Wednesday, December 5, 2007

Comcast sees customer loss in 2008

That the stock market hasn't already taken into consideration into the price of cable stocks, the effect of competition for cable subs from phone and satellite companies, is surprising. That it takes comments from Comcast affirming that competition does exist to cause todays drop in stock value is simply reactionary and hopefully short-lived. Competition is here and it should be a surprise to no one that existing cable company subs will move to phone.

Cable companies like Comcast and Time Warner have been living the good life, competing only with satellite and offering a more robust and technically superior product. But the moment cable entered into the phone business and Verizon and AT&T recognized that to retain their wired customer they too had to offer TV, the marketing wars would begin, pricing would become competitive, and eventually the swing of subs would have to shift back to the middle; consequently, an initial loss of basic subs. Convergence of technologies and selling the bundle brought more competition, not less.

But rather than bemoan the loss of customers, cable should look at the opportunity that the pipe offers to go further into new businesses - commercial businesses, security, e-commerce, and continue to find new uses and new users to the cable pipe.

Cable has had the monopolistic grasp through exclusive franchises and lack of competitive threats till now; the phone companies have been aggressively pushing to gain a foothold into the cable business for more than a year. Their intentions have been obvious. The stock markets reaction and price drop is either short sighted or based on other issues not yet fully announced.