Earnings Call: Comcast Questions 4G Competition

Comcast

Comcast (NSDQ: CMCSA) executives provided a general overview today of how their deal with Clearwire (NSDQ: CLWR) will work to roll out the company’s 4G wireless broadband services to its cable customers. During the earnings call, following Comcast’s largely positive Q2 numbers, CEO Brian Roberts defended the company’s promotional campaign for the Comcast-To-Go service, while saying he doesn’t see much competition from wireless companies any time soon.

Wireless margins: Comcast’s introductory price for the Clearwire connection, which is available in Portland Ore. and Atlanta, is $49.95 for the first year. At the end of year, that price rises to $69.95. Ultimately, Comcast expects the service, bundled with related products, to produce “a healthy margin of 40 percent,” according to Roberts.

What competition? The MSO’s early jump into wireless will certainly help Comcast take market share for now. But as Deutsche Bank’s Douglas Mitchelson openly wondered during the call, that advantage could be erased as other 4G networks emerge from wireless companies, of which Verizon Wireless (NYSE: VZ) is being the most aggressive. After all, wireless companies might be better able to compete on price. Roberts: “Our working assumption is that the wireless companies are going to do what they want anyway. 4G is the next evolution in their technology. But I’m not sure how quickly they’ll roll that out. They’re barely deployed to 3G and it’s an open question as to what the return on capital would if they completely go to the next generation.”

Ultimately, Comcast expects wireless to be a big part of its business and working with Clearwire was the quickest, easiest way to enter that market, Roberts insisted. “When Clearwire came to us and said we can start from scratch with over 100Mhz per market, and have virgin spectrum deployed right out of the box. We’ve only launched in two markets in the past few months. A lot of us believe that voice is going to run on top of data as an application. That’s not happening today. But a lot of people see that day coming. This is the beginning of what we think will be a good investment.” More from Comcast’s earnings call here, on our sister site, paidContent.

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