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With its all-digital transition complete, Comcast is now starting to charge $1.99 per month for the simple channel-zappers that helped make it possible

Comcast's DTAs Begin to Pay Their Way

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
1/30/2013
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Comcast Corp. has started charging US$1.99 per month for Digital Transport Adapters (DTAs), the small channel-zappers that fueled the cable operator's plan to reclaim valuable analog spectrum and reapply that capacity toward bigger HDTV channel lineups and Docsis 3.0 upgrades. Based on the current deployment base of DTAs, the fees are poised to add about $46 million to Comcast's monthly revenue stream, or $552 million on an annual basis. Comcast confirmed that it has started to apply DTA fees in a handful of markets, including Philadelphia, and expects to roll out the new policy in additional markets during the year. The Philadelphia Inquirer first reported word of the policy change on Wednesday. DTAs convert digital video signals to analog so they can be viewed on older TVs after Comcast completed the all-digital conversion in a given market. DTAs lack a return path, so they do not inherently support interactive services such as video-on-demand (VoD). However, they can be "force-tuned" to a particular channel, opening up the theoretical possibility that DTAs could access VoD content via an IP-based app on a tablet or smartphone. (See Comcast DTAs Can Be 'Force-Tuned'.) Comcast has already deployed more than 23 million standard-definition DTAs, and is now starting to offer HD versions in select markets. Comcast has not revealed what it pays for the devices, but SD models are said to run about $35 each. HD-DTAs are expected to sell for less than $50 in volume. Most customers install DTAs themselves, allowing Comcast to avoid costly truck rolls. (See Comcast Pursuing $35 Digital Dongle.) The DTA fee is being introduced more than three years after Comcast began its analog reclamation program, dubbed Project Cavalry. To promote the migration and spur adoption of the devices, Comcast provided customers with two DTAs at no additional monthly service charge. (Comcast has already been applying a $1.99 monthly fee to customers who require more than two DTAs.) But the boxes have been providing some extra benefits -- customers who were previously taking analog tiers received improved picture quality and a broader selection of channels. (See Comcast Seeds Digital Shift with Free Boxes.) Comcast says the fees reflect the value of its new all-digital platform and that the company is in the process of adding new features and enhancements to the millions of DTAs that are already in service. For example, SD DTAs will soon get a software upgrade that will add a guide and parental controls, a Comcast spokeswoman says. Those features will be available in HD-DTAs from the start. But the fees are also factoring in as cable operators look to offset rising programming costs. And there are sunk costs associated with Comcast's digital migration that the operator might also be looking to recoup. Back in 2009, Comcast estimated that its analog reclamation project would cost about $1 billion to complete. The strategy allowed Comcast to recapture about 300MHz, with the MSO estimating that the project ended up costing less than 10 percent of what a physical rebuild would have cost. (See Comcast's $1B Bandwidth Plan.) — Jeff Baumgartner, Site Editor, Light Reading Cable

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craigleddy
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craigleddy,
User Rank: Blogger
2/1/2013 | 1:23:29 PM
re: Comcast's DTAs Begin to Pay Their Way
Another tale of how MSOs manage to put one foot forward while shooting themselves in the other foot.

I'm a Cablevision sub and instead of DTAs they gave out STBs that convert the analog signals, free for a year. I agree with the technical upgrade but am leery of fees to come. --
lwchalupsky
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lwchalupsky,
User Rank: Light Beer
2/1/2013 | 1:39:14 AM
re: Comcast's DTAs Begin to Pay Their Way
I'll echo msilbey and jb's comments and expand as a Comcast sub. I understand the technical and economic fundamentals of analog reclamation and migration to digital - for CMST, an imperative and a no brainer.- Kudo's to them that it's done in most markets.-

But, as a sub, I went from unlimited access on all of my sets-to changing to a digital tier (with a price hike) that included 1 free premium box (no DVR, but guide, etc.) and 2 free DTA's when they started reclamation in my system. My other sets could receive "basic" (local plus a few other channels) programming in the analog bands, but not the full tier I subscribed to. OK...

With little to no notice, the analog capability was pulled, once the conversion was complete. Several-TV's now stranded, but the small ones make great door stops. The offered solution?-Lease additional DTA's at $2 a month.

And of course there were-programming price increases while the transition was taking place. As a sub, planning to charge $2 for my current DTA's is another rate hike. Any mention of a charge for the "free" premium boxes subs were offered?

Last thought, if I have a DTA going into an S/XVGA/HDMI monitor or an HD set, maybe the picture quality improvement matters. But what if I have it going into a 10 yr old Toshiba 19" TV?-Not so much.--
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/31/2013 | 3:38:59 PM
re: Comcast's DTAs Begin to Pay Their Way
Interesting way to utilize DTAs, though sortuva clunky way to go about providing access to those channels. .i'll have to catch the replay of that...on a train with very spotty Wi-Fi at the moment.
craigleddy
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craigleddy,
User Rank: Blogger
1/31/2013 | 3:01:41 PM
re: Comcast's DTAs Begin to Pay Their Way
I suspect that some subs will feel there is a bait-and-switch going on here, partly because of the new fee and partly because, as you suggest, cable has a hard time generating good will and Comcast becomes everyone's favorite whipping boy. Other subs may feel $1.99 is no big deal because a DTA gives them better pictures and, depending on the situation, more channels, a new remote and a guide.

Time Warner Cable is taking a different approach with DTAs and analog reclamation. According to their earnings call this morning, they're weeding out least-viewed analog channels-in some markets (they prefer switched digital video). If a customer still wants those channels, then TWC will provide a DTA. TWC didn't say whether there's a charge or how customers learn about this option.
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/31/2013 | 3:01:17 PM
re: Comcast's DTAs Begin to Pay Their Way
I was surprised to learn that they had opted to start making customers pay for these devices even after this long of a period. They can certainly play up the added value of the DTA, but the decision won't come without some degree of backlash.-But this decision makes it look like another form of a rate hike. JB
msilbey
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msilbey,
User Rank: Blogger
1/31/2013 | 2:22:27 PM
re: Comcast's DTAs Begin to Pay Their Way
While Comcast is certainly within its rights to start charging for DTAs after 3 years, it still irritates me to see people penalized for not having up-to-date tech. Two reasons this is particularly irksome: free digital OTA services (i.e. the TV alternative to cable) are severely limited depending on where you live (I have friends in metro DC who can't get all of the broadcast channels!). And Comcast customers - even analog ones - are already spending a lot of money on the monthly entertainment bill. Again, Comcast is certainly within its rights, and the move makes business/profit sense. But this is also why cable has a hard time generating good will.-
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