Roberts: Cable’s Handling Telcos’ Video Challenge

3/06/2007 7:54 AM Eastern

Comcast CEO Brian Roberts said the cable industry is winning the battle against phone companies that are encroaching on the video market, adding that more than one-half of its high-speed-Internet customers in the fourth quarter came directly from telcos’ digital-subscriber-line customer base.

Roberts, speaking at the Bear Stearns Media Conference in Palm Beach, Fla., Tuesday, said cable’s higher data speeds are giving it the advantage despite its higher price. In the fourth quarter, Roberts said, 52% of Comcast’s net high-speed-Internet customer additions came from DSL.

This despite the large price disparity between the two services -- cable-modem service averages $40-$50 per month unbundled, while DSL can be priced as low as $19 per month.

“DSL is the new dial-up,” Roberts said at the conference, equating the telco offering to that antiquated Internet technology.

Driving that concept is the way customers are using the Internet to download video, Roberts said, adding that bit-rate consumption is up 30%-40%. He said 2%-4% of the traffic on Comcast’s high-speed-Internet service last month was to download video from sites like popular viral-video Web site YouTube.

Later, Roberts said fears that cable will need another round of upgrades -- and the additional spending that goes with it -- to provide even faster speeds are unfounded.

He added that with switched-video technology, cable can recapture as much as 80 analog channels, many of which could be used to provide even faster high-speed Internet service.

Roberts said that with DOCSIS 3.0 technology, cable operators can currently deliver speeds as high as 100 megabits per second using only four channels. Once the industry moves to 100% digital -- Comcast is currently at about 50% -- the possible speeds are almost unlimited.

“We’re now up to 50% digital. We will get to 80% digital and, someday, we will have 100% digital, and then we reclaim some, if not all, of those 80 analog channels,” he added. “If we, therefore, needed 1 billion bits per second, bidirectional into your house, we could do that.”

While customers may need higher and higher bandwidths to download video from the Internet, Roberts said he does not see similar demand for wireless video.

While he said one year ago that wireless video was all the rage -- and another concern that cable operators would not be able to compete with telephone companies with their own wireless networks -- he added that this is not the case today. Wireless video, he said, has proven to clog up wireless networks and keep providers from reliably performing the main task of a wireless network -- completing phone calls.

“I think we’re further from having to worry about a pure attack on your cable business,” he said, adding that in the event that a more robust wireless network is needed, Comcast has access to 20 megahertz of wireless spectrum in some of the biggest markets in the country through its participation in Federal Communications Commission spectrum auctions last year.

Roberts also reiterated Comcast’s position that it would not pay cash for retransmission consent from broadcast-television stations.

He said Comcast has done about 600 retransmission-consent deals, and another few should be done shortly, perhaps referring to the MSO’s ongoing negotiations with Sinclair Broadcast Group.

“We will be happy to sit down with reasonable folks and talk about some sort of cooperative deal, where comparable value gets exchanged or approximately comparable value gets exchanged,” Roberts said. “We are not interested and will not pay cash for retrans if that’s all you do.”

He added that most of Comcast’s biggest retrans deals -- mainly with networked-owned stations -- don’t come up for renewal for five to seven years.

“Of the four largest retrans deals we have, the earliest expiration is almost five years from now, but most go beyond six or seven years,” Roberts said. “This is not a conversation we’re having anytime soon. With the pure independent smaller folks, we believe we’re going to be able to have something other than just pay and get retrans. We’re going to help market each other’s businesses; it’s going to be a win-win outcome. It will not require us to raise consumers’ rates or charge the consumer for free TV. That line is drawn, that’s not changing. I don’t anticipate that changing anytime soon.”