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How Comcast Hopes to Make the U.S. One Big Wireless Hotspot

When you talk about innovation, Comcast (CMCSA) isn’t normally part of the conversation.

But with an ambitious “neighborhood initiative” that wants to turn your modem into a wireless hotspot for all your neighbors, Comcast could very well be at the forefront of the telecom industry.

Here’s the gist: Paying Comcast customers with a Wi-Fi connection will continue to get the same service they always have. However, anyone passing by who also happens to be a Comcast customer can use their log-in to piggyback on the modem.

In theory, the home customer’s service will not slow down and security will not be affected; the only thing that happens is that Comcast Internet subscribers now have a connection anywhere there’s a Comcast customer with a wireless router.

Sound too good to be true? Maybe; we’ll have to see how it plays out in practice. But the theory is astounding — and it’s not an understatement to say it could revolutionize the way we use the web and the way Comcast makes money going forward.

Just check out this map (generated here via the Xfinity hotspot site) of hotspots in Rockville, Md. — right down the road from the InvestorPlace Media offices.

Pretty cool, eh?

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Of course, investors have a hard time getting excited about Comcast because of its waning cable television business and dying landline phone empire. In the latest quarter, CMCSA lost another 60,000 cable customers but managed to squeak out a small revenue boost only by raising rates.

And while the company did just double down on its NBC Universal stake to take full control of the programming arm a few years earlier than planned, whether the money comes from TV ads or cable bills the point is largely moot to Wall Street. People are “cutting the cord” by the thousands across the TV biz, thanks to streaming video options including Netflix (NFLX), Prime from Amazon.com (AMZN) and Hulu Plus. Time Warner (TWX) faces similar pressures, as does Verizon (VZ).

The only “growth” to be had in Comcast (or any of its mega telecom peers for that matter) is in Internet access. Consider that in 2008, Comcast had 14.9 million high speed Internet customers and has increased that every year since to hit 19.4 million in 2012 — a 30% increase across five years. Meanwhile, video customers have fallen every year from 24.2 million to 22.0 million in the same period — a 9% decline in five years.

Here’s where Internet’s growth potential becomes not just an opportunity but a necessity. Comcast clearly can’t rely on cable, and in a mobile age it can’t even rely on wired internet access for long either. So why not help people cut the cord as long as they are paying customers, and allow them access anywhere?

In theory, you could sign up for Internet access in a few years and never even have one of those painful appointments to get your modem up and running. Just pay for a log-in and sign onto the web anywhere there’s a hotspot.

It’s an innovative and intriguing idea — and frankly one I didn’t think Comcast was capable of.

There are clearly issues with security, if only from a perception level. I’m sure log-in authentication prevents a stranger from abusing your wireless connection and leading the police to your doorstep as they skate scot free but many people are very guarded about anyone sharing anything on the web these days.

And I remain skeptical that my neighbors won’t cause endless problems streaming Breaking Bad off my Internet connection and clogging my bandwidth.

But color me impressed Comcast. I’m interested in seeing where this goes.

Investors should be, too.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP

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