Cellular providers including Sprint (S), AT&T (T), and Verizon Wireless (VZ)(VOD) have had the broadband wireless market all to themselves. WiFi offered some modest competition, but its service only works within a few hundred feet of a base station. The 3G broadband wireless systems created by the telephone companies cover entire cities and most major roadways.
Comcast (CMCSA), the nation’s largest cable company, means to break the hegemony of the phone companies.
Starting in Portland, Philadelphia, Atlanta, and Chicago, Comcast will begin to offer ultra-fast wireless based on the relatively new WiMax standard. According to The Los Angeles Times, “The service offers speeds of up to 4 megabits per second, faster than any comparable non-Wi-Fi service being marketed.”
The largest American cellular companies could hardly be facing worse news. As their landline telephone services have shrunk, they have counted on their rapidly growing wireless services to keep earnings moving up. Any realistic threat to those services puts their most critical sales source in jeopardy.
The Comcast move is a chance to strike back at the telecom industry. AT&T and Verizon have been installing fiber-to-the-home to offer broadband and TV services which are a direct threat to the major revenue sources of cable companies.
Cable is about to get a measure of revenge and it will almost certainly cut some of the wireless growth that has made large telecom companies good investments.
Douglas A. McIntyre
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