February 14, 2008
Comcast Corp. (Nasdaq: CMCSA, CMCSK) will rely heavily on switched digital video (SDV) and analog reclamation initiatives to free up spectrum for gobs of high-definition television fare and the speedier Docsis 3.0 platform, executives said during today's earnings call.
As for HD, Comcast is staying true to its strategy to play up its expansion of high-def “choices,” offering some color on how many linear HDTV channels it plans to add this year.
The operator offers 25 to 30 linear HD channels in a typical system but expects to push that to 50 to 60 by year's end, Comcast COO Steve Burke said on the call. (See Comcast Adds Record 2.5M Subs in '07.)
He also reiterated that Comcast plans to offer more than 1,000 HD choices by the end of 2008, up from about 300 now -- a reflection of the Project Infinity initiative Comcast unveiled last month at the Consumer Electronics Show. (See Comcast Launches 'Project Infinity'.)
“We think we are more than holding our own,” Burke said of Comcast’s ability to keep up with competitive HD offerings. At last check, DirecTV Group Inc. (NYSE: DTV), claimed to offer more than 90 HD channels.
Comcast officials also affirmed plans to deploy the Docsis 3.0 architecture to 20 percent of its footprint by the end of the year. The base minimum configuration outlined by the CableLabs specs calls for the bonding of four downstream channels and four upstream channels. (See Comcast Closes In on 100 Mbit/s.)
“We’ll begin to offer [Docsis 3.0] to millions of our 48 million homes later this year,” Comcast chairman and CEO Brian Roberts said.
Lighting up SDV, analog reclamation
The MSO shed some more light on where it expects to find the capacity necessary for its Docsis 3.0 rollout and HDTV expansion plans, notably citing SDV and a broader “all-digital” expansion. (See Comcast Closes In on 100 Mbit/s.)
Comcast has already identified two test markets for SDV: Denver and Cherry Hill, N.J. (See Comcast Reveals SDV Test Beds and Comcast Puts SDV Vendors to the Test.) But it apparently has much more in store: The MSO has set aside enough of the budget to light up SDV in about 15 percent of its systems in 2008, according to Comcast CFO Michael Angelakis.
SDV is a system/technique that increases bandwidth efficiency by streaming channels in a “switched” tier only when a customer in a given service group selects them for viewing.
Another 2008 focus will be analog reclamation. Comcast calls this an “all-digital” approach, but “mostly digital” might serve as a better descriptor. That’s because the operator expects to continue offering a lifeline channel lineup -- as many as 30 channels -- in analog format. Moreover, unless it commits to giving every customer a digital box, such as what RCN Corp. is attempting to do in Chicago, Comcast is already mandated to deliver so-called “must-carry” channels in analog form following the February 2009 digital transition. (See FCC OKs Dual TV Carriage Rules.)
With digital penetration in the mid-60 percent range, Burke said Comcast could migrate 20 percent of its systems to an all-digital format by the back half of 2008. That migration, he said, is already baked into the MSO’s capital plans for the year.
“You will see us follow a similar strategy to what we did in Chicago last year,” Burke said, referring to Comcast moving its expanded basic analog tier (about 38 channels) to digital there. Customers who want access to the channels will need a digital box. (See Going 'Mostly' Digital .)
“We’ll send all of our content digitally while maintaining an analog tier of 20 to 30 channels,” he added. That conversion, Burke said, will allow Comcast to reclaim 40 or more analog channels, which can then be allocated for up to 150 high-def channels, Docsis 3.0, “and other ideas that we can dream up.”
Not mentioned on the call was Comcast’s plan to use an advanced MPEG-2 encoding scheme that aims to increase efficiency by as much as 50 percent. Although the MSO has not named its partner for that, it’s widely believed that a startup called Imagine Communications is playing a significant role. (See Imagine Raises the Bandwidth Bar .)
’Impatient’ about SMB
On the small- and mid-sized business front, the MSO generated $384 million, up 46 percent from the previous year, as it put those building blocks in place in 2007. But Burke expressed some disappointment in those results.
“I’m getting impatient that it’s not ramping faster,” he said. “It really is starting to move, but not as quickly as I wish it was. If you look at some of the other cable companies, they have commercial businesses that are much bigger than ours, even not adjusted for the fact that we’re much larger.”
At the end of 2007, Comcast had 2,100 employees dedicated to the SMB effort, comprising 750 sales people and 1,400 techs. It spent more than $150 million last year starting up that portion of the business. It estimates that there are 5 million SMBs in the Comcast footprint that spend $12 billion to $15 billion on telecom services. Comcast’s goal is to generate $2.5 billion in SMB-related revenues by 2011.
— 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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