End of ACP like a 'promotional roll-off,' Comcast CFO says

With the end of the Affordable Connectivity Program (ACP) increasingly likely if Congress does not quickly step in with more funding, broadband operators are adjusting their game plans to continue to serve customers who have been benefiting from the program.

Comcast, which has about 1.4 million customers on the program, is no different. But the company intends to play defense and offense if and when the ACP goes away, Comcast CFO Jason Armstrong said Wednesday at the Morgan Stanley Technology Media and Telecom Conference.

The majority of Comcast's ACP recipients were preexisting customers before signing up to the program, he said. It's likely that a sizable portion of them were getting broadband from Comcast and used the ACP subsidy to move to a higher-speed tier.

On the defensive side, Comcast intends to offer customers access to Internet Essentials, a program for qualified low-income households that starts at 50 Mbit/s for $9.95 per month. Comcast's Internet Essentials Plus package doubles those speeds for $29.95 per month.

While acknowledging that the end of ACP will no doubt be disruptive to some of Comcast's customers, Armstrong likened the ACP situation to a "promotional roll-off" that Comcast sees each and every quarter as customers come off of various promotions and limited discounted offers.

"This is not new. We're wired to do this," Armstrong said.

But the possible end of the ACP also presents some opportunities for Comcast to go on offense and win "jump balls" that are triggered as consumers seek options outside of the program.

Broadband market is 'very healthy'

Comcast remains confident that it will return to broadband subscriber growth over time, but hasn't identified when that might happen. The company lost 34,000 broadband subs in Q4 2023.

Despite rising competition, the overall broadband market is "very healthy," Armstrong said.

Data usage among broadband customers continues to grow. He said the average Comcast customer consumes 700 gigabytes of data per month, while a group of "super users" are consuming about 2 terabytes per month. About one-third of Comcast's broadband subs now take speeds of 1 Gbit/s or higher, up from 15% a year ago, Armstrong said.

Armstrong said Comcast will continue to segment its broadband strategy to various parts of the market, including the high and middle part of the market where the operator generally faces off with fiber competition, as well as the lower end of the market that's been gravitating to fixed wireless access (FWA) options.

Fiber, he said, will be Comcast's competitor for the "long term."

He also expects the narrative around FWA to change when the discussion does not center around sunk costs and the use of excess capacity, and instead shifts to the need for more spectrum and the need to split cell sites. "That's going to be a different conversation," he said.

Speed upgrades

Comcast is also employing speed upgrades to help with broadband customer retention and acquisition. Today, the company announced a wave of speed upgrades for a portion of its postpaid broadband tiers as well as its prepaid broadband offering.

By tier/service, here's how those changes (focused on the downstream) stack up:

Distributors want access to the new sports streaming bundle

Armstrong was also asked about how a new sports streaming bundle from Disney, Fox and Warner Bros. Discovery might impact Comcast's pay-TV business as well as NBCU's Peacock streaming service.

He said cable operators have long sought the ability to offer more flexible programming options – particularly around sports networks – to their pay-TV customers, but so far have not been able to achieve it.

"Distributors are going to look at this and say, 'We've always wanted this. This is exactly what we wanted,'" he said.

But Armstrong said the big question is whether distributors like Comcast will be able to offer the new sports streaming bundle under the same terms that Disney, Fox and WBD will offer on a standalone basis or through Disney+, Hulu and Max.

It's not clear how the new sports streaming bundle will impact Peacock, which has 31 million subscribers and extensive sports rights with multiple sports leagues, including the NFL and WWE, and the Olympic games.

Armstrong said live sports is an important acquisition driver for Peacock. However, sport represents only 10% of usage on the platform, so it's critical to provide access to a wider range of content, including popular originals such as "The Traitors," to keep customers happy in between those live sporting events, he added.