Comcast IDs Next WiMax Markets

Comcast Corp. (Nasdaq: CMCSA, CMCSK) plans to launch its WiMax-fueled High-Speed 2go service in at least two major markets -- Boston and Houston -- sometime in the second quarter, company COO Steve Burke revealed in this morning's first-quarter earnings call.

Comcast, which is piggybacking on Clearwire LLC (Nasdaq: CLWR)'s network to deliver the offering, has already introduced it in a handful of other big markets, including Chicago, Portland, Seattle, Philadelphia, and Atlanta. It's also starting dabble more with WiFi. (See Cable Plays Clearwire Card, Comcast Launches Chicago High-Speed 2go, and MSO WiFi: Roam (If You Want To).)

Update: Comcast has since clarified that its initial High-Speed 2go offering in Boston will be a 3G-only service, so it appears that any packages there that include WiMax will be added at a later date. Comcast is also marketing a 3G-only option alongside tiers that include 4G access in Portland, Ore.; Philadelphia; Seattle; and Houston. (See Comcast Boots Up 3G-Only Option .)

That was just one highlight shared today as Comcast reported first-quarter numbers that meet or beat Wall Street expectations, and were aided by a rebound in advertising revenues, which jumped to $360 million, versus $292 million in the year-ago period. (See Comcast Reports Q1.)

Table 1: Comcast Q1 at a Glance
Q1 2009 Q1 2010 Change (%)
Revenues ($B) 8.86 9.20 4%
Net Income ($B) 0.77 0.86 12%
EPS ($) 0.27 0.31 15%
Share Price ($) 15.89 18.79 18%
Source: Comcast

Table 2: Comcast Versus Wall Street
Analysts' Consensus Estimate Q1 2010 Actual Q1 2010
Revenues ($B) 9.15 9.20
EPS ($) 0.30 0.31
Source: Comcast and Bloomberg

Comcast still lost basic video subs in the period, but managed to balance that with solid gains in its high-margin digital video, high-speed Internet, and digital voice service categories.

Table 3: Sub Update
Q1 2009 Q1 2010 Cumulative Sub Total (End of Q1 2010)
Total video net adds -78,000 -82,000 23.47 million
Digital video adds 288,000 427,000 18.84 million
High-speed Internet adds 329,000 399,000 16.32 million
Digital voice adds 298,000 275,000 7.89 million
Source: Comcast

"While it's not clear whether we are entirely out of the woods on the economy, we are cautious and optimistic, executing better in this environment and against the competition," Comcast chairman and CEO Brian Roberts said on today's call. Time will tell if Comcast can maintain that momentum as it heads into the seasonably slow second quarter.

Other notable nuggets from today's call:

  • First-quarter capex plummeted 20 percent, to $925 million, representing 10.1 percent of total revenue. Comcast chalked that up to simple timing as it bought big in the fourth quarter to take advantage of vendor discounts.

  • Looking ahead, Roberts said Comcast will be spending dough to get systems enabled for metro Ethernet. "The capital and the expense [for that project] will outweigh the revenues in 2010, so it's an investment year. But we've started, in earnest, in many of our markets," he said.

  • Burke said Comcast's all-digital deployment, dubbed internally as "Project Cavalry," is about 43 percent complete (its Portland, Seattle, and San Francisco are already done), and is "active" in about 70 percent of Comcast's footprint. He expects 80 percent of Comcast's systems to have made the all-digital conversion by year end. (See Comcast's $1B Bandwidth Plan .)

    Comcast has already deployed 9 million Digital Terminal Adapter (DTA) devices to fuel that effort. About 80 percent of customers who use DTAs are installing the boxes themselves, saving Comcast some truckroll dollars.

  • Tied into that project, Comcast has completed Docsis 3.0 upgrades in nearly 80 percent of its systems. It's starting off most of those markets with a 50-Mbit/s downstream wideband tier, but anticipates adding 100-Mbit/s offerings in all markets as it completes all-digital network upgrades and introduces its new Xfinity brand.

    Those markets also get access to nearly 20,000 video-on-demand (VoD) "choices," with 5,000 of them in hi-def format. Comcast systems that haven't made the jump to Xfinity are typically getting 17,000 VoD selections, with 3,000 in HD.

  • Roberts made it sound like Comcast has bandwidth to spare these days as it reclaims analog spectrum for new uses. "We have so much capacity right now that we are actually looking for bandwidth-intensive uses like 3D video and hi-def video... to stimulate that market."

  • Burke offered a brief update on the cross-MSO Canoe Ventures LLC effort, reiterating that initial efforts will center on interactive advertising and Enhanced TV Binary Interchange Format (EBIF) technology. He said Comcast and its partners expect to have EBIF in front of about 7 million subscribers by June, and would be ready to ramp that up to "20 million or 30 million pretty quickly." (See Cable's Canoe Heads for Scalable Waters .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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