Comcast is getting into the wireless broadband business by bundling Clearwire's 4G wireless service with its existing broadband products.
The largest cable operator in the U.S. will launch the new service in Portland, Ore. And it will expand the service to other Comcast cities later in the year, including Atlanta, Chicago, and Philadelphia.
Comcast invested in the new Clearwire in 2008, along with Google, Intel, Time Warner Cable, and Sprint Nextel, which gave Clearwire its 2.5GHz spectrum. Clearwire's plan has been to roll out its service nationwide. The service is now up and running in a few cities, including Atlanta, Baltimore, and Portland, Ore. And the company has plans to roll it out to 80 markets by the end of the year.
Some of the cities where it plans to launch the service include, Las Vegas, Chicago, Charlotte, N.C., Dallas/Ft. Worth, Honolulu, Philadelphia, and Seattle. And it plans to launch the network in cities such as New York, Boston, Washington, D.C., Houston, and the San Francisco Bay Area, in 2010.
Clearwire is using a technology called WiMax, which offers faster speeds than current 3G wireless technologies, but offers wider coverage than other high-speed wireless technologies such as Wi-Fi. Clearwire claims that it can provide up to 4Mbps for downloads and 500 kbps for uploading, which is more than double what consumers can expect using a 3G wireless connection.
Comcast will be selling 4G wireless access as part of an Internet bundle to Comcast subscribers. To entice new subscribers, Comcast is offering the new 4G wireless with its 12 Mbps download cable modem service, plus a free 802.11g router for $50 a month for the first 12 months.
The data card used for the 4G wireless, which fits into a laptop, costs $99. But subscribers who sign up for the package with a two-year commitment get the data card for free.
After the first 12 months, subscribers will then pay $43 per month for the 12 Mbps broadband service and $30 extra per month for 4G wireless service. The 4G wireless service is only available in Comcast's cable territory, but subscribers who travel to other cities where Clearwire's network is operational will be able to access the network at no additional cost.
New customers signing up for Comcast's triple play bundle of TV, phone, and Internet can add the 4G wireless component for $30 extra a month. So with the introductory price of $99 a month for the first year, the total would be $130 a month. After the first year, that bundle increases to $130 per month, so it would cost subscribers with the 4G wireless service $160 a month.
For subscribers who want more ubiquitous coverage, Comcast is offering a 3G/4G service that provides wireless connectivity on the Clearwire 4G network when it is available and on Sprint Nextel's 3G wireless service in other areas where 4G is not available. The cost of this service is an additional $20 per month.
Existing Comcast customers can add the new service for $30 more a month to their existing packages. And they can add the nationwide access with 3G access for $20 more per month.
Comcast has had its eye on the wireless market for quite sometime. The company bought wireless spectrum in the Federal Communications Commission's wireless spectrum auction in 2006. So far, the company hasn't said what it plans to do with that spectrum. But it has at least 10 years to decide, after which time the FCC could ask for the licenses to be returned.
Comcast has also worked with other cable operators to form a joint venture with Sprint Nextel in 2005. This joint venture was supposed to allow Comcast to bundle its broadband, TV, and telephony services with Sprint's wireless services. But the partnership never really got off the ground.
This time, Comcast thinks it has the right service package that will finally offer consumers a compelling product mix. The company is interested in not only using the service to help it win new customers but to also help it keep existing ones who may be tempted to defect to phone company competitors.
"This is really our first entree into expanding our in-home broadband service in combination with a wireless Internet service," said Catherine Avgiris, the company's senior vice president and general manager of wireless and voice services. "We are trying to get those consumers, who may not have chosen Comcast's broadband services in the past, to see that they can get the best and fastest in-home and wireless service from Comcast. But we are also trying to make sure we can keep the customers we do have from going to a competitor."
While it's clear that Comcast is using this new service to compete against its phone rivals, namely AT&T and Verizon Communications, it will also be competing against its partners Clearwire and Sprint Nextel, which will also be selling the same WiMax service to consumers.
Clearwire's service called Clear starts at $20 per month for in-home wireless broadband. And its mobile Internet plans start at $40 per month. Customers can also get a day pass for $10. The company also allows customers to add voice service to their in-home package for $25 per month.
Sprint is also offering a 3G/4G wireless service for people living and traveling regularly to places with 4G wireless coverage. For about $20 more a month, Sprint wireless data customers can get access to its 3G network plus the 4G Clearwire network for $80 per month. Sprint's regular 3G wireless data service costs about $60 per month.
AT&T and Verizon haven't included their 3G wireless data services into their in-home broadband and TV services, but the companies have been offering special deals for wireless customers. And both operators have announced Netbook offers where they subsidize the cost of these mini-laptops in exchange for a two-year service commitment. AT&T has also given free Wi-Fi access for its more than 20,000 Wi-Fi hotspots around the country to its broadband customers as well as some smartphone users.
AT&T isn't the only Wi-Fi provider that could compete with Comcast's 4G wireless service. In cities, such as San Francisco, there is already quite a lot of Wi-Fi in public places thanks to services like X. And in Philadelphia where EarthLink had deployed a citywide Wi-Fi network, Wi-Fi is still available for free in some locations.
Comcast isn't completely down on Wi-Fi. The company also offers a Wi-Fi solution in cooperation with Cablevision, a cable operator serving the New York area. The two companies are deploying Wi-Fi hotspots in train stations and on train platforms along the North East corridor from Philadelphia to New York City. The Wi-Fi access is free to Comcast and Cablevision broadband subscribers.
But Wi-Fi doesn't offer ubiquitous coverage. So these networks aren't the best answer for every consumer. But the success of Comcast's 4G wireless service is very much dependent on price. The company has priced the first year of the service extremely well, making it the hands down winner in terms of value for consumers. But it will be interesting to see if consumers are still interested in the service once the promotion is over.
The other potential downside to the service right now is that consumers will only get one USB laptop card per account. This might make it hard for families with multiple family members who want wireless broadband service outside the home. And this is also a problem for small businesses, which Comcast is also targeting with this service.
That said, Avgiris said that Comcast is working on a solution and will be offering multiple wireless cards for an additional cost. But the exact pricing of these cards and service hasn't been determined just yet.