Verizon probably wasn’t caught off guard by Comcast’s announcement that it was evolving its mobile virtual network operator (MVNO) strategy to include its own 5G network infrastructure by deploying Samsung’s 5G radios in its Citizens Broadband Radio Service (CBRS) and 600 MHz spectrum holdings. But that doesn’t mean the news won’t influence Verizon and other traditional wireless operators.
Comcast has always said it might supplement Verizon’s 4G/5G network with its own equipment. And Comcast already makes use of its existing Wi-Fi network to offload traffic from the Verizon network. The addition of the 5G cell sites and small cells will mean more cost savings for Comcast because more subscriber traffic is offloaded.
But will that cost savings for Comcast result in a financial hit for Verizon? Mark Lowenstein, managing director of Mobile Ecosystem, thinks Verizon may see a “modest” revenue loss but otherwise the impact will be minimal. “We’re talking about selective deployments in a handful of markets, over time. And this is in areas where Verizon itself wants to provide a good customer experience so they wouldn’t want non-Verizon customers clogging their network,” Lowenstein said.
He also noted that he expects Comcast’s rollout of the 5G cell sites and small cells from Samsung to happen gradually. “There’s currently testing with employees and they’ll then do it cautiously with customers. There are issues to be sorted out,” he added.
One issue in particular is how Comcast’s Xfinity Mobile users’ phones will switch between in-home Wi-Fi, outdoor Comcast Wi-Fi hotspots, the Comcast small cells and Verizon’s wireless network.
CableLabs, the R&D arm of the cable industry, has been working on this. A CableLab’s technical working group is focused on developing an architecture for what it refers to as hybrid MVNOs, or H-MVNOs, which is an MVNO that not only offloads traffic to its Wi-F network but also has its own wireless assets, such as a 5G network.
In a blog post from December, CableLabs wireless architect Omkar Dharmadhikari said that the group was evaluating a new evolved dual-SIM, dual standby architecture that leverages 3GPP interfaces to provide more control to H-MVNOs so they can better manage the user experience and also glean more information about their subscribers.
Will other MVNOs follow?
Comcast probably won’t be the only MVNO to deploy 5G cell sites. Although Charter Communications hasn’t said it is following Comcast’s lead, the company spent $465 million to acquire CBRS spectrum and earlier this year it received permission from the FCC to test 5G New Radio using a combination of CBRS spectrum and 37 GHz spectrum.
While Verizon shouldn’t be surprised by Comcast’s announcement, the operator (and its peers AT&T and T-Mobile) should be concerned about the “unbridled” success of Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile MVNOs, says Tammy Parker, principal analyst, global telecom consumer services at GlobalData.
In the second quarter Comcast, Charter and Altice USA added 694,000 wireless customers and together the three cable MVNOs now have 9.12 million mobile customers.
Parker noted that based upon third-party benchmarking data from Ookla, Xfinity Mobile is now claiming to have the fastest overall mobile service thanks to its Wi-Fi offloading. Being able to say your company’s wireless service is faster than the others is a powerful message. “The ability to expand its value proposition beyond mere competitive pricing positions Xfinity Mobile as even more of a threat,” Parker says.
Comcast’s deployment of 5G cell sites for offloading traffic should raise some red flags for existing mobile operators. It’s likely Comcast and its cable MVNO peers will start to make claims of service and customer experience superiority, which is a compelling differentiator. Verizon may soon have more to worry about than “modest revenue losses” from Comcast’s 5G deployment.