1 Major Reason Comcast's CEO Is Excited About Streaming. Hint: It's Not Peacock.

"I'm excited about streaming," Comcast (CMCSA 0.90%) CEO Brian Roberts said at an investors conference last month.

The head of the biggest cable TV provider is welcoming more and more streaming video content, even as it leads to more cord-cutting. More than 4.3 million Comcast subscribers have dropped its pay-TV service since the start of 2021.

The company joined the streaming wars in the summer of 2020 with the launch of Peacock. And while that service is showing some strength, garnering 22 million paid subscribers, it's certainly not enough to offset the impact of cord-cutting. That's not the reason Roberts is excited about streaming.

He's excited about the opportunity in home internet.

Where are all the home internet subscribers?

Comcast has struggled to add new home internet subscribers over the past year, with its trending schedule showing a whopping 1,000 net subscriber additions over the last four quarters.

In the meantime, fixed wireless services from T-Mobile US (TMUS 0.56%) and Verizon Communications (VZ 0.57%) have been winning subscribers: T-Mobile added 2.2 million and Verizon gained 924,000 during that same period.

The two wireless carriers expect to have a combined total of between 11 million and 13 million fixed wireless subscribers by the end of 2025, up from about 4.3 million today. And a substantial share of that growth is coming from cable companies like Comcast. T-Mobile CEO Mike Sievert said that "cable is the biggest contributor to our customer base in this business" during the company's first-quarter earnings call. It's going to be hard for Comcast to expand its base if it's losing millions of subscribers to T-Mobile and Verizon every year.

Can wireless carriers handle more streaming?

Roberts, though, thinks the wireless carriers are going to have a real problem in the not-so-distant future as more and more content moves to streaming.

"It seems like you're sharing resources for an increasing need in broadband capacity," Roberts said. Indeed, T-Mobile and Verizon are using excess capacity on their 5G networks to support home broadband. That's the same network used by its core smartphone customers.

Roberts noted video streaming places a huge demand on home internet capacity. He pointed out how Sundays typically have the highest demand for bandwidth, but when Amazon started exclusively streaming Thursday Night Football, all of a sudden Thursdays had more demand than Sundays. "So it seems like a real high likelihood that we're going to need ... more capacity for those peak moments," Roberts said.

Roberts thinks Comcast is in the best position to fulfill that demand because it doesn't have to invest more in capital expenditures to buy wireless spectrum licenses and build out capacity on a network. The cable companies can leverage their existing infrastructure to push faster speeds to customers by using a broader spectrum range with the new DOCSIS 4.0 protocol.

Over time, that should lead to Comcast reaccelerating its growth in home internet subscribers while increasing average revenue per account. And it can do so with greater capital efficiency than the wireless carriers.

Tempering the excitement

Roberts is asking a lot of investors -- namely, to buy into the near-term pain with the expectation that the competition will fail.

Both T-Mobile and Verizon are working to improve 5G speeds, reduce latency, and expand bandwidth. What's more, it's in streaming companies' interests to reduce the bandwidth needs of their services in order to reach as many people as possible. After all, cable doesn't reach every home in America.

While it's very likely broadband demands will increase over the next five or 10 years as streaming becomes even more entrenched in entertainment, it doesn't mean Comcast is going to be the company to serve those needs. The wireless industry has to invest more to serve its customers, and it has proven willing to do so, as all three major U.S. carriers are still able to generate massive amounts of cash flow despite their heavy investments in 5G.

Considering that broadband is a key driver of operating results for Comcast's connectivity business, investors are betting big on Comcast's technology coming out as the superior solution for streaming's broadband needs. I'm not sold.