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Wednesday, May 2, 2012

For Comcast, The Growth Comes From High Speed Subscriptions

Just last week, my post on Time Warner discussed the growing value on the pipeline for broadband and telco subscription verse the cable subscription.  Today's news from Comcast strengthens my point.  While cable subscriptions dropped in the quarter, both high speed data/broadband and telco subscription grew.  Like Time Warner Cable, Comcast is watching their cable subscription business decrease as viewers seek lower cost alternatives for video consumption.  Their own broadband pipeline being the ideal means to watch their web based programming from Netflix, Hulu, and others.

As a content producing company, Comcast sees growth from its content creation business, NBC.  With double digit revenue growth, NBC benefits by getting business from its parent company's rivals including DirecTv, U-Verse, and FIOS, as well as from streaming deals.  Comcast subs may be dropping but NBC viewership can be gained from these competitors and other platforms.

Still, for Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline.  While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription.  Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant.  And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

As cable subscription costs continue to rise, consumers will seek ways to lower their bills.  It may be smaller packages of services; it may become a la carte.  As programming license fees continue to rise, the old cable model is breaking apart.  Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe.

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