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Comcast Goes Big With 'Internet Essentials'

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Following initial launches in markets such as Chicago, Philadelphia and Hartford, Comcast Corp. (Nasdaq: CMCSA, CMCSK) went national Tuesday in Washington, D.C., with its Internet Essentials program and its promise to help low-income families afford access to cable modem services.

"We are treating this as the national launch of the program," Comcast Executive Vice President David Cohen tells Light Reading Cable. He was joined at the launch, held at the Ballou High School, by Federal Communications Commission (FCC) Chairman Julius Genachowski and D.C. Public Schools Chancellor Kaya Henderson.

Internet Essentials, a voluntary commitment linked to Comcast's acquisition of NBCUniversal LLC , targets impoverished households with school-age children who are eligible to receive free lunches under the federally assisted National School Lunch Program. Qualified households (PDF) will receive discounted Internet service (1.5Mbit/s down by 364kbit/s up) from Comcast at $9.95 per month, a $149.99 voucher to be used toward the purchase of a PC and access to a free digital literacy training regimen. Acer Inc. and Dell Technologies (Nasdaq: DELL) are supplying computer equipment for the program, with Comcast subsidizing part of the cost, Cohen says.

Comcast is also waiving activation and equipment fees and promising not to increase the monthly price for as long as families qualify for the offer. As a standalone service, Comcast's Economy tier, which provides the same speeds as Internet Essentials, runs about $47 per month with the equipment lease included.

In addition to being eligible under the NSLP free school lunch program, families must also live in an area where Comcast offers Internet service, must not have subscribed to that service within the last 90 days and must not have an overdue Comcast bill or unreturned MSO equipment.

Why this matters
The national rollout fulfills one of several conditions tied to the NBCU deal while also fitting within the aims of the FCC National Broadband Plan.

Comcast has rolled out Internet Essentials in all markets, but says it's too early to say how many kids are signed up for it. Cohen notes that the eligibility process typically takes two to three weeks and many schools have not even been open that long.

Internet Essentials is also a 2.0 version of sorts of a similar program the cable industry launched in 2009. The effort, called Adoption Plus (A+), was to provide free cable modem installations in addition to a 50 percent discount on cable modem service. (See Cable Offers 50% Broadband Discount to School Lunch Bunch.)

"We didn't like the price target of that program," which was about $15, Cohen said, adding that it "was the best the industry could do at the time. We thought the price needed to be $10." Adoption Plus also targeted only at middle school students, so Internet Essentials also takes that commitment a step further by applying to a larger group of eligible families and students.

For more
Read more about Internet Essentials and the FCC National Broadband Plan.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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User Rank: Blogger
12/5/2012 | 4:53:04 PM
re: Comcast Goes Big With 'Internet Essentials'

I remember our household Prodigy account was $10/month in the early 1990s. At the time, the cost was significant, not only because that was 20 years ago (when $10 also filled up our gas tanks, by the way), but also because large monthly entertainment subscription fees were not the norm. 

The Comcast program is fantastic. Internet access is too important not to make it available to lower-income households. However, the program also highlights just how much cable has adjusted our expectations around monthly bills in the last two decades. ARPU is at an all-time high, and $10 a month sounds not only reasonable today, but practically laughable compared to standard broadband fees. It's a remarkable attitude shift in a relatively short period of time.

Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:53:01 PM
re: Comcast Goes Big With 'Internet Essentials'

That takes me back. Prodigy was my first ISP, started subscribing well before they opened it up to the Web and my user name was something like YT6QIFG, which went well with my screaming 14.4 US Robotics modem.

Also, guess it's smart for Comcast to call this Internet Essentials, rather than Broadband Essentials, since the speed of that tier doesn't meet the FCC's definition of broadband. JB

User Rank: Light Beer
12/5/2012 | 4:53:00 PM
re: Comcast Goes Big With 'Internet Essentials'

I know this offer is paired with the NBCU deal, as a voluntary condition, so Comcast deserves praise. Here's also a small shout-out to Bernstein Research, which has been tracking the income/broadband equation for about two years. Whie I follow experts who think that expenditures measure poverty more accurately than income (Bernstein relied on income data) Craig Moffett has socialized this issue quite effectively within the industry. Bottom line may come from industry gadfly and Fast Net News editor Dave Burstein, who hit the nail with his head when (last December) he called the Comcast offer "a remarkable move that goes far beyond any previous U.S. program."

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