that is already tied into Comcast's product and business ecosystem. Those customers will not need to undergo a separate credit check for Xfinity Mobile service, and any billing and shipping information will be pre-populated in Comcast's online sign-up forms.
“The simplicity of the offer lends itself to a digital-first experience, which is going to be at a very efficient cost to serve, as well,” said Mike Cavanaugh, Comcast's chief financial officer.
Under similar pressures, the rest of the cable industry is expected to move in Comcast's direction. Charter Communications has said that it intends to launch a wireless service sometime next year.
Comcast is leaping into a highly competitive industry that has seen companies such as T-Mobile and AT&T engage in tit-for-tat price wars, dueling promotions and the return of popular features such as unlimited plans. Because it relies on Verizon's infrastructure, Comcast's new service could be hurt if Verizon decides it poses a threat. But for the moment, analysts say, Xfinity Mobile appears poised for a successful launch.
“Wireless should be a positive driver of value for Comcast, and the market isn't giving them credit for it today,” said Jonathan Chaplin, an industry analyst at New Street Research, in a note to investors Thursday.