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?
DOCSIS 3 will be the real eye opener. If cable can offer it at the same or less price points, DSL will be in real trouble. It will be leaps and bounds better than anything DSL can offer, except maybe VDSL2 – but that has serious distance issues.