What's going on?
Comcast, the American media and cable TV giant, said on Tuesday that it will launch a US wireless service sometime next year. It shows how the line between media, cable and telecom companies continues to blur (more on that below).
What does this mean?
Comcast will take advantage of an agreement it made with Verizon five years ago that gives it the right to use Verizon’s wireless infrastructure (e.g. cellular towers) to run its own service. Comcast will probably offer customers a package involving home internet, TV channels and wireless connectivity. The idea for Comcast is that by providing another service to its customers, it will strengthen its overall relationship with them (a.k.a. increase stickiness / reduce churn). It will also provide Comcast with another stream of revenue.
Why should I care?
The bigger picture: Companies seem increasingly intent on owning the ecosystem in which their customers operate.
In a different but somewhat related bit of news, Netflix will be available on Comcast’s X1 cable boxes starting this week. In fact, Comcast’s description of its next generation home console (the XB6) sounds a lot like something you’d imagine from a tech company (e.g. Apple): a little thing that sits in your living and powers your TV, internet and other connected devices (e.g. the Internet of Things). Whether it’s Apple, Comcast or others, these companies want to own the space in which you’re operating – primarily so they can “upsell” you on more products/services.
For markets: As companies look to gain scale, it’s reasonable to expect some consolidation.
As the lines between industries blur and companies look to increase the scale of their operations, it’s normal for acquisitions to take place. AT&T’s acquisition of DirecTV in 2014 is one example. Verizon’s purchase of Yahoo’s media assets is another one (that’s a telecom company moving into media, which is the reverse of what Comcast is doing). Comcast is able to move into wireless easily because of its existing deal with Verizon – but it’s more common for a company to have to buy another one if it wants to beef up its presence in a new area.