Comcast Corp. will launch a wireless service in mid-2017 with a network that combines its 16 million WiFi hot spots and wholesale access to Verizon Communications Inc.'s cellular towers and spectrum.
The endeavor is fraught with risk in a competitive and price-sensitive market with big incumbents Verizon, AT&T, T-Mobile, and Sprint. But the venture also has the potential to reach millions of consumers who have become attached to their smart phones to watch streamed TV and entertainment.
The wireless product, Xfinity Mobile, also will offer Comcast customers a so-called quad play, or four-service bundle of TV, phone, higher-speed internet, and wireless.
Comcast announced the plans - hinted at for months - in New York on Thursday morning.
Xfinity Mobile customers have the option of Apple, Samsung, or LG phones. They can buy the phones outright or on a monthly interest-free installment plan, Comcast officials said.
Comcast - whose prior wireless venture, as part of a cable company consortium, failed within the last decade - said that, this time around, Xfinity Mobile was designed for data and video in mind, not necessarily talk and text.
It will be available to only 29 million Comcast customers who subscribe to TV or internet services. Consumers can buy unlimited data plans for $45 or $65 a month, or 1 gigabyte of data for $12 a month, and continue adding gigabytes, at $12 a pop, as needed during the month.
Comcast estimates that Xfinity Mobile could save consumers 10 percent to 40 percent a month on wireless bills, depending on usage and package.
"They are not at the very bottom of the market. I would describe [the prices] as low but reasonable," said Craig Moffett, a telecom analyst with the research firm MoffettNathanson. "It signals that their ambition is to use this service to mitigate [cable-TV] churn as opposed to a stand-alone profit opportunity."
Amy Yong, telecom analyst with Macquarie Bank, said Comcast's wireless plan can take wireless customers from competitors while it also can strategically position itself for fare by Amazon or Netflix.
"The worst-case scenario is you have video going over mobile devices and cable does not play a role in that," Yong said. "You have some people who can live on T-Mobile and Netflix."
Phone calls will go only through Verizon's network. For video and data, Xfinity Mobile will toggle between Comcast WiFi hot spots and Verizon's wireless network. The Comcast phones will automatically find a Comcast WiFi hot spot, authenticate the phone as eligible, and connect to it. Outside the hot spot's range, the Xfinity Mobile phone will find another hot spot or revert to the Verizon network.
Comcast has built this WiFi network through public hot spots and its TV and internet consumers. Xfinity WiFi routers have both private and public WiFi channels. Comcast has said that the public WiFi channel - which will be part of the Xfinity Mobile network - is secure for its subscribers.
Up to 80 percent of wireless data travel today over WiFi networks, according to industry estimates. Off-loading data traffic onto Comcast's extensive WiFi network will relieve congestion on Verizon's network, thus saving Comcast operating costs.
Moffett noted that "it will be critically important that Comcast unload as much traffic as possible onto their own network to mitigate the risk that customers consume unreasonably large amounts of Verizon bandwidth that Comcast would have to pay for."
A catalyst for Comcast's new wireless product was AT&T Inc.'s acquisition of DirecTV in 2015, allowing the two companies to offer both wireline and wireless bundles, said Jeff Kagan, longtime wireless analyst in Georgia.
AT&T's DirecTV Now service now streams live television to smartphones and mobile devices, a service that Comcast can't offer without Xfinity Mobile.
"Comcast understands the need to get back into the wireless business for their own survival. They have to compete in this new mobile television space," Kagan said. "The transformation of the industry is forcing Comcast back to the drawing board."
Investors seemed to agree. Comcast shares had risen more than 2 percent by midday, and closed the day up 2.12 percent, or 79 cents, to $38.13.
Comcast can offer the wireless service now because of an agreement it reached six years ago with Verizon.
In late 2011, Comcast and other companies sold Verizon a big chunk of wireless spectrum for $3.6 billion after a consortium of cable companies, including Comcast, failed to impress consumers with its wireless phone product.
As part of the spectrum sale, the cable consortium negotiated a deal to use Verizon's wireless network on a wholesale basis if it wanted to get back into the business. This is what Comcast will be using to offer Xfinity Mobile.
Analysts said this could lead to the loss of customers for Verizon Wireless but it also could boost Verizon's national wireless wholesale business.
Comcast is believed to be both a buyer and seller of wireless spectrum in the Federal Communications Commission's recent spectrum auction that repurposed some TV airwaves for the wireless industry. Industry experts say that Comcast may have sold airwaves controlled by its NBC and Telemundo TV stations. It also may have acquired TV-related wireless spectrum for Xfinity Mobile.
Strict confidentiality rules have prevented Comcast from saying what it did in the auction. The company is expected to disclose the information this month or in early May.
Comcast has been developing the wireless offering for months and tapped executives with wireless experience to help with the launch.
Greg Butz was appointed as president of Comcast Mobile, the new wireless division, in July 2016. Formerly the executive vice president for sales and marketing in the cable division, Butz joined Comcast in 1993 as director of business development for Comcast Cellular Communications, now a defunct unit.
Tom DeVito, the new head of Comcast's retail stores, formerly ran AT&T's retail stores. Comcast says it does not believe that it needs to add retail stores in malls and other retail areas, relying instead on its upgraded 500 Xfinity stores and online sales.