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Comcast Hones 2-Pronged Business Attack

NEW YORK -- The Future of Cable Business Services 2011 -- Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s ability to use new Metro Ethernet lines to serve small-business customers with Docsis 3.0 and mid-sized enterprises is paying off as cloud services drive bandwidth requirements in the last mile and commercial customers seek out telco alternatives, a top MSO exec said here today. (See US Cable Firms to Bank $6B in Biz Services.)

Those trends are playing into the MSO's hands, and Comcast is already starting to see the fruits of its two-pronged business services strategy, Kevin O'Toole, SVP of product management and strategy for Comcast Business Services, said during this keynote address Thursday morning.

"I think cable, in general, and Comcast, in particular, can be an incredibly unique breed of cat," he said, noting that cable doesn't have any twisted pair to defend like the ILECs do and doesn't have to rely on someone else's last-mile network facilities like the CLECs do. Comcast, he said, has facilities-based, last-mile access in 20 of the top 25 U.S. markets stretching across 599,000 route miles of network.

Stoking the growth engine
Comcast definitely has its foot on the pedal, and it hasn't taken all that long for it to get ramped up in this service category. Its business services unit is currently pumping cash at a $1.85 billion run-rate. Heavy Reading Senior Analyst Alan Breznick expects Comcast to easily blow past the $2 billion mark in 2012. (See US Cable Firms to Bank $6B in Biz Services.)

And the MSO has barely started to scratch the potential of its current segment that's paying most of the bills now -- businesses with fewer than 20 employees. Comcast estimates that this type of customer spends $10 billion to $15 billion in its footprint, meaning it's siphoned away less than 15 percent of the market away from the telcos in the early going.

Among other stats, business services revenues now represent almost 5 percent of cable revenues at Comcast, O'Toole said, noting that the company now has an army of 1,500 salespeople hawking the MSO's business services lineup.

In the smaller end of the business market, Comcast is leveraging its Docsis 3.0 buildout to offer up to 100Mbit/s for $369 per month, while tying in a cloud component -- hosted access to Microsoft's Communications suite.

Next up is the mid-market served by Metro Ethernet, a category that Comcast defines as businesses with between 20 to 500 employees. Comcast took the wraps off that in May when it announced it had MetroE up in more than 20 markets offering up to 10 Gbit/s. (See Comcast Expands Metro Ethernet.)

MetroE is "poised to do to legacy TDM-delivered data services what cable modems did to dial-up," O'Toole said of the technology's potential. That's because MetroE's bandwidth boost will be key to supplying revenue-driving cloud services because they require more data to run down the last-mile connection -- something that legacy TDM systems struggle with.

"MetroE and Docsis are unlocking cost-effective last network capacity," he said, noting that MSOs can mine and harvest additional capacity from the HFC portion of the network by reclaiming analog spectrum, splitting nodes and enabling higher QAM modulation schemes.

"I don't think people appreciate the ... last-mile capacity that HFC is capable of or where we stand relative to unlocking its full potential," O'Toole said.

What Comcast and most other MSOs don't have in their business toolboxes is a significant wireless and mobile component. But not having one has not slowed down cable's pursuit of business customers.

"There's no denying that mobility is important to customers," O'Toole said. "We've found that it's not in our way right now. We're doing very well without that in our bag."

— Jeff Baumgartner, Site Editor, Light Reading Cable

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