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Comcast May be the Next AOL
15 Aug, 2007
For all intents and purposes, the move from dial-up to broadband by the masses is complete. Sure there are still large numbers of dial up subscribers who have not made the move, but there are now more people who access the Internet via broadband than via dial-up. The remaining dial-up stragglers will either move to broadband eventually or never at all because they don’t feel a need to. The next major Internet transition will be the move to wireless broadband. Adding mobility and portability to the broadband experience is a compelling proposition. One that most subscribers will find enticing enough to join the wireless broadband movement. Service providers that can offer a true broadband experience wirelessly will gain competitive advantage. The future looks bright for companies like Clearwire, Sprint, and winners of the upcoming 700 Mhz spectrum auction.
There are implications for wireline broadband providers. A significant number of subscribers will take one of two paths with their wireless broadband future. They will either abandon their wireline only broadband provider entirely, or migrate to a broadband provider that adds a portability/mobility experience to their wireline service. Does this mean Comcast will be the next AOL? They are the leading wireline broadband carrier with millions of subscriptions and enjoying the limelight of being market leader. They enjoy many accolades from analysts, the press, and Wall Street. Sound familiar? Will they get caught in a wireless broadband transition, much the same way AOL got caught in a dial-up to broadband transition? Maybe, maybe not. If they aren’t already, they would be wise to begin executing a broadband wireless strategy. Subscribers will soon demand a robust broadband mobility/portability experience which either complements or replaces their wireline broadband service. Comcast and companies like them will not be able to rest on their wireline broadband laurels alone. Perhaps a Comcast/Clearwire alliance or merger is on the horizon. Initial impressions of Pivot wireless, the cable/Sprint joint venture, does not lend itself to a robust broadband wireless solution. Maybe Sprint and their cable partners have something up their sleeve, and will extend this partnership to Sprint’s WiMAX strategy. Whatever the eventuality, wireline broadband carriers will need a broadband wireless strategy, or they will find themselves trying to reinvent their business model mid-stride, much the same way AOL is doing today.
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Should Telephone Service be Free?
12 Oct, 2008
Comcast announced a new promotion last week that offers 12 months of free basic cable service for new customers who also sign up for an additional service. Customers who don’t want an additional service can get Comcast’s basic service of about 20 -30 channels for $10/month. The promotion is tied to the digital TV transition of February 2009 and entices potential customers to avoid the transition “hassle” by getting “free” cable service. “The simple fact is that basic cable is the easiest path through the digital transition and now consumers can get it for free,” said Derek Harrar, General Manager and Senior Vice President, Video Services for Comcast in a company statement. This move is similar to strategies pursued by other video service providers, who are hoping to leverage the digital TV transition for new subscriber additions.
But is this strategy a leading indicator for the future? Should basic core services like basic cable and basic telephone service be offered for free, used as a “carrot” to entice customers to buy “more important” services like broadband? Maybe a very basic phone service, with no LD, access to landline 911, and maybe outgoing service only (to avoid telemarketers) should be a free component of a bundled offering. Such a wireline service may appeal to a customer who previously cut the cord for wireless only, but also needs broadband. There is a growing portion of the population who find the value of traditional wireline phone service elsewhere – either through wireless or broadband/IP services. But, if they could get the security of landline 911, and an extra dial tone in their home as a free value add for subscribing to broadband (or video from a telco’s perspective), maybe a telco’s bundled offering may look more attractive than a comparable cable offering. I realize this idea is not appealing to the hundreds of ILECs who are a part of the current access/settlement system (in fact, it couldn’t work in the context of today’s regulatory structure), but I wonder whether it’s inevitable. In this possible future scenario, the current settlement system adapts to broadband as the underlying service, as opposed to voice.
This scenario cuts both ways. From a cable company’s perspective, a growing portion of the population is turning to the Internet as a source for their video content, and no longer see value in paying for a broad package of video as a part of a traditional subscription pay-TV service. But, if they could receive basic TV (which includes local broadcast affiliates) as a free value add for buying broadband, maybe the cable bundle is more attractive. In a true IP/broadband world, very basic phone and video service is relatively easy to deliver, and has little impact on bandwidth and network performance. Maybe the digital transition is opening the door to a future where free basic services are a regular component of a bundled offering. Thoughts?