Sunday, January 9, 2005

Comcast Sees VoIP as Engine for Growth

VoIP will be Comcast's "next engine of growth," said Brian Roberts, Comcast's Chairman and CEO, speaking at the Smith Barney Media & Telecommunications Conference in Phoenix, Arizona. With its network rebuild now complete, Comcast's goal is to build on the portfolio of video and data services it provides.

Comcast already has experience in residential telephony and services about 1.2 million circuit-switched customers in several markets. It has over 1,000 employees dedicated to telephony operations. Comcast launched its first three VoIP markets last year. Roberts confirmed that during 2005 Comcast will scale the operation to 20 markets nationwide, reaching a potential market of 15 million homes. Residential VoIP should be available across the full Comcast network by year end 2006. Comcast will cap its circuit-switched network.

Comcast is targeting an initial price point of $40 per month for unlimited nationwide local/LD calling. Over time, Comcast will add unified messaging, customized ringtones, softphones, and CallerID on TV capabilities. Comcast will offer a full set of features, including a voice portal, E911, CALEA and battery back-up. The company believes it can achieve a 20% subscriber penetration rate by its fifth year of availability.

Some additional highlights of the presentation include:

  • Roberts said HDTV has now reached an inflection point with U.S. consumers.

  • Comcast VOD services are currently available to 80% of the customer base. Over 3,000 titles are offered and Roberts predicts there will be over 10,000 on-demand offerings by year-end.

  • Comcast registered 62 million On Demand orders during the month of November.

  • In Philadelphia, there were 23 orders per customer during the month. There was 65% customer usage of VOD during the month, and nearly 80% of customers accessed the service over a 3 month period. Based on these figures, Comcast estimates it will deliver 1 billion VOD orders for all of 2005.

  • Comcast is continuing to add content to is VOD library through recent deals with MGM/Sony, NFL, NBA, etc.

  • Comcast will begin upgrading its analog customers with a digital box that delivers the same channels but with better picture quality. It will also enable VOD to these basic customers.

  • Comcast reported progress with its high speed Internet service (cable modem), noting that the download speeds have been increased. The company is introducing Video Instant Messaging and will add higher level of portal customization.

  • Comcast's cable modem penetration is about 18% of its customer base, giving it nearly 7 million customers at year end 2004. ARPU is about $40.
  • In October 2004, Comcast reported that its cable phone revenue declined 8.6% for its third fiscal quarter compared to the same period in 2003, to $173 million, the result of a 7.5% decrease in subscribers to 1.2 million. There was stable average monthly revenue per subscriber of $47.18. At the time, Comcast said it is continuing to focus on profitability, not unit growth, while it begins the transition from circuit-switched to VoIP.

  • In October 2004, Cedar Point Communications announced that it had been selected by Comcast as its primary vendor of VoIP services equipment. Under the multi-year agreement, Comcast will expand its deployment of Cedar Point's integrated SAFARI C(Cubed) Media Switching System to multiple new phone markets. Financial terms were not disclosed.