Comcast Earnings: Broadband Now Competing with Fixed Wireless

Business services growth offset disappointing residential broadband numbers in Comcast Corp.‘s second-quarter earnings.

Shares were down  nearly 8% as of 11 a.m. ET Thursday after Comcast disclosed in its earnings report that it did not gain any broadband subscribers in the quarter. Total Comcast revenue increased more than 5% year-over-year, to $30 billion. In the meantime, profit shrank more than 9%, to $3.4 billion.

Comcast’s Brian Roberts

Comcast CEO Brian Roberts cited competition as a reason for flat broadband growth. In particular, he said fixed wireless access cut into Comcast’s broadband base. Telco rivals AT&T, Verizon and T-Mobile have all hailed their growth in FWA subscribers.

“Fixed wireless is a new entrant in the marketplace, and while there are likely to be significant long-term limitations, today’s excess capacity in wireless networks is creating what we believe to be a temporary opportunity targeted at value-oriented customers,” Roberts told investors. “We are not seeing fixed wireless have any discernible impact on our churn, but its early growth appears to be another contributor to our lower connect activity. In addition, we continue to compete against fiber in an increasing percentage of our footprint.”

Is Fixed Wireless the Future?

Channel Futures asked partners if they are seeing growth in fixed wireless and if they view it as a long-term solution. Many indicated that adoption is growing, but that demand is somewhat niche and limited in nature.

Adaptiv Advisors’ Ashley Rowland

“I am selling more fixed wireless now than ever before but only because my customers have locations where fiber or coax isn’t available. When given the option, my customers typically choose in this order: fiber, coax, fixed wireless, mobility LTE/4G/5G, satellite,” said Ashley Rowland, partner at Adaptiv Advisors, “I never bet against Elon [Musk] (and am not despite this observation) but I hear [his company, satellite internet provider] Starlink is getting crushed right now, and as expected, latency is a huge deterrent.

Sumo Communications’ Bret Hickenlooper

Bret Hickenlooper, president of Sumo Communications, said Comcast faces a bigger challenge competing against fiber than against fixed wireless.

“I’m getting rid of ‘Xfinity’ for Starlink at home for reliability reasons, not cost. I would call broadband of any kind a value-oriented purchase without an SD-WAN device and a redundant connection,” Hickenlooper told Channel Futures. “I’m not sure fixed wireless is the long-term answer either, it’s been around for years and will be for sure but has its own limitations.”

Rad-Info president Peter Radizeski pointed to the elephant in the room: Broadband adoption has reached its ceiling.

Rad-Info’s Peter Radizeski

“I guess we can’t say that we peaked — that everyone on-net that wants a cable modem has one and from this day forward it will be a decline,” Radizeski said. “There is $40-plus billion in federal funds going into deploy fiber to the home. Cable modem, DSL and satellite broadband will be the victims.”

Kyle Duncan, president of DC Inc. agreed.

DC’s Kyle Duncan

“As the top B2B telecom producer in our channel, there will certainly be a shift away from cable modems and not getting into FWA will mean being left behind,” Duncan said.

Cable Breakdown

Overall cable revenue ticked up 3.7% to $16.6 billion. Broadband (6.8%) and wireless (29.8%) growth offset declining video (-2.4%) and voice (-12.3%).

However, disappointing customer numbers overshadowed broadband revenue growth. Comcast’s 32 million Q2 residential customers represented a net loss of 38,000. Comcast lost 10,000 in residential broadband, 284,000 in residential voice and 497,000 in residential video.

Business Holds Its Own

But business services fared well, growing more than 10% year-over-year, to $2.4 billion. Comcast cited higher average rates and an increase in the number of customers. It also cited the completed acquisition of Masergy. Although residential broadband customers declined in Q2, business broadband customers increased by 10,000, to 2.3 million. The business segment did see declines in video and voice, although voice only lost 1,000 customers between April and June.

The total number of business services customers grew slightly from from 2.45 million, to 2.5 million.

Wireless Continues Its Rise

Wireless revenues grew almost 30% year-over-year, to $772 million. Moreover, Comcast reported a net addition of 317,000 wireless lines in its second-quarter earnings. Comcast last summer expanded its Verizon-powered mobile virtual network operator (MVNO) services to SMB customers.

Executives reiterated the cableco’s intent to bundle broadband and wireless services. However, residential customers that two or more products declined in the second quarter.