@Home Migration Cuts Into Comcast Pocketbook, 2002 Goals

Comcast Corp. outlined its fourth quarter
2001 revenues Wednesday, announcing revenues of $2.8 billion and a net loss
of $321 million, mainly attributable to the cable company’s efforts to
migrate its @Home customers

The No. 3 cable network in the U.S., behind AT&T Broadband
and AOL Time Warner , spent much of the quarter (and much
of its money) bringing [email protected] customers back to the fold after the
broadband ISP filed
for bankruptcy and announced its imminent shutdown.

Officials tally the cost of upgrading the network and starting the
process of migrating nearly 950,000 customers at $140 million, almost half
of the fourth quarter’s reported losses. Further costs will likely show up
in the first quarter of 2002, as Comcast promised @Home bondholders it
would pay $160 million in three payments to keep the network running until
the end of February.

But the first quarter will see more revenues for Comcast, now that its
subscribers are fully under its control. As part of its deal with @Home,
before the ISP’s dissolution, a portion of every month’s subscriber bill
went to the @Home coffers for operational upkeep.

Comcast added 155,400 cable Internet customers in the fourth quarter, for a
grand total of 948,100, to end the year.

The company plans to garner more high-speed customers with a $1.3 billion
investment in the network to get more cities “digitized,” which in reality
is a step back. The capital investment is down $550 million from earlier
statements from officials.

That’s likely due to its projected 2002 goals for its Internet
arm. Officials predicted Internet growth would be flat, with somewhere
between 400,000-500,000 customers for the year.

For the answer to that, you need to look at Comcast’s digital cable
numbers. Despite having 75 percent of its network upgraded to provide
digital services (digital cable and Internet access), only nine percent
have signed up for the pricey service.

Brian Roberts, Comcast president, expects new services to spur interest in
cable Internet in 2002, with the rollout of applications that make the most
of broadband speeds.

“We continued to demonstrate the power of upgraded systems in delivering
digital and broadband services to consumers,” he said. “We have
substantially completed the transition of high-speed Internet customers to
our new network. We are building a more robust network to deliver an even
better service to our customers, including remote e-mail, multiple e-mail
addresses, web storage and enhanced high-speed options.”

Comcast is also likely looking for a boost in Internet numbers with its winning
$72 billion bid in December 2001
for AT&T Broadband. The deal
still has a long way to go, needing both shareholder and likely Federal
Communications Commission and Federal Trade Commission approval.

The combined entity would be called AT&T Comcast Corp. and have a combined
2.2 million high-speed cable Internet subscribers, making it the largest cable ISP
in the U.S.

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