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