By Steven Perlberg
Comcast Corp. will roll out a new pay-as-you-go program that lets consumers sign up for television and internet services for seven or 30 days at a time, a blueprint used by the wireless industry to attract low-income households.
Under the plan, called Xfinity Prepaid Services, customers will pay a one-time equipment setup fee and can "refill" their service without limitations on the number of times they can renew, Comcast said. The service doesn't require a credit check or contract.
The cable giant will make the service available later this year in Illinois, Michigan, Georgia, Florida and Indiana, with plans to extend it to its entire customer base by the end of next year. Comcast has signed an arrangement with Sprint's no-contract wireless brand Boost Mobile to offer the prepaid services at its 4,400 locations within Comcast's footprint by the end of 2017. Comcast declined to disclose the financial arrangement.
"We want to create an easy, pay-as-you-go option for people who want more flexibility and predictability when buying our services," Marcien Jenckes, executive vice president of consumer services at Comcast Cable, said in a statement.
Of the 20 million U.S. homes that don't pay for TV, 14 million to 16 million can't pass the necessary credit check to receive service, according to estimates from AT&T, which J.P. Morgan analyst Philip Cusick highlighted in a recent note. Comcast's more flexible service could appeal to such customers, who otherwise may flock to over-the-top video services.
The new plan comes during an uncertain time for the future of pay TV, as consumers cut the cord or opt for skinny TV packages and streaming services. One question will be whether a prepaid service runs the risk of encouraging consumers to cut the cord, knowing they can sign up again for short windows to watch one-off events like the NBA Finals.
"Certainly that is a possibility, but I don't think that is our expectation," said Comcast spokesman Steven Restivo. While the service is primarily geared toward "people making tough decisions" on a monthly basis about finances, consumers with vacation homes could use the prepaid option to toggle their cable on and off, Mr. Restivo said.
Comcast's new offering could be appealing to consumers who just want to be "in and out" for certain events, according to Jefferies analyst Mike McCormack. But, he said, "it's probably more of a play for the younger demographic that doesn't want to sign up for full-time services."
The TV prepaid plan has two tiers. For a 45-channel plan, customers pay an $80 setup fee for equipment and the first 30 days of service. Then, they can pay $15 at any time to "refill" their service for seven days, or $45 for 30 days. A 140-channel plan costs $120 to start, with $30 and $90 "refills" for seven days and 30 days, respectively.
Comcast will charge $80 for the internet starter kit, with $15 for seven days or $45 for 30 days.
BTIG analyst Rich Greenfield said the plan provides a way to grow Comcast's low-income subscriber base and is unlikely to get people shifting from a regular plan to a prepaid plan. A new, more flexible option may even create some goodwill for Comcast's brand. "This seems like a very friendly way of appeasing regulators," Mr. Greenfield said.
Comcast won't include prepaid customers when it reports its subscriber numbers during quarterly earnings, Mr. Restivo said.
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