Will Comcast Succeed in Mobile?

It is a fair question to ask how whether Comcast mobile market success is likely or unlikely, as it is similarly fair to ask how well telcos will do in the new endeavors they are making, and will make, in new lines of business.

A reasonable person would caution that it always is challenging when firms in one business enter new lines of business where they do not necessarily have core competencies. But cable companies and telcos have shown ability to do so, in a growing number of instances, despite some failures.

Generally speaking, telcos have not so fared well in the information technology and computing businesses they have tried to enter for the past several decades (dating back to the 1980s). Few have had much success creating mass market over the top voice or messaging services, while efforts in the data center business also are mixed.

But one might also say fixed network telcos managed to learn what they needed to enter the mobility, video entertainment and even Internet access businesses, none of which were core competencies, originally.

Neither voice nor Internet access was an issue for cable in the consumer markets.

Some might initially have dismissed cable efforts to enter business markets for voice and data. But cable has done so, tapping first the small business segment, moving into the mid-market, and now starting to target enterprise services.

Earlier, some might have dismissed cable’s ability to scale its hybrid fiber coax network enough to keep pace with new quality and bandwidth demands, but they have done so.

So some of us would argue cable understands the stakes and the difficulties of becoming major players in the mobile market. While “necessity” is no guarantee of success, the cable industry has shown an ability to methodically enter new markets and gain significant share.

Some of us also would argue that it is inevitable that cable will want to shift even further in the direction of owning its own network assets. In the mobile context, that means access to spectrum (licensed, unlicensed and shared) plus transmission assets under its full control.

That means an ultimate shift to ownership of mobile infrastructure, beyond spectrum rights. That is partly a matter of industry culture, and partly a matter of maintaining profit margins.

Also, cable will scale its efforts gradually, as it has already learned to do entering business markets. Even if it initially focuses on services for its existing customers, that is only the first step.

Eventually, cable will emerge as a national competitor, for a number of reasons including the fact that mobility increasingly is a national and scale business. Though the greatest value might come as the industry is able to build quadruple-play packages of fixed and mobile services, greater scale will be necessary.

And Comcast’s service territory only reaches about 30 percent of U.S. households. Some of us might be wrong, but would bet on Comcast (and Charter, ultimately) succeeding in the mobile business.

The business will evolve, with cable gaining confidence in smaller matters before tackling bigger matters.