Comcast has revealed some of their WiMAX strategy. They plan to aggressively use femtocell technology to deliver seamless mobility services to residential subscribers, and expect to achieve 8 Mbps in throughput. The Clearwire partnership which Comcast and other cable companies invested in will set aside 5 Mhz of spectrum for femtocells. Femtocells create a mini wireless base station (or cell tower) in the home and can route wireless voice calls and data sessions originating on mobile and portable devices through it. The goal is to provide better in home wireless coverage for mobile devices, thus offering wireless voice services that can conceivably rival Comcast’s wireline IP voice service. Comcast sees femtocells as a key wireless strategy for them, because their customer base is primarily residential customers. Light Reading’s Cable Digital News revealed the Comcast femtocell strategy. Dave Williams, Comcast’s senior VP for wireless and technology was quoted in the Light Reading article as saying, “We’ll be pushing WiMax femtocells because we have a good customer base in the home -- we sell HDTV, VOIP, and high-speed Internet connectivity. We want to take that experience in the home and add mobility.”

The revelation is a peak into an interesting competitive development. Comcast and their WiMAX cable brethren intend to maximize their Clearwire investment to offer a suite of wireless services that they hope will rival their telecom competitors. By using femtocells, in theory at least, they can leverage their own broadband network with Clearwire and create a mobility experience that won’t falter once a subscriber enters their home. By so doing, Comcast can now offer seamless mobility, in and out of the home, and also appeal to customers who want to (or already have) cut the wireline cord and aren’t interested in a traditional triple play service. The service is a long way off. The femtocells will need to go through the WiMAX certification process, which could take months or even years.

With all the talk of increasing broadband speeds, we sometimes fail to mention that the focus tends to be on the download side. But in a web 2.0 world where the uploading of multimedia content is all the rage, upload speeds are becoming an important competitive weapon. Verizon FiOS does a good job of differentiating their upload speeds from their competition. Comcast is taking notice and has announced new upload speeds for select broadband tiers. In their statement Comcast says they will “… nearly triple the upload speed of its 6 Mbps / 384 Kbps Performance tier to 6 Mbps / 1 Mbps and more than double the upload speed of its 8 Mbps / 768 Kbps Performance Plus tier to 8 Mbps / 2 Mbps.” Expect to see more emphasis in upload speed upgrades. Customers who are satisfied with fast download speeds can quickly become frustrated when they join the world of user generated content upload and sharing. Broadband competitors will increasingly try to seize on that frustration by offering and marketing faster upload speeds.

Just as service providers get used to teeing up standard DVR and VOD services as competitive weapons, the new battlefront is already morphing into extending these services throughout any set-top-box connected television in the home. Comcast just announced the expansion of their AnyRoom On Demand service throughout New England. AnyRoom allows subscribers to start a VOD session in one room, and continue watching it in another room. The service is offered at no additional charge. The expansion comes on the heels of Verizon’s expanded effort to position their multi-room DVR product as a leading differentiating service. Multi-room DVR allows FiOS customers to watch and control recorded programs on multiple TV’s throughout the room. Verizon is marketing it as a single home DVR – no need to buy multiple DVRs. See Verizon’s latest commercial featuring NBA star Kevin Garnett below.

These new battlegrounds are setting the stage for the eventual connected home – a home where media of any kind can be distributed throughout to any appropriate networked device. It’s been the subject of many a PowerPoint deck or panel at your tradeshow of choice. We’re not there yet by any stretch, but these deployments are leading indicators of a future to come. Service providers will be challenged to ensure they too can offer these differentiated networked home product portfolios.

The recent news of Plaxo’s acquisition by Comcast stimulates some interesting discussion. What exactly is (or should be) the role of social networking in telecom? On the surface, it seems as if social networking and telecom make a perfect fit. On the service provider side, you have a business relationship and connectivity with thousands or millions of customers (depending on company size). On the social networking side, you have a method for building, maintaining, and strengthening relationships around areas of interest. Why not bring those two strengths together? It’s always easier said than done with issues like this. For example, could you have cultures that are more diametrically opposed as entrepreneurial web 2.0 start ups and status quo “utility” service providers? Probably not. Secondly, social networking outfits love to be on the edge and some probably see the Plaxo acquisition as somewhat of a sell out. On the other side, traditional telecom service providers aren’t exactly sure what a social networking business model is and how to truly monetize its assets.

