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Comcast Business Invades Canada

Jeff Baumgartner
10/16/2019

Business services is already a key growth engine for Comcast, but the US's largest cable operator will now pursue additional opportunities north of the border.

Comcast Business announced Wednesday that it will extend services and network management capabilities to Canadian branch locations for its US-based enterprise customers via an access agreement with iTel Networks.

iTel has wholesale agreements to resell services via major carriers in Canada, including Shaw Communications, Rogers Communications and Telus, and deals with about 50 or so small cable operators and telcos throughout the country. iTel also has the ability to serve remote areas by dropping in portable terminals that utilize satellite or 3G/4G cellular connectivity.

"They [iTel] can reach pretty much every business location throughout Canada," Glenn Katz, SVP and GM of Comcast Business Enterprise Solutions, said.

Katz stressed that Comcast Business's extension into Canada is solely to support branch locations of Comcast's US enterprise customers and that the intention is not to pursue separate, standalone enterprise-level agreements there. So, in that sense, Comcast Business won't suddenly become a direct competitor to Canadian MSOs such as Rogers and Shaw.

Comcast Business said the managed offering delivered in tandem with iTel provides enterprise customers with a single service provider to oversee elements such as order management, installation, account management, billing and network monitoring across both on-net and off-net locations.

Comcast Business' initial focus in Canada will be transport-related services, but work is underway to add a managed services layer stack to support offerings such as WiFi, security and voice. Comcast Business still needs to navigate some of the different regulatory requirements for those services in Canada, but the intention is to get those additional managed services on board by Q1 2020, Katz said.

This new focus on Canada comes about four years after Comcast Business announced an initiative to target large, Fortune 1000 companies, including hospitality, retail and banking customers, using cross-network agreements with several US-based cable operators, including Charter Communications, Cox Communications and Cablevision Systems (now part of Altice USA). Comcast Enterprise's entry into this segment, which enabled Comcast to pursue deals usually dominated by Verizon and AT&T, was aided by Comcast's acquisition of Contingent Network Services in the fall of 2015.

Why this matters
Commercial services is already a key growth engine for Comcast, which pulled down $1.9 billion in revenues in the category in Q2 2019, up 9.8% from the year-earlier period. The move into Canada will open up new growth opportunities there and help to shore up Comcast's ability to serve enterprise-level clients that operate locations in the US and Canada.

Comcast Business doesn't break out its enterprise service revenues, but Katz said the unit has achieved a 22% to 23% compound annual growth rate since inception and now employs close to 1,200 people. He said the unit, which inked a deal with Taco Bell in 2017 that now spans some 6,400 locations, has close to 200,000 branch locations from Fortune 1000 companies under management.

There might be more international activity to come for Comcast Business, which, by the way, has a presence in Europe thanks to its 2018 acquisition of Sky.

Katz characterized the move into Canada as a "first step" for the enterprise service unit's global aspirations.

"We know we need to get there; we don't have a sense of when we're going to get there," Katz said, noting that discussions about how Comcast Business could expand beyond the US and Canada are underway. "We are now talking about it."

Alan Breznick, cable/video practice leader for Light Reading, has some ideas about which regions Comcast Business might target next.

"This is a very intriguing and savvy expansion move by Comcast, opening up the US enterprise market even further," said Breznick. "Now that they're moving to serve their enterprise customers north of the border, I bet it won't be too long before they start making similar moves in Latin America -- especially Mexico-- as well as in Europe and Asia. So look for more international partnership deals like this in the future."

According to Breznick, US cable operators generated about $18 billion in revenues from business services in 2018 and could hit the $20 billion mark in 2019. He said the total US opportunity in that category is close to $150 billion, with cable currently claiming nearly a seventh of the overall market.

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— Jeff Baumgartner, Senior Editor, Light Reading

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