On this episode of Industry Focus: Consumer Goods, Vincent Shen and Daniel Kline share some thoughts on the arrangement, including what the deal could mean for the reigning Big Four wireless companies.
So will their efforts succeed? Tune in to find out more.
A full transcript follows the video.
This video was recorded on May 16, 2017.
Vincent Shen: Dan, you cover a ton of wireless companies and cable companies, too. You cover them quite extensively. Last week, I spoke with Asit a little bit about the partnership that Comcast entered with Charter to unite their very significant resources, as they get into the wireless business. Xfinity Mobile from Comcast is expected to hit the market soon. What are your thoughts?
Dan Kline: I think it's a major uphill battle. On paper, it makes sense. Just like when any of those companies, any of the cable companies, decide to sell home alarms, there's a logic of, they have the customer base, they already have an install force. But it never works that well, because the reality is, all Americans that want mobile phones have mobile phones. And while there is some churn, the four major wireless carriers are really well setup to bring your number over, to bribe you to make the change. So just because you're going to pay a little less, you're going to get $5 or $10 back in credit, whatever it works out being with the bundling, I just don't see too many people. And while not all the details are out, these systems tend to be limited, where it's just the iPhone. I think in this case, it is just the iPhone so far. And consumers are used to choices. So I don't think it's necessarily going to be a failure in terms of, will it add some bottom line for these companies for relatively little effort on their part. But I don't think this becomes the fifth wireless carrier that gets up to, T-Mobile is in 70-something million homes, I'm guessing at that number, but T-Mobile plus Sprint is right around where AT&T and Verizon are. I don't think it becomes even a blip on that. It'll be a few million people if they're lucky.
Shen: Sure. As far as I know, from what I could find out about the offering, iPhone is definitely the focus, but they mentioned a few other flagship devices will be available from competing handset makers like Samsung. But, don't you feel like, in terms of sheer resources, if there's any company that's going to try and get into the very competitive wireless space, Comcast is in a position where they can throw their weight around.
Kline: I think they should buy Sprint. If you want to get into this space and you're Comcast, just get into this space. Then make a Sprint movie and have a Sprint ride at Universal Studios, have the can you hear me now guy, where he says now I'm talking, or whatever it is, have him in a TV series on NBC. I don't really get this playing around the edges. Cablevision did this. When Cablevision did it, it was much more based on wifi and being as cheap as possible in terms of using the airwaves, which is part of what Comcast and Charter are doing but only part of it. And it was very incremental. It was for parents who wanted a third phone for their child but didn't necessarily want to spend the real money. It's very hard to make people switch from something that works. I have T-Mobile, I'm not sure what you have.
Shen: I have Straight Talk, which is essentially AT&T, similar service to this, in a way, piggybacking off of a major carrier.
Kline: Right. I know that I get better offers. Sprint and T-Mobile are perpetually battling each other. If I'm happy, I'm not going to change. You have to mail your phones back and go to a store and fill out paperwork, it's not simple, and I'm not going to deal with it just to give Charter more money. Charter is still one of the least liked companies out there. I don't think people are clamoring to do more business --
Shen: Along with Comcast, no less.
Kline: Yeah, I don't think people are going, "Oh, I really want to give these guys a bigger chunk of my business!"
Shen: OK. Well, I wanted to get your first impressions on this. Once it launches and we have more information, maybe some first-hand experience from subscribers, we'll talk about it more, see if it's having any impact for the business --
Kline: Yeah, we'll test it. My mom lives in a Comcast van at home, so we'll try to get a phone and see what it looks like.
Shen: There you go.
Daniel Kline has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.