Comