Many cable operators are considering new pricing for broadband services that would link the amount of data their subscribers consume with the amount they pay. But Comcast (s CMCSA) isn’t one of them, according to execs.
At the UBS Global Media and Communications Conference on Monday, Comcast Cable president Neil Smit and CFO Michael Angelakis implied that such plans probably wouldn’t be good for the company’s growing broadband business.
While the cable industry has suffered from subscriber losses on the video side, it’s seeing increased growth in broadband subscription revenues. That growth is due in part to more consumers coming online, but also to a greater number of subscribers opting for higher-speed data plans.
Comcast, for instance, lost 165,000 video subscribers in the third quarter, but added 261,000 broadband users in the same period. The increase in broadband subs also means the company has seen an increase in double- and triple-play customers: now more than 70 percent of its subscribers pay for two or more bundled services. With that in mind, Comcast believes that changing up its pricing could have a negative effect on its high-speed data subscriber growth.
“Our goal is to grow share and grow ARPU [average revenue per user],” Angelakis said, noting that about 70 percent of U.S. households subscribe to broadband, and 34 percent are Comcast high-speed data subscribers. “We don’t want to disrupt the consumer experience,” he said.
Comcast’s take comes in contrast to some other cable providers, which are considering rolling out usage-based pricing as soon as next year. With video subscriptions on the decline, those companies are looking to broadband to continue increasing revenue. As a result, Sanford Bernstein analyst Craig Moffett said in an interview with Bloomberg last month that he expects at least one cable provider to institute that type of pricing in 2012.
But Comcast sees the approach as antithetical to its subscriber growth plans. Smit was blunt in his assessment of the pricing model: “We don’t want to nickel-and-dime customers at this point,” he said.
Instead, Comcast hopes to upsell subscribers on higher-speed plans. It recently rolled out 100 Mbps broadband services throughout its entire footprint, and is pushing its 25 Mbps Blast!, Extreme 50 and Extreme 105 broadband services with a holiday promotion that offers new subscribers a free wireless gateway. In an interview last month, Cathy Avgiris, SVP and GM of Comcast’s Communications and Data Services told us about 20 percent of its subscribers pay for broadband at speeds of 25 Mbps or more.
While Comcast doesn’t plan to institute usage-based pricing, it does have a broadband cap of 250 GB per month, which the company instituted in 2008. Since then, broadband usage has exploded, especially with the growth of streaming video, but Comcast hasn’t increased its cap. The company claims most customers are still well below their limits, with the median usage being around 6 GB to 8 GB per month. Still, with growing demand for video and other high-bandwidth services, more family members using more devices, and more of Comcast’s customers taking higher-speed plans, it seems more customers are going to bump up against those caps unless the company increases them soon.