Comcast might have added only 60,000 cable-TV subscribers in the fourth quarter, but its big growth came from 251,000 new digital subscribers, folks who pay an extra $10-or-higher a month for premium services bringing the total to 21.5 million. Average revenue per video subscriber is up to $50.22 from $47.45 despite increased competition from satellite. The high-speed Internet subscribers grew by a whopping 438,000 despite price cuts by rivals like the Baby Bells who sell DSL services. Analysts at Marquis Investment Research believe that this could be the calm before the storm.
The intensifying competition from the RBOCs will get worse, not better. The race for the consummate consumer bundle is on. When the smoke clears after fiber to the premises, we believe the RBOCs will have a better bundle, driven by the big differentiating product: Internet Speed. Thus, the cables would have to come up with a fiber initiative to compete, and this costs money. Additionally, the RBOCs have wireless.
I think this is an overblown scare, because Bells are doing all that is humanly possible to get off the ground and offer four-play. It will be a couple of years when they can match the penetration of cable, and that might be enough time for cable companies to marshall their resources for a more aggressive competitive marketplace.
* Business 2.0 columnist Paul La Monica thinks Comcast is moving on up the stock valuation ladder.