But back to the original question – does it make sense for these two to connect? One might perceive Comcast as taking the lead with this, at least among “national” players. We can add Plaxo to Fandango and Fancast, which will all make up the Comcast Interactive Media division. Comcast clearly has some semblance of an interactive media strategy, and Plaxo may play a big role. The two were already connected, with Plaxo developing the address book platform for Comcast's SmartZone communications center. SmartZone is a unified communications platform targeting the consumer sector, and will launch later this year. Plaxo also hosts the address books of Comcast Web mail users. If you’re the creative type, you can begin to see the potential of marrying Comcast’s entertainment and subscriber assets with Plaxo’s social networking application development experience. The end result could be interesting social networking applications that blend my entertainment and media interests with my social network. Such a blend may enhance the value of being a Comcast subscriber and build a competitive advantage for them. It also doesn’t hurt that social networks tend to have millions of subscriber relationships. Relationships that Comcast and companies like them would love to market to. Some might argue that cable companies are better suited than their telecom competitors for these types of partnerships because of their media heritage. But telecom still has a trick up their sleeves which may be the trump card for all social networking – mobility services. Where does this all lead? Stay tuned.

Update - May 7, 2008: It's official. Sprint and Clearwire announced the formation of the "new" Clearwire, as discussed below in the original May 6th post.

A mega deal which involves Sprint, Clearwire, Intel, Google, Comcast, Time Warner Cable, and Brighthouse Networks is on the verge of being announced according to the Wall Street Journal (subs. req.). The deal will merge Sprint and Clearwire's WiMAX assets into a company valued at $12 billion. The company will retain the Clearwire brand and will be led by Clearwire's CEO Ben Wolff. The cable company investments totaled over $1.5 billion, led by Comcast who ponied up over $1 billion. The deal has been rumored for months. It is expected to be announced as early as Wednesday.

It appears as if WiMAX will now have the foothold it needs to become a 4G wireless force in the North American market. Cable companies including Comcast, Time Warner Cable, and Brighthouse will now have access to a legitimate broadband wireless network and begin the long process of integrating wireless opportunities into their core business. The deal will allow cable companies to sell broadband wireless under their own brand. It's somewhat surprising that cable companies and Sprint are partnering for another wireless venture, given the failure of their previous joint effort, Pivot Wireless. Perhaps Pivot's demise was intentional to make way for Clearwire. It's not clear what this development means for cable's AWS spectrum holdings. Regardless, this new WiMAX momentum will provide interesting competitive observations. Sprint will conceivably gain a considerable 4G lead over their main competitors, AT&T, T-Mobile, and Verizon, who have all tagged LTE as their 4G technology of choice. It will be at least a couple years before we see them bring something to market though. It's some welcomed news for Sprint, which has seen nothing but rumors focused on their troubles swirling for the past few weeks.

Comcast reports that two-thirds of the new 492K broadband subscribers signed up during the first quarter of 2008 churned from telecom DSL offers. Other interesting metrics for their cable modem high speed Internet product include:

• Added 492,000 high-speed Internet subscribers, reaching 28% penetration or 14.1 million customers
• High-speed Internet revenue increased 12% to $1.8 billion
• High speed Internet evenue growth of 13% from the previous year
• 2% decline in average monthly revenue per subscriber to $42.18 for high speed Internet

The decline in Comcast's HSI ARPU is primarily attributable to an uptake in their Economy Internet service, which offers 768Kbps service for approximately $25/month.

Comcast continues to see impressive gains in voice service as well. It’s quite clear that broadband and voice services are Comcast’s growth engine. Voice revenues increased 65% and HSI revenues increased by 13%, while video revenues increased by only 5% "It's the diversification of revenue streams that is the strength of our business," said Comcast Chief Executive Brian Roberts, as reported in the Wall Street Journal. For voice service, interesting metrics include:

• Added 639,000 Comcast Digital Voice (CDV) customers during the first quarter
• Voice penetration reached 12% or 5.1 million customers
• Phone revenue increased 65% to $587 million in the first quarter of 2008 from $356 million in 2007

Comcast announced the launch of a 16 Mbps download/2 Mbps upload speed for its Business Class Internet service tiers. The increase in speeds will be provided at no additional cost to existing customers. Comcast also offers a Microsoft Communications Services bundle for SMB customers. “Comcast is dedicated to and focused on offering a better broadband Internet experience so business customers are equipped with technology solutions that save time, increase productivity and offer more value,” said Bill Stemper, President, Comcast Business Services.

It’s official. Pivot Wireless, the wireless joint venture between Sprint and the cable industry is dead. The three major cable partners, who included Comcast, Time Warner Cable, and Cox, have decided to move on. Sprint announced back in October that it would stop marketing Pivot. All existing Pivot wireless subscribers will migrate over to Sprint. There are no firm numbers on exactly how many subscribers the venture had obtained. All joint venture participants had previously complained about Pivot’s provisioning and integration complexities. It almost seems that it was doomed from the start.

The real question is what’s next for the cable industry in regards to wireless? They are sitting on a “boatload” of spectrum obtained from recent AWS and 700 MHz (Cox is the lone national cable provider with 700 MHz) auctions. In some regards, Pivot was almost a distraction. With it removed from the equation, the cable industry may start moving more aggressively on a true facilities based wireless platform. Gigaom.com is reporting that Comcast has hired a seasoned wireless executive to start building the framework for their own wireless launch. There has also been speculation that the cable industry was interested in investing in Sprint’s WiMAX play, Xohm. That seems highly unlikely now, given the Pivot blow up. Whatever the case, the cable industry needs to move fast on their wireless strategy. If they don’t, they may arrive to the wireless party too late (which may already be the case), and spend billions on building a nationwide wireless network, only to find out that subscribers are quite content with their current wireless provider.

AT&T posted pretty strong financial results for the first quarter. For the quarter ended March 31, 2008, AT&T's revenues totaled $30.7 billion, and net income totaled $3.5 billion. The net income increased 21.5% from the year-earlier first quarter. Revenue and income growth was fueled by several factors, including:

• 18.3% increase in wireless revenues; wireless data revenues from areas such as Internet access, messaging and media bundles up 57.3%
• 13.2% growth in broadband revenues; 491,000 net gain in broadband connections in the quarter to reach 14.6 million in service
• Enterprise revenues up 1.2% and enterprise service revenues up 2.1%, led by a 22.9% increase in revenues from IP based data services
• Continued ramp in AT&T U-verse TV subscriber totals, with a first-quarter net gain of 148,000 to reach 379,000 in service; on track to reach target of more than 1 million subscribers by year-end 2008

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The FCC offered its opinion in the recent spat between cable MSOs and Verizon. Several cable companies lodged a formal complaint with the FCC claiming Verizon was illegally trying to stop customers from defecting to cable triple play offers. The complaint alleged that once Verizon got notice of a telephone number porting request, they aggressively pursued that customer with offers to keep them from switching phone service providers. The cable industry argued the practice is against the spirit of FCC competition guidelines, and may even be illegal. Verizon argues that they are doing nothing illegal, and are simply aggressively competing in the marketplace.

Apparently, the FCC agrees. In the Enforcement Bureau’s recommendation, the FCC, while suggesting Verizon’s retention marketing practice may need more study (and even recommends a Notice of Proposed Rulemaking on the subject), sees this type of debate as healthy for consumers and the competitive marketplace. “In fact, one could argue that, when the customer’s existing provider offers to lower prices or expand services to prevent the customer from switching providers, the customer benefits. This type of aggressive competition to win and to keep customers can result in lower prices for consumers, the introduction of new services and technologies, and improved quality of service as carriers compete in the open marketplace,” says the FCC Enforcement Bureau. They go on to say, “In fact, today’s competitive marketplace for bundled services, and intermodal competition of providers of services within the bundle, may reduce the need for regulation. It is reasonable even to ask whether further deregulation would allow for even more vigorous competition for customers and bring with it the associated benefits of such competition.” In the end, the recommendation rules for Verizon and says the cable company’s complaint and argument “don’t hold any water” in the context of the current guidelines and regulations. Checkmark Verizon.