Comcast Goes Live with Xfinity Stream

Cable companies offered TV from the first, and were also among the first to offer broadband Internet. Now there are indicators that they’ll be separating the two. Comcast is about to go live with its Xfinity Stream service, which will be available on Roku and Amazon streaming devices and on some TVs, with other platforms expected down the line. This could have a seismic impact on both broadband and streaming, and it could be a good or bad thing for cable companies and for consumers.

Like the telcos, the cablecos have traditionally had specific territories, geographic areas where they were able to deploy wireline infrastructure. Early cable TV was a combination of a media source where antennas didn’t work well, and a means of delivering video that wasn’t affiliated with an over-the-air channel and thus not redistributed as linear RF. Over time, cable (via the industry’s CableLabs shared R&D) has been modernizing the format for CATV delivery to improve its value as a consumer broadband conduit. CATV has a lower “pass cost” for infrastructure than things like FTTH and better capacity than DSL, but it’s not practical for cablecos to build out a national footprint.

The advent of streaming video, and in particular the growth of live streaming of programming, has impacted the cablecos because these services are available over any broadband connection with reasonable bandwidth. That means that cable TV now competes with streaming TV everywhere cable has service, but also everywhere any broadband is available. From a competitive perspective, that’s obviously not a good thing.

Another problem with cable TV in competition with streaming is the need for a set-top box. While these are usually combined with the normal home WiFi base stations, and while any broadband connection will have that feature these days, set-top boxes are required for every TV and they’re more expensive than streaming sticks. Not only that, more and more TVs come with built-in streaming support, so there’s no need for a device at all. That cuts service costs to users, and reduces the installation and support challenges for operators.

Comcast has seen steady declines in subscriber growth this year, and it’s clear that TV revenues are under threat to streaming providers. Given all of this, it’s no wonder that the company wants to be able to offer TV service over any broadband connection. Eventually, IMHO, it’s likely that they’ll move everything to Xfinity Stream.

The risk, of course, is that this will encourage the disconnect between live TV and consumer broadband that’s created the problem for cablecos in the first place. For at least a period of time (and who knows how long) Comcast will have to deliver linear RF to legacy STBs as well as streaming broadband video, which means a higher infrastructure cost. Their Xfinity Stream will still have to compete with other streaming services, too.

One reason Comcast may have decided to make the move despite potential market issues is the risk created by 5G home broadband. 5G is no revolution in mobile service terms because of limitations in mobile devices’ ability to meaningfully exploit it, but it could be a major revolution in home broadband. Fixed wireless, as it’s often called, has a lower pass cost than even CATV cable, and it’s not difficult to see how a player in the space (like T-Mobile) could encroach on Comcast’s territory and at the same time offer services in places where Comcast doesn’t have CATV at all.

Comcast may be especially vulnerable to this because they’ve tended to work to get deals with subdivision developers for exclusive broadband rights. While these deals can prevent other operators from running wireline cable/fiber in these communities, they can’t block consumer decisions to use fixed wireless if it becomes available. And concentrations of Comcast-or-cableco-committed subdivisions might well encourage some creative antenna-placing by fixed wireless competitors.

The biggest industry question posed by Xfinity Stream is whether Comcast is in fact reacting to fixed wireless. If major consumer broadband providers like the cable companies believe that streaming over fixed wireless is a threat, then it probably is. That would mean that operators overall would be under some competitive pressure from the technology, that T-Mobile is likely to be a more significant (maybe very significant) player in the future, and that streaming technology is likely to supplant all linear RF TV delivery.

Another interesting data point is that Comcast is quietly deploying fiber in some of their home territories, even in places where their CATV plant is fairly modern and capable. You don’t need fiber to deliver linear RF and current-level consumer broadband. They are likely seeing areas where services like Verizon Fios are available or likely to become available as being under competitive threat for broadband speed, including upload speed where CATV is weaker. So far, fiber is apparently being used more for distribution than for home connection, but a shorter CATV span with fewer subscribers on it could result. That could mean better CATV broadband, making the approach a kind of FTTN model.

Google is also expanding its fiber broadband service to five additional states. Google doesn’t target entire states, of course; they typically enter market areas where there isn’t high-speed service available and where there are pockets of higher demand density. Nevertheless, this move suggests that other players will be jumping into the broadband space, and the Google model is for broadband-and-streaming-TV rather than linear RF.

I think that what we’re seeing is a multiplication of broadband delivery options, not a focus on a specific approach. Sure there’s a lot of PR on fiber-to-everyone, but that’s not going to happen. What will happen is fiber to any demand-dense area and other technologies, including and especially fixed wireless for the demand fringe areas. In between we’ll see things like FTTN or FTTC (node and curb, respectively) as cable companies and perhaps even telcos try to reduce the cost to serve users in areas where densities are marginal.

I also think that there is no future in the linear RF model, that streaming video, including streaming of live TV, is going to rule the future. That raises a very significant question, which is whether streaming aggregators like YouTube TV (Google) or Xfinity Stream from Comcast will then come under pressure from content companies who take advantage of the inherent populism of Internet streaming to go directly to the customer with their material. That would be a major shift in market practices, and could have a major impact (positive or negative; it’s too early to tell) on the content industry.