Comcast blames telcos, economy for net-adds dropoff

Comcast plans to lower its capital spending this year, both in absolute dollars and as a percentage of revenue, a move made possible by improved prices for customer premises equipment, increased efficiency and “lower unit activity,” Comcast said. But it will continue to spend where it matters most: For example, the company will spend between $400 million and $500 million this year rolling out all-digital products and DOCSIS 3.0 technology, which enables much higher broadband speeds, including 50-Mb/s offerings.

Comcast said today it will bring DOCSIS 3.0 to 65% of its cable footprint by the end of this year. That represents a doubling of its current DOCSIS 3.0 footprint, which at the end of last year reached nearly a third of its overall cable footprint.

“Our goal is to get our entire footprint – or the vast majority of it – up to 12 megabits [per second] and to offer 50 to 100 meg in as many places as possible,” Roberts said, adding that it already offers 50 Mb/s service to 10 million homes in 10 markets.

Digital voice revenue was up 38% in the quarter and up 48% in the year, to $2.6 billion. Nearly 40% of all Comcast customers subscribe to voice. But the company saw a slowdown in its voice customer net adds in the second half of last year, a trend it attributed in part to a slowdown in the housing market, since less moving among customers gives Comcast fewer opportunities to sell. Its voice service penetration is now nearly 14%, but in some markets, it’s more than 20%.

“Eighty-seven percent of our phone customers take all three of our products, so this product is important in terms of bundling,” Roberts said. “Since we launched phone a few years ago…we’ve competed largely if not primarily on the basis of price. Now we’re also beginning to offer new converged services and features to compete on that basis as well.”

In addition to rolling out universal caller ID (now available to 10 million homes) and converged email, voicemail and address book features, Comcast is launching “an enhanced cordless phone” and other new packages this year.

It has also recently introduced low-cost options for phone and broadband, including a 1-Mb/s service for $24.99 per month. And through a recent promotion, which Roberts called “a real winner,” Comcast offered customers $200 back for signing a long-term contract.

One particularly bright spot for the company in the fourth quarter was its business services division, whose revenue was up 47% in the quarter to $162 million, giving those operations a $650-million annual revenue run rate. Telco competition is not as fierce there, Comcast said, because telcos tend to focus on larger business customers than Comcast does.