Comcast

Broadband Price War on the Horizon?

Bernie — Tue, 02 Sep 2008 10:08:39 -0400

Verizon recently launched a new DSL promotion offering six months of free service for customers who bundle phone service. The phone and DSL package is being offered for $45/month. Verizon joins AT&T, who also recently launched a DSL promotion, offering a “no contract” term for DSL pricing, which locks their pricing in for two years. Both promos are believed to be, at least in part, a response to the dismal 2Q08 results for DSL net adds. The Wall Street Journal takes it a step further, and suggests a broadband price war may be in the making. But the article is quick to point out that it is a one sided war for now. Cable companies have yet to respond, and feel less need to do so. Even though broadband adoption is slowing, cable companies are taking the lion's share of new customers. There’s less pressure on them to join this “price war.”

The third quarter will be an interesting one to watch. Logic says that these bad economic times, which seem to be cresting in this current quarter, should drive more potential broadband customers to less expensive DSL options. But that didn’t happen in 2Q08. In fact, some cable companies, Comcast included, noted their best broadband take rates occurred with their premium, and more expensive, cable modem tiers. Will that change in 3Q08? Perhaps. It seems like the bad economic news is really piling on these days, which may push people to more “value” priced DSL options. If it doesn’t, and cable repeats its 2Q08 “slam dunk” performance against DSL in the current quarter, telco service providers may be in real trouble.

Redefining the Triple Play

Bernie — Thu, 31 Jul 2008 09:39:53 -0400

The triple play has historically been defined as a bundle of voice, video, and broadband. And of late, the cable industry seems to be executing a triple play strategy quite well. For example, Comcast’s triple play strategy execution has helped vault them to the fourth largest phone company in the U.S. (by access line count) – all within three years. How many decades did it take Embarq/Sprint to be the fourth largest traditional phone company? If you look at recent quarterly reports, cable companies seem to be executing the triple play better than their telco competitors. Take a look at each industry’s core product. Comcast lost 132K of its core product (basic video subs) last quarter. AT&T and Verizon’s losses in core product (switched access lines) are now being measured in millions each quarter. Current indications suggest that a triple play bundle of voice, video, and broadband favors cable companies.

But what if the future of triple play really involves wireless? Whenever wireless is injected into a bundle discussion, it’s seems to be as a part of a “quad play” – voice, video, broadband, and wireless. But what if we redefined triple play as wireless, broadband, and video. If the future of wireline voice service lies with IP, then there really is no reason to delineate voice and broadband separately. The two should be combined into “broadband,” since voice will simply be one of many broadband applications (you could conceivably say the same for video, but that’s the subject of another post). In this regard, future triple play strategies may shift to wireless, broadband, and video. If so, than despite the short term troubles of telcos relative to their cable competitors, the long term looks quite bright for the telcos who are fortunate to have wireless assets. Consider that in 2Q08, AT&T’s ($12 billion) and Verizon’s ($12.1 billion) individual revenue from wireless alone dwarfs Comcast’s total revenue of $8.5 billion. So while telcos may be licking their wounds over switched access line losses in the short term, they may well be positioning themselves for long term triple play dominance, with wireless at the center of their strategy.

Is Cable Pulling Away From Telco?

Bernie — Wed, 30 Jul 2008 20:20:27 -0400

Comcast released their quarterly numbers today, and they potentially offer some bad news for telcos. It begs the question, is cable pulling away from telcos in the competitive race? Perhaps. But we also know this race is a marathon, not a sprint. First let’s look at some numbers for Comcast’s 2Q08:

278K new broadband subs in 2Q08, 14.4 million total, representing 29% penetration of homes passed
555K new digital voice customers, 5.64 million total, representing 12.5% penetration of homes passed
Lost 138K basic video subs, but gained 320K digital subs

Pretty impressive when put into the context of their major telco competitors, who are "licking their DSL net adds and switched access line loss wounds." I guess we know one of the reasons why DSL growth slowed so much last quarter. From a 2Q08 perspective, Comcast kicked telco butt. Sanford C. Bernstein & Co. Inc. analyst Craig Moffett tells Light Reading’s Cable Digital News, “...that U.S. cable will own as much as 90 percent of the broadband net additions when the book on second quarter is closed.” What’s even more alarming for telcos is that Comcast CFO Michael Angelakis revealed that new, “premium Internet tier” additions were added at a four-to-one ratio when compared to their “economy” tier. That suggests that cheaper priced broadband is not as appealing as faster more robust packages. If that is indeed true, than DSL may be in even more trouble. DSL is considered the “value” option because, generally speaking, it costs less than cable modem. But if customers are opting for faster bandwidth over cheaper pricing, cable may have an inherent advantage. An advantage that will only be enhanced when DOCSIS 3.0 or wideband becomes more available. Are all the “value” conscious broadband subscribers gone?

Want a Wii? Sign up for Comcast

Bernie — Mon, 28 Jul 2008 22:58:55 -0400

Comcast’s latest triple play promotion offers a free Nintendo Wii game console for new customers who sign up for either Comcast Preferred Plus or Premier Triple Play packages. The hugely popular Wii system is often hard to find and Comcast hopes to capitalize on both its popularity and scarcity. New customers must agree to a two year agreement. The promotion runs through August 17, 2008.

Let it Go to Voicemail, It’s Comcast

Bernie — Thu, 24 Jul 2008 23:24:11 -0400

Comcast is joining the caller ID on the television party. While a little late to the party, they plan on moving aggressively into the converged communications arena with other services as well. Caller ID TV will be available in August, followed by caller ID on the PC and visual voicemail for the TV early next year. Other cable MSOs including Cablevision have been offering Caller ID TV for some time. Telecom competitors have also been offering it for some time. Comcast also announced the launch of a “fourth” screen product, similar to Embarq’s eGo phone.

Comcast’s move into converged communications raises the bar for everyone. They are now the fourth largest phone company in the U.S., and competitors who don’t have these services in Comcast’s markets will be at a disadvantage. Caller ID TV is an extremely sticky service that subscribers come to love very quickly. Its value was initially underestimated, but it’s now one of the most successful differentiating applications available. Any service provider looking to compete in the marketplace today is basically compelled to offer it.

Comcast and Vonage Shake Hands on Network Management

Bernie — Wed, 09 Jul 2008 14:51:20 -0400

Comcast and Vonage announced a “cooling off” agreement, where the two competitors will “address the reasonable network management of Internet services.” The move by Comcast is a response to their recent bandwidth throttling strategy, which raised eyebrows at the FCC. The throttling attempts were more targeted at peer-to-peer traffic generated through sites like Bittorrent. These type of traffic shaping tactics don’t bode well for Vonage and other “bring your own broadband” VoIP providers that ride Comcast’s broadband pipes into the home.

“Although we’re competitors with Comcast, this understanding helps our two companies work together to balance the needs of network management with consumers’ ability to freely access the services, applications and content of their choice,” said Louis Mamakos, Vonage Chief Technology Officer, in a joint press release. Comcast has made similar overtures to Bittorrent. Reaching out to Vonage and Bittorrent buys Comcast some cover at the FCC as they try to figure out a way to manage Internet traffic more to their liking and their wallet. Do you think agreements like this mean anything, or do they just make great press release fodder?

Comcast Expects 8 Mbps From WiMAX

Bernie — Mon, 23 Jun 2008 20:38:35 -0400

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.

Upload Broadband Speeds Becoming New Battleground

Bernie — Thu, 12 Jun 2008 11:28:00 -0400

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.

Multi-Room Features is New Competitive Battlefront

Bernie — Wed, 28 May 2008 00:09:24 -0400

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.

What is Social Networking’s Future with Telecom?

Bernie — Fri, 16 May 2008 14:49:13 -0400

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.