Fire Flame

Comcast reported quarterly results today and revealed a first since the communications conglomerate began offering internet service decades ago. No broadband growth in the previous quarter.

It’s a true sign of the times, as fiber and fixed wireless providers are beginning to make headway against the mighty Comcast, which has historically led all broadband growth among large national providers for as long as most can remember.

Comcast actually lost 10K residential broadband subscribers in 2Q22, but made up for that loss by adding 10K business broadband customers, resulting in zero net adds for the quarter. By comparison, Comcast had 354K net broadband adds a year ago in 2Q21 and 262K net adds a quarter ago in 1Q22.

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It’s a bit of a sobering reality, although Comcast executives brushed aside the implications on today’s call, blaming most of it on declining move activity in the Comcast broadband footprint, rather than competitive impact.

“Our win share of new customer acquisition opportunities remains high, but the slow down in moves has resulted in fewer of these jump balls and this has had the largest impact on our gross connects,” said Comcast CEO Brian Roberts on today’s call.

Roberts also cited a return to pre-pandemic activity as more impactful on Comcast’s flat broadband growth than competition. Roberts did cite competition from fixed wireless and fiber as having some impact, but downplayed it as a temporary issue.

“We are not seeing fixed wireless have any discernible impact on our churn, but its early growth appears to be another contributor to our lower connect activity,” said Roberts. “In addition we continue to compete against fiber in an increasing percentage of our footprint.”

The churn comment is interesting, given results from fixed wireless competitors. T-Mobile reported results this week as well, and the company added 560K new fixed wireless subscribers in the quarter. Commenting on those fixed wireless net adds, T-Mobile CMO Michael Katz said, “A little over half were switching from cable.”

How Will Comcast Respond?

Beyond the typical rhetoric around “superior product” and “fixed wireless is a value play with little long term impact”, a couple of thoughts from Roberts did catch my attention with regard to the Comcast broadband competitive response strategy.

“We’re working hard to expand our footprint, taking advantage of growth in housing and businesses in our current markets, accelerating edge outs into new areas,” Roberts said. “We’re playing offense when it comes to government subsidies.”

Edge outs and offense on government subsidies are particularly noteworthy. As Comcast continues to feel this competitive heat in its core markets, it intends to look elsewhere for growth, and take advantage of government subsidies to do so.

That means Comcast potentially sees the flow of infrastructure and other government funding as fuel for growth. You can probably expect them to be a player in BEAD and other funding programs.

Evidence of that is already surfacing. The company won two-thirds of the latest funding round in West Virginia for rural broadband expansion.

Charter is also quite active with rural expansion, leveraging government funding programs.

As these large cable companies continue to feel competitive heat, it looks like one strategy to offset that impact is to grow through expansion into more rural areas. As a result, competitors may see these cable giants competing for not just subscribers, but for the government funding that helps support that growth.

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