Comcast Down But Not Out in a Tough Season

Carl Weinschenk

These are interesting days for Comcast, the nation's largest and by far highest-profile cable operator. Make no mistake about it: The fate of Comcast -- to some the A-Rod of cable operators -- is an important element of the overall fate of convergence. The company has more than 24 million subscribers, about 11 million more than runner-up Time Warner Cable. That gives it a lot of clout in Washington as well as with programmers, advertisers, regulators and equipment vendors.


The good news, at least from its subscribers' point of view, is that the multiple system operator (MSO) is moving aggressively to ramp up the speed of its service. The company said this week that it has introduced fast Data Over Cable Service Interface Specification 3.0 (DOCSIS 3.0) to about 30 percent of its footprint, which is about 15 million homes and businesses, according to the report in Ars Technica. The goal is to offer wideband to 65 percent of its service area this year and to eventually provide all its subscribers with 12 Megabit per second (Mbps) service. The story lists the 10 major markets in which DOCSIS 3.0 already is available.


The bad news, however, is for the stockholders in the company. This company is feeling the impact of the recession. The Nashville Business Journal reports that the cable operator laid off about 3,300 people during the second half of last year. CNNMoney adds that profit during the fourth quarter fell 32 percent. The story attributes the decline to scaled-back customer spending and the reduction in value of its investment in Clearwire, which offers WiMax and other wireless services under the Clear banner. During the quarter, the company earned $12 million (14 cents per share), compared to $602 million (20 cents per share) during the year-ago quarter.

 

The fun thing about quarterly results calls is that there is plenty for observers to focus on, and the exact approaches taken tend to vary and emphasize different information. This TVWeek take focuses on how the different business units did in relation to each other. Video customer rolls fell 2.3 percent from the end of 2007 to the end of last year. At the end of 2008, Comcast had 24.2 million video customers. One important number is that 40 percent of the 575,000 customers there were lost left in the fourth quarter. The most meaningful stat, however, is that even in a bad economy the company finished 2008 with 21.4 million phone and data customers, 19 percent more than at the end of 2007. That enabled fourth quarter revenue to rise 9.4 percent to $8.77 billion-and demonstrated the inexorable transition of Comcast from a video-dominated company to a full-service voice, video and data organization.

 

Broadband Reports offers a nice interpretation of a report that it links to in The Wall Street Journal reporting on negotiations between programmers and Comcast and Time Warner Cable to provide programming over the Internet at no extra charge to customers. The commentator is less than overwhelmed. He sees it as perhaps a nice extra for current subscribers, but not something that is likely to affect the big picture. Much of what the companies likely would offer is available elsewhere on the Internet. The big question is whether the downloads would count against data caps set by the operators.

 

Comcast will continue to be a lightening rod -- or A-Rod -- in many important debates. While its numbers are down for the fourth quarter of 2008-whose weren't?-it seems to be navigating the stormy environment and completing the journey to full-service telecommunications provider in fairly good fashion.



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Feb 23, 2009 1:32 AM Kevin Kevin  says:

Comcast is working towards becoming competitive with some of the lower speeds Verizon can offer. I hope they exist, but I will never recommend them. They are one of the most deceptive advertisers i've seen in TV/ISP. They claim to offer to the most HiDef "Options" out of all Cable Providers... in fact they claim to offer more HD "Options" than all of their competitors combined... while they have only 14-20 actual HiDef (non-Premium channels), they use their onDemand HiDef selection as part of that count giving the consumer the idea they have more HiDef "Channels" than all competitors combined. They also say they are faster than Verizon making them the fastest internet out there... of course they are comparing to Verizon DSL 3MB service... not the 6MB DSL Service that is available or the Verizon FIOS 50MB/20MB service that is available. If Comcast can only get to 12MB they are in deep trouble in the long-term. Fiber Optic with time can grow with much more bandwidth and as servers and services out there start streaming higher quality videos and offering downloads at faster speeds, Comcast will be Verizon FIOS what ISDN is to Comcast Cable and/or DSL. Top that with some of the worst customer service available and that could spell bad news. The only good thing I have to say about Comcast is that when i did have their Cable Internet service, it was what they said it was. I got my promised bandwidth, up-time was suprisingly almost 100%. Not sure if that is the norm or not, but in 3 different physical locations of having the service, that was the case.

I'm excited that FIOS is out and hopefully continues to grow and give Comcast a run for the money. Hopefully the competition will force it to rethink itself and up the level of service it provides (especially for its TV service). Having tried Comcast Digital and HD TV, it's premium channels, etc as well as the comparable service from Verizon FIOS, and currently DirecTV, I would have to say quality of service and quality of customer service is the lowest for Comcast by far.... I really enjoy both DirecTV and FIOS TV service as both are very comparable.

I say all of that to say that Comcast may be on top now, but the competition is fierce and they will have to fight (in the long-term) to stay on top.

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Feb 23, 2009 12:38 PM Mark Mark  says:

We will be in trouble if Comcast is successful in their bid to become full-service provider: they are the only utility within the Paducah, KY city limits not yet recovered from the ice storm of January 27.

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