Comcast: What Fiber Threat?

In recent months, regional telecoms Verizon and SBC have taken direct aim at cable giant Comcast , earmarking hundreds of millions of dollars for
fiber-to-the-premises rollouts.

FTTP uses hair-width, fiber-optic strands to carry content — including video
programming — to residential and small business customers. The Baby Bells
say the technology will enable them to offer a better bundle of television,
broadband and phone service.

Comcast CEO Brian Roberts addressed
the threat on a quarterly conference call today.
“A number of us have lived through this before,” he said,
referring to various threats to cable television’s dominance over the years.

Even if Verizon and SBC hit ambitious deployment goals, they’ll still be the
fourth or fifth competitor in a market that also includes satellite TV
providers, Roberts said.

“Let’s play it out,” he continued, noting that any subscriber defections to
FTTP would likely be spread among Comcast and other players.

Despite the cool assessment, Roberts isn’t dismissive of FTTP, acknowledging
that it would represent a “meaningful competitor.” But
from a business standpoint, he doesn’t see FTTP delivering a strong
return-on-investment for the Bells because of high up-front costs.

Roberts said Comcast is honing its technology and offerings to compete with
Verizon and SBC or any other rivals. For example, it’s pushing ahead with
Voice over IP plans. It currently offers the
service in three markets and will expand to new cities next year.

“We’re convinced that [VoIP] will be a good business for us,” Comcast COO
Stephen B. Burke said, although he noted that the service won’t produce
material financial gains until 2006.

Burke declined to comment on press reports that Comcast was talking with
Sprint and Level 3 for backbone services
carrying VoIP traffic.

Other recent moves include a content distribution pact
with Sony Pictures that includes plans to expand its
video-on-demand menu. Additionally, Comcast joined a Sony-led
consortium that’s buying Metro Goldwyn Mayer.

In the third quarter, Comcast revenues were $5.1 billion, up 12
percent from the $4.5 billion during the same period last year. Net income
was $220 million, or 10 cents per share, down from $3.18 billion, or 1.41
per share, from the same quarter last year, in which it sold its stake in QVC.

Bright spots included 549,000 new broadband subscribers and strong interest in video-on-demand, Comcast
said.