When Will Comcast's Move Up-Market Pay Off?
The MSO's business services revenues were $394 million in the first quarter, up 50 percent from the same quarter last year, but 45 percent of that jump came without the help of NGT and Cimco, a CLEC that complements Comcast's footprint in the Chicago area. (See Comcast Offsets Video Pains With Broadband Gains, Comcast Snares a CLEC and Comcast to Acquire New Global Telecom .)
Comcast's commercial unit broke the $1 billion barrier in total annual revenues for the first time in 2010. It's already on pace to generate at least $1.6 billion in 2011. The MSO bought Cimco and NGT to last year help it move up-market to serve businesses with 20 to 250 employees, viewing it as a $15 billion market opportunity.
But most of its commercial services revenues -- as much as 85 percent, according to industry sources -- still originate from businesses with one to 20 employees, a segment that also represents a potential $15 billion in Comcast's footprint. (Comcast doesn't break out its commercial services revenues into categories.)
In metro Ethernet services, now up in 11 of 19 markets, Comcast is still figuring out ways to shorten service installation times by improving in areas such as provisioning, construction and building access rights. That gives AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), ILECs and other Comcast competitors more time to shore up their defenses.
Don't expect Comcast to make more business-related acquisitions or to join Verizon, CenturyLink Inc. (NYSE: CTL) and Time Warner Cable Inc. (NYSE: TWC) in buying cloud computing companies, though. (See Verizon Taps Terremark for $1.4B, CenturyLink Clouds Up With Savvis Buy, TW Cable Nabs Navisite and TW Cable Buys Into the Cloud.)
"Obviously we're looking at things," Comcast CFO Mike Angelakis said, when asked about that during the earnings call. "But from our standpoint, we think the real focus is on executing the business plan in front of us on both the small side and medium side of the business."
— Jeff Baumgartner, Site Editor, Light Reading Cable