Comcast luring DSL customers with triple play

Comcast may have come late to the VoIP party, but the U.S.’s largest cable company is making up for lost time--and doing so at the expense of its telephone company rivals.

In announcing a record first quarter in new customer adds, Comcast also said an increasing percentage of its high-speed data customers are leaving DSL, and that its triple-play bundle is also driving up cable modem sales.

“Comcast is noticing two key trends related to its high-speed data service,” said Stephen Burke, chief operating officer and president of Comcast Cable. “An increasing percentage of our new data customers are coming from DSL--34% of our net adds came from DSL this quarter compared to 23% a year earlier. We now get as many customers from DSL as from AOL narrowband. We think our emphasis on speed superiority continues to ring true. As the RBOCs cut prices, we stay focused on speed superiority.”

In addition, Burke told industry analysts on Comcast’s earnings call, sales of cable modem service are going up in areas where Comcast is introducing its digital voice service.

“The triple play at $99 for the first year is very competitive with what the regional Bells are offering,” he said. The company has also been able to reduce churn by offering expanded video-on-demand and other digital TV products, Burke said.

Comcast continues to expand its digital voice offering, adding 3.9 million marketable homes in the first quarter to now have 20 million homes able to get Comcast Digital Voice. An additional 5 million homes will be added in the second quarter. The company average 15,385 new voice customers a week in the first quarter and is now “having weeks around 20,000,” Burke said. “We are pleased with how the business continues to ramp.”

The company is aggressively marketing its triple-play bundle in markets such as Boston, Philadelphia, Indianapolis and Pittsburgh, he added, and will launch the more aggressive market plan in the majority of the company within the next three to six months.

“We are seeing ARPUs of $120 to $130 for the $99 triple play as people elect to take HBO or digital on top of the $99 bundle,” he said. “About 75% of our CDV customers take all three products.”

Comcast today announced that its first-quarter earnings had tripled, largely on the triple play, as the cable company added 211,000 phone subscribers in the quarter. Comcast had trialed Cox Communications, Cablevision and Time-Warner Cable in aggressively marketing voice services, but is doing so now, according to Brian Roberts, and doing well.

“We are bullish on our business and the growth businesses, and we hope to have an outstanding 2006,” Roberts said. Comcast earned $466 million, or 22 cents a share, compared with $143 million, or 6 cents, in the first quarter of 2005. Revenue rose nine percent to $5.6 billion as the company had its best-ever quarter in cable revenue, adding 965,000 new high-speed Internet, digital video and phone subscriptions. Comcast also added 340,000 new digital cable subscribers, its highest level of first-quarter subscriptions and added 47,000 new basic cable subscribers, another first-quarter best. Its broadband revenues rose 22% to $1.1 billion, as it added 437,000 customers to end the quarter with 9 million high-speed Internet customers. Average monthly revenue per Internet subscriber rose from $42.81 to $43.14. “I think we had an excellent first quarter and, more importantly, an excellent start to 2006,” Burke said. “I think it is going to be a year that defines the acceleration of our growth.”

In 2003 to 2005, Comcast put the major building blocks in place for that growth, Burke said, closing the AT&T Cable acquisition and rebuilding that system, adding simulcast to enable use of low-cost set-tops for digital service, introducing video-on-demand with 7500 shows, upgrading its cable modem product to add higher speeds and adding Comcast Digital Voice to the product mix.

“With this foundation in place you will see our business pick up across all our product lines,” Burke said.