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Policy

Comcast’s Cohen: Broadband Aid Is ‘Essential’

9/26/2011 12:01 AM Eastern

WASHINGTON — Comcast isn’t saying how much it is spending to boost broadband deployment.
But executive vice president David Cohen, who joined Federal Communications Commission
chairman Julius Genachowski last week in launching Comcast’s Internet Essentials
program here, said the nation’s biggest cable operator doesn’t expect to make money from
recruiting those new customers. Comcast is providing Internet-only service for $9.95, and
subsidizing low-cost computers and digital literacy education. Low-cost broadband was high on Genachowski’s
agenda as he went straight from the D.C. event to the New York announcement of Microsoft’s
low-cost broadband initiative. Cohen told Multichannel News Washington bureau chief John Eggerton that
Comcast is going beyond its pledge to the FCC — the deployment promise being an approval condition of
its NBCUniversal merger — and was driven partly by the failure of the cable industry’s “A-Plus” program,
which even he called a “hollow commitment.” Cohen said he thinks the government should follow Comcast’s
lead and underwrite low-cost broadband. He offered his take on the progress of Internet Essentials,
which debuted in Chicago this past spring.

MCN: How many folks have applied for the Internet
Essentials program?

David Cohen: It is still really early. But I can tell you
we have received almost
100,000 calls to our dedicated
call center so far.
That doesn’t mean 100,000
people will get through the
entire process, but the program
is clearly resonating
enough to get people to pick
up the phone and call.

MCN: Will Comcast wind
up making money on this?

DC: I think it’s unlikely. It is
clearly not why we are running
the program. We are
trying not to talk about the
money, but we have very
significant up-front expenses:
design of the program,
design of the marketing materials.
We have distributed
almost 10 million pieces of
the marketing materials.
They are highly professional,
four-color, glossy, expensive
materials.

We are cont inuing to
spend on designing the digital
literacy component. Obviously,
the modems we are
going to pay for, and we are
subsidizing the computers.

To the extent we do need
to do truck rolls for installation
or troubleshooting,
those are all going to be significant
upfront expenses
as well. We are not in the
program to make money in
it. We are selling for $9.95 a
month a product we have in
the marketplace for $40 to
$50 a month.

MCN: Was the objective getting the NBCU deal
approved?

DC: No, the objective really isn’t fulfilling the deal commitment.
Comcast has been the most vocal company on
the issue of broadband adoption for three or four years.

We were the moving force in the cable industry for the ‘APlus’
adoption program. A lot of that came out of borrowing
from other people, but we have been very active in this
space.
We weren’t particularly happy with the A-Plus program
because we didn’t think it went far enough and we thought
the preconditions would mean that nobody was ever going
to be able to take advantage of it, and of course that
has turned out to be true.
The requirement of the government
lining up a hardware
partner and have the
school districts step and do
the digital literacy, we just
didn’t think that was going
to happen. We thought
it was sort of a hollow commitment
by the cable industry
that wasn’t actually
going to result in activity to
close the digital divide.

So, we continued to pursue
this on our own and
during the course of our
negotiation, we went to the
commission and said: ‘You,
the chairman [Genachowski]
and commissioner
[Mignon] Clyburn in particular
have talked a lot about
broadband adoption and
the need to close the digital
divide. We have a program
that we are about to roll out,
and if it will be helpful in
the transaction, we will be
happy to make it a voluntary
commitment that you
can incorporate into the
FCC order.’ That is where
the [merger] condition came
from.

We have gone so far beyond
what the basic requirements
of the commission
order are, in terms of the
extent of the rollout and expenditure
of up-front marketing
expenses. All these
public events are designed
to create an echo chamber
to help promote the program. This is a passion for this
company.

MCN: Is there any upsell element to this?

DC: We have not committed not to ever upsell, but the answer
is, this is a $9.95 standalone offer. You don’t have to
have any other Comcast products or services. There is no
activation fee or contract. There is simply this offer. It is not
a promotional price. You can have it as long as you have a
child eligible for a free lunch living in your household, you
will be able to take advantage of this price point.

So, 15 or 20 years from now, people will still be paying
$9.95 a month for this product.

MCN: This is only for kids getting free lunches, not reduced
lunches? Why the cut-off?

DC: The difference is an income cut-off . Obviously you are
eligible for the free lunch if you make less money. That will
obviously vary by city. It will be a higher number in New
York than, say, Denver.

You have to draw
the l ine somewhere.
There are 2.5
million to 3 million
households in the
Comcast footprint
where there are
children receiving
a free lunch under
the National School
Lunch program.

MCN: What is the
biggest thing Congress
and the FCC
could do to help
cable boost deployment?

DC: When you say
‘help’ cable operators,
I kind of don’t
like that question. I don’t think the point should be to help
cable operators, but to close the digital divide.

That said, help would fall into a couple of categories.
And I am not necessarily advocating this in order to relieve
any burden on Internet Essentials. It is a program we
are very comfortable with.

But you could use [Universal Service Fund] funding to
discount the price of Internet service, either at $9.95 or
even below that, to come up with a funding stream or a
source of new or refurbished computers at even less than
$149.99, at $100, or $50, or free.

I actually think the easiest role would be for the government
to develop a robust and complete digital literacy
curriculum that could be rolled out in modular fashion
and available to be taught in schools and computer centers
created by [Commerce Department broadband stimulus]
funding, plus dollars for training people to teach the
curriculum.

I think those are not necessarily unrealistic opportunities
for government engagement.

MCN: How will you measure success?

DC: If only 100 people sign up for the program, it is a success
for those 100 people. Obviously, in terms of national
public policy we are hoping for a much bigger sign-up
than 100 people. At the end of the day over a two-or-three
year period — I think you can’t look at this after year one
— if we’ve made a real difference in our footprint in closing
the digital divide, that there will be thousands or tens
of thousands of additional internet customers who, but for
this program, would not have signed up.

September