Has Comcast Drafted Your Router Into Its Secret Wi-Fi Army?

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Your modem router's loyalty may be conflicted. In a move that is either beautifully brilliant or brazenly boneheaded, Comcast (CMCSK) is turning leased residential routers into Wi-Fi hotspots that are accessible to nearby Xfinity customers.

Comcast has a lousy reputation even before this head-turning move.

The controversial experiment started earlier this month with 50,000 homes in Houston with plans to expand to 150,000 residential routers by the end of the month.

It may seem outrageous at first. Why would anyone want to have strangers relying on their connectivity to go online? Comcast is quick to point out that the Wi-Fi hotspot will be separate from a home's network. You won't have outsiders firing off your Wi-Fi printer or diving into your music collection and family photos. Comcast also promises that Xfinity members hosting these routers will be allocated additional bandwidth to make sure that third-party access to the router doesn't slow them down.

It's still bound to be a dicey practice. For starters, Xfinity customers don't opt in to participate in the bold experiment to create residential neighborhoods with Wi-Fi accessible to existing subscribers. The onus is on the customer to opt out.

It also doesn't help that Comcast, despite being the country's largest cable TV and broadband provider, has a lousy reputation even before this head-turning move.

It's Comcastic

Consumerist in April published it annual list of the country's worst companies. Readers vote in tournament-style fashion until the initial list of 32 is whittled down to the villainous victor. Comcast won in 2010 and is back as Consumerist's Worst Company in America, just beating out Monsanto (MON) for the dishonorable honor.

Yes, Monsanto. The agribusiness giant that never has a problem rounding up vocal protestors picketing the state of chemical supplements that increase crop yields lost out to a company that simply provides cable programming, Internet access and Web-based home phone service.

Then again, it's hard to please customers as a pay TV giant. Comcast had working relationships with 26.8 million homes as of the end of March, and more than 21 million depend on Comcast's Xfinity for online access.

It's hard to find cable customers who are happy with their provider given the service outages and the ever-rising cost of programming. Comcast and its peers will argue that it's merely passing on the contractual upticks of the channels they carry, but that still doesn't excuse them from forcing folks to pay for countless unwatched channels just to have access to the ones that they do watch.

It also doesn't help that Comcast's financials show that it's doing more than merely passing on the increased costs. Revenue climbed 14 percent in its latest quarter despite having fewer pay TV subscribers than it did a year earlier. Adjusted earnings per share soared 33 percent.

Nipping a Revolution in the Bud

There will be natural resistance to Comcast's ambitious push to blanket key markets with Wi-Fi. Comcast can argue that it's only drafting its own company-owned routers to active duty. Folks are leasing the modems with router functionality. Comcast isn't doing this to routers provided by customers.

However, Comcast's unflattering reputation -- you don't become Consumerist's Worst Company in America by accident -- isn't going to help. Folks will vent their outrage and publicize the way to opt out of the feature. Customers with modem routers recruited to be part of the Xfinity army can also fight back. They can disconnect their routers when they're not in use, frustrating users who may have been on it at the time and further diminishing Comcast's lack of reliability.

If Comcast is able to overcome all of these hurdles, it will be an interesting feature to pitch to its customers. Xfinity subscribers may be able to find Wi-Fi access in unlikely places. However, if inconsistency has been the biggest hit on Comcast's reputation, it's hard to fathom how the random nature of this new offering will improve its image. Doing something questionable when the public already sees you as the bad guy isn't usually a good idea.

Motley Fool contributor Rick Munarriz and the Motley Fool have no position in any of the stocks mentioned.​


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3 Comments

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dencuddy

Its been going on in Baltimore for 3 months, Daily Finance is a joke.

June 18 2014 at 11:56 AM Report abuse +1 rate up rate down Reply
jdykbpl45

Rick's business bash of the day.

June 18 2014 at 11:05 AM Report abuse -1 rate up rate down Reply
trew.liberal

This is a brilliant move by Comcast.The big ***** in the cable companies armor has been the inability to offer wireless service. And as the world increasingly goes mobile, this void will become more and more difficult to overcome. But imagine what happens when Comcast can leverage existing infrastructure to blanket vast areas with wifi?

Comcast could easily become a much more potent version of Republic Wireless. Mobile operators like Republic sell devices that have been configured to default to wifi for routing all traffic, including voice calls. So if a Republic customers picks up their mobile phone to make a call, the phone will first try to route that call over a wifi network. If no wifi is in range, the phone hands the call off to a traditional wireless network. Importantly for consumers, this allows Republic to sell wireless plans that range from $5 - $40/month, depending on service level. And all without a contract!

Of course, Republic has no wide network of wireless hotspots. So if their customers are at home, they can offload traffic to their home wireless network, but typically not when they are mobile. But imagine how Comcast can take this concept to the next level by blanketing entire geographical areas with wireless coverage.

June 18 2014 at 8:55 AM Report abuse -1 rate up rate down Reply