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Comcast Funds Wideband, Digital TV

2/21/2009 2:00 AM Eastern

While Comcast expects total capital expenditures to be lower in 2009 than last year, the company plans to spend up to $500 million deploying DOCSIS 3.0 to more than 65% of its footprint and freeing up spectrum with analog-reclamation projects in additional markets.

Comcast CEO Brian Roberts told investors on the company's earnings call last week that capex is expected to decline in 2009 — both in absolute dollars and as a percentage of revenue — even with the investments in “all-digital” conversions and DOCSIS 3.0 upgrades.

In 2008, Comcast's capex was $5.7 billion, down 8% from the year prior. The company attributed the decline to “increased efficiencies” as well as lower activity levels and lower construction.

Specifically, Comcast saw the cost for much of its consumer-premises equipment drop 10% to 20% in the fourth quarter, while HDTV set-top boxes were down 20% to 30% on a unit basis, chief operating officer Steve Burke said.

The operator currently offers high-speed Internet services with up to 50 Mbps downloads to some 15 million premises, in about 30% of its footprint. By the end of 2009, Comcast expects to offer “wideband” services to more than 30 million premises.

Burke suggested the MSO will offer 100-Mbps services at some point.

“Speed really matters in this business, particularly when you see more video on the Internet, YouTube and other applications that get better with more speed,” he said on the earnings call. Comcast's goal is to get all broadband subscribers to a minimum level of 12-Mbps service, and “offer 50 or 100 Meg in as many places as possible.”

The upgrades to DOCSIS 3.0 represent a “replacement of spending we would normally incur for DOCSIS 2.0,” Burke said.

In independent interviews with a dozen of the MSO's first wideband customers, Multichannel News found that most were pleased with the services despite a few initial glitches (see “Comcast's Hot Wheels,” Feb. 16, 2009, page 10).

In the fourth quarter, Comcast's basic-video subscribers fell by a net 233,000, but Burke claimed the availability of video content on the Internet was not driving large numbers of customers to cut the cable TV cord.

On the analog-reclamation front, Comcast has seen positive results in its initial Portland, Ore., market, according to Burke. With these projects, the operator distributes low-cost digital-to-analog adapters to basic subscribers that are not interested in upgrading to digital cable; Comcast is then able to eliminate the transmission of 50 to 60 analog channels, freeing up space for DOCSIS 3.0, high-definition channels or other services.

Comcast is currently in the process of introducing DTAs in three additional markets, according to Burke: Seattle, San Francisco and Philadelphia.

In Portland, the MSO has seen a higher percentage of people doing self-installs than anticipated, though Burke added with the DTA projects “there's a real cost” and that “in the year you do it it's not necessarily accretive.” Benefits start to accrue later with operational efficiencies, reduction of cable theft and the introduction of new services.

“By 2009 and into 2010, we will recapture much of our analog bandwidth,” Roberts said.

 

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