February 11, 2008
Comcast Corp. (Nasdaq: CMCSA, CMCSK) expects to apply some competitive pressure to AT&T Inc. (NYSE: T) in the tech-savvy Bay Area after booting up an upgrade that will cap modem speeds at 16 Mbit/s down and 2 Mbit/s upstream.
The new tier -- dubbed “Blast!” -- essentially doubles the speeds offered by what was previously the MSO’s highest tier of cable modem service. Comcast said an "automatic upgrade" to the the 16 Mbit/s service (via the download of a new "boot file" to the modem) to customers who currently take the 8 Mbit/s "Performance Plus" tier will occur between February 22 and February 29.
New customers, or those who subscribe to the 6 Mbit/s tier, were allowed to start signing up for Blast today (Feb. 11).
As far as performance, Comcast claims the speedier tier will enable customers to download a 700 Megabyte movie file in less than 6 minutes. The MSO says downloads could be completed more quickly with “PowerBoost,” a technology that pumps up speeds when extra capacity is available on the network.
But also expect those claims to be challenged just as rapidly by consumers and Internet advocates that have previously complained about Comcast’s “invisible” consumption cap. Their chief complaint has been less about the presence of a cap but that they are kept in the dark about the specific limit. Comcast has countered that the cap applies to a fraction (about 0.01%) of its customer base and that the policy ensures a quality experience for all customers. (See A Tip of the Broadband Cap.)
Given the competitive nature of the product, Comcast has been careful not to divulge much about the rollout plans for the 16 Mbit/s Blast service, but it’s expected that the MSO will offer it initially in its most competitive markets (read: Verizon Communications Inc. (NYSE: VZ) FiOS territories).
A Comcast spokesman notes that Blast is now available in systems serving Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and Washington, D.C. That’s not a complete list of 16 Mbit/s deployments, but Comcast plans to roll it out to more customers throughout the year, he adds.
In the Bay Area, Comcast says Blast will leapfrog AT&T’s 10 Mbit/s up / 1.5 Mbit/s down “Max” DSL tier, which was recently introduced for $55 per month when combined with its U-verse TV offering. (See AT&T Ups U-verse Downloads.) Comcast is pricing Blast at $52.95 per month when bundled with a video service. It sells for $66.95 if it isn’t combined with any other Comcast services. AT&T does not offer the 10 Mbit/s product on a standalone basis.
So, is AT&T gearing up for a competitive response to Blast, in pricing or speed? If it is, AT&T is not about to telegraph any free info to Comcast.
“In terms of the broadband offering, we’ve found that [customers] really want not just speed, but a great value with other features and benefits,” says AT&T spokeswoman Destiny Belknap. “We feel that we meet those needs with the speed and value that we offer.”
As for those examples of service differentiation, she points out that the company recently announced that its broadband subs (or at least those who subscribe to a speed tier of 1.5 Mbit/s or higher) will have free, unlimited access to the AT&T national WiFi network, which comprises about 10,000 hotspots. That number will climb following AT&T’s announcement earlier today that it has unseated T-Mobile US Inc. to offer WiFi service at more than 7,000 Starbucks locations.
Coupling the faster speeds offered by Blast, Comcast played up access to additives such as its Games Invasion service, its video-centric The Fan application, and Rhapsody Radio.
But even more speed is clearly in the making. Comcast’s announcement for the Bay Area also cited the emerging Docsis 3.0 platform. “With Docsis 3.0, Comcast will deliver significantly faster speeds of up to 100 Mbit/s to customers over the next two years, with the capability of delivering higher speeds of 160 Mbit/s or more in the future,” the company said.
Late last year, Comcast chief technology officer Tony Werner said the MSO expects to have a Docsis 3.0 infrastructure in place in one-in-five homes by the end of 2008. (See Comcast Closes In on 100 Mbit/s.) Three cable modem termination systems (CMTSs) have received a subset qualification from CableLabs for Docsis 3.0, but no cable modems have yet to make the grade. ( See Cisco, Arris & Casa Make the CableLabs Grade.) Results from Certification Wave 57 should be known by mid-to-late April.
Comcast’s Blast-off in the Bay Area followed two significant cable speed-related announcements last week. Vidéotron Telecom Ltd. of Canada is using channel bonding to fuel two new tiers that push downstream caps to 30 Mbit/s and 50 Mbit/s, respectively. (See Videotron Hits the Gas and Videotron Update .) Insight Communications Co. Inc. , meanwhile, has just taken the wraps off a 20 Mbit/s tier in parts of Kentucky and Indiana. (See Insight Doubles Down.)
But how will these speed increases resonate with consumers? One analyst believes that the new tiers will keep existing customers happy but won’t do much to expand the customer base.
“The first thing is, we can’t think of all consumers as one. What we are really talking about is retention,” Bruce Leichtman, president and principal analyst of Leichtman Research Group Inc. (LRG) , says of cable’s gravitation toward offering faster speeds at the same price. Operators “are making sure that consumers who have been with them for a while continue to get that value, especially as telephone companies in some places increase the speed.”
He says customers who are new to broadband are more cost-conscious. “Speed is still number one, but to them [new sign ups], 16 [Mbit/s] means no more than 1.6.”
Leichtman estimates that top U.S. cable operators and telcos had more than 62 million broadband customers by the end of the fourth quarter of 2007. “The 62-millionth broadband customer is really concerned about cost,” he says.
— Jeff Baumgartner, Site Editor, Cable Digital News
Interested in learning more on this topic? Then come to Docsis 3.0 Strategies: From Product Development to Service Deployment, a conference that will take a comprehensive look at the cable industry's plans to roll out its next-generation architecture around the world. To be staged in Denver, March 19, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.
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