Comcast enters wireless market riding on Verizon’s back

The wireless market in the U.S. is getting hotter with cable providers crowding in.

In a strategic move which will have a significant impact on Comcast Corp, the company has unveiled a wireless service with an unlimited data plan, thus making it the first major U.S. cable provider to enter the highly competitive arena of the wireless market.

By the middle of this year, Comcast is likely to offer unlimited data, talk and text for $65. Customers who already subscribe to its X1 packages will have to shell out $45.

In comparison, other wireless carriers, including AT&T, Verizon Communications Inc., Sprint Corp and T-Mobile US Inc. have recently come up with plans ranging from $50 to $90.

With Comcast releasing its package, the prevailing uncertainties on how it would roll out its service and its price ranges are finally out in the open.

Investors reacted to this news with Comcast’s shares rising by 2.1% to $38.13.

Comcast’s move underscores the migration of cable companies into wireless as they try to add more services to reduce customer attrition. Younger viewers have typically shun high-priced subscription in favour of more affordable option.

Charter Communications Inc., another cable provider also plans on launching itself as a wireless service provided in 2018.

Comcast’s service will launch on Verizon’s airwaves as part of an agreement both companies had entered into in 2011. Comcast’s customers will be able to automatically switch to its Wi-Fi hotspots from 4G LTE.

As per Jonathan Chaplin, an analyst at New Street Research, Comcast’s agreement with Verizon was merely a way to enter the market.

“Comcast will secure far better economics in wireless in time, either through a network sharing arrangement with or an acquisition of one or more carriers,” said Chaplin.

Initially, Comcast will limit the rollout to customers within its footprint, which includes cities such as Chicago and Philadelphia. Additionally, it will also be available to its Xfinity subscribers.

According to its filing, as of 2016 Comcast has around 25 million high-speed Internet customers.

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