Cast Aside?: Why Comcast and Other Cablecos Are Struggling

Further, Angelakis said Comcast has seen some slowness and softness in the business. "We’ve seen a bit of uptake in churn," he said. "That does absorb some capital above what our [plans are]."

Comcast historically has increased capex spending. The cable giant spent a total $4.6 billion in calendar year 2006, after initially providing a guidance of roughly $4.5 billion earlier that year.

So why, in the eyes of Comcast CEO Brian Roberts, did Wall Street hit his company’s stock after the change in financial guidance?

"I think it’s a combination of factors: heightened competition, the potential softness in the economy, the maturation of broadband. A majority of homes now have broadband. There’s growth, but it will be slower growth," Roberts said in an interview with Fortune magazine. Comcast denied xchange’s request for an interview with Roberts, however. "What I hope we will prove with subsequent performance is that we have new products — telephone, [services for] small and medium-sized business, more digital subscriptions and broadband. When you add those together, we’ll continue to grow at a very exciting rate."

Double Jeopardy

Of course, well-positioned telcos see things differently.

For example, Verizon’s early FiOS and especially 20/20 rollout began primarily in the densely populated territory of Comcast, pitting the telco’s FTTH plant against the cableco’s more coax-rich network. Although Verizon’s entry into the video business required the telco to make massive investments in fiber and video infrastructure, the telco believes building the offering from the ground up gives it a solid market advantage, says Jerrlyn Jwata, director of programming for Verizon.

Comcast CTO Tony Werner pledged in late November that his company will have DOCSIS 3.0 infrastructure in place in 20 percent of its footprint by end of 2008, with initial focus on faster downstream channel bonding.

In lieu of DOCSIS 3.0, cablecos must deploy switched-digital technology to enhance their networks, in an effort to deliver more HD and pay-per-view channels to their customers as soon as possible. Comcast declined to detail or update its plans for switched-digital technology in its network infrastructure.

Why is the move to switched-digital technology so key for cablecos? Because with prices for HD sets continuing to fall and with more units flying off the shelves in the last year than ever before, HD lineups have become a huge focus for marketing efforts by service providers of all types and sizes.

"I’d do this to keep my customers from switching to DBS providers," emphasizes Infonetics’ Heynen. "Switched video can’t come soon enough, but what’s the impact on my existing STBs? Do my customers have to switch out their boxes?" Another question the expert poses is whether cablecos can expand their access node frequency to 3GHz to let them offer more HD programming in addition to switched video.

Share this article: Email, Slashdot, Digg, Del.icio.us, Yahoo!MyWeb, Windows Live Favorites, Furl
Add this article feed to: RSS, My Yahoo, Newsgator, Bloglines