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Video services

Comcast Racing Ahead, But Not Sprinting

In a research brief sent to clients late last week, Sanford C. Bernstein & Co. Inc. analysts shared key comments by senior Comcast Corp. (Nasdaq: CMCSA, CMCSK) executives from a private meeting in Boston. The takeaway? First, Comcast is only dating Sprint Corp. (NYSE: S), not marrying it. Second, VOIP is even hotter than ever. Third, switched digital video is ready to roll. And fourth, the MSO is finally getting serious about commercial services.

Rumors that Comcast has been maneuvering behind the scenes to take over Sprint have spooked investors for months. Comcast CEO Brian Roberts squashed the idea in a single sentence: "We see absolutely nothing appealing about owning Sprint," according to the Bernstein report. In other words, Comcast is content to play in mobile by partnering with Sprint, and leveraging the new wireless spectrum that the Sprint-MSO consortium acquired in key cable markets earlier this year. (See Sprint-Cable Group Weighs New Wireless Options.)

Comcast is undoubtedly feeling better about going its own way in voice now that its VOIP rollout is gaining even more steam. MSO execs told Bernstein analysts that Comcast's VOIP run rate is now "more than 40K subscribers per week." Better yet, the company's sell-in of VOIP to new basic cable subscribers is as high as 60% in markets where it offers service bundles.

Investors continue to press cable operators on their strategies to manage network capacity in the face of increasing VOD and HDTV service demand. Comcast said it plans to deploy switched digital video (SDV) infrastructure to address the problem. According to the report, Comcast execs plan to have a quarter of their footprint enabled for SDV by the end of 2007, and launch "the next 50 channels of HD" as switched channels. And you wonder why there's now a bidding war for Terayon? (See Motorola, Cisco Bidding for Terayon .)

Bernstein analysts said Roberts highlighted business services as "the next big thing" for Comcast. Ironically, Roberts shared the same sentiment six years ago when the company launched Comcast Business Communications with an aggressive deployment plan, starting in Baltimore. But, realizing that the MSO needed to get its residential house in order first, particularly after acquiring AT&T Broadband, Comcast later put business services on the back burner.

Getting back to work in August, Comcast hired Bill Stemper, then VP of Cox Business Services, to serve as president of Comcast Business Services. Comcast execs told Bernstein that a market test is now underway in Boston. Details about its new-and-improved business services strategy will be unveiled early in 2007.

— Michael Harris, Chief Analyst, Cable Digital News

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