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Comcast: DOCSIS 3.0, WiMAX Coming

The economy is down but revenue and income are up at cable and ISP giant Comcast (NASDAQ: CMCSA). Comcast is not totally unscathed by the economy though, there are feeling some effects of the slowdown with slower growth in high speed Internet connections.

Comcast reported second-quarter revenues of $8.9 billion, which is a 4.5 percent year-over-year increase. Second-quarter net income hit $967 million, up 53 percent over last year.

Despite the current economy, Comcast said it's expanding its infrastructure and marketing activities for faster Internet for its subscribers by way of the DOCSIS 3 cable Internet standard. Comcast is also building out its 4G wireless strategy with partner Clearwire.

"We continue to make progress on our key strategic initiatives deploying DOCSIS 3.0 or Wi-Band and All-Digital," Comcast Chairman and CEO Brian Robert said during the company's earning call. "We have already installed Wi-Band in nearly 50 percent of our footprint and we hope to reach close to 80 percent by year-end. As we deploy this Wi-Band capability, we are doubling speed to our existing customers and introducing new, higher speed services in these markets."

The current DOCSIS 2 standard provides a maximum of 43 megabits per second downstream and 30 Mb/sec upstream. DOCSIS 3, in contrast, will offer speeds in excess of 160 Mb/sec per second downstream and 120 Mb/sec upstream.

Though Comcast is still growing its high-speed Internet business, Roberts noted that the growth has been slowed by the economy and greater competition.

"The combination of a weak economy and increasing competition does continue to translate into slower growth in new customer additions," Roberts said.

Comcast CFO Michael Angelakis said during the call that in areas where there are high levels of unemployment and real estate foreclosures, there were more Comcast service disconnects.

Wireless

While Comcast is known primarily as a cable TV and Internet vendor, it's also moving in the wireless space with the Comcast 2Go product. Roberts said Comcast launched 4G high-speed wireless data services in Portland and Atlanta during the quarter.

"We are clearly now in the execution phase of our wireless strategy as Portland and Atlanta will be followed by other major markets like Chicago, Philadelphia and others," Roberts said.

Comcast's 4G wireless product is built on the Clearwire network. Comcast joined the Clearwire effort in 2008 as a way to build a national WiMAX carrier. Steve Burke, Comcast's chief operating officer, explained during the call that Comcast 2Go is powered by the Clearwire network in the markets where it's launched its network.

"It is primarily sold in conjunction with our high-speed data products," Burke said. "We think of them as sold in a bundle that makes a lot of sense for the consumer, and it is quite straightforward transactionally for us to process."

Burke added that by bundling services Comcast, ends up with more new customers and better profit margins.

"Really importantly, 40 percent of the customers we are getting in Portland are brand new to Comcast," Burke said. "We are very comfortable that this is a product that is an enhancement to our high-speed data business and can grow the overall pie."



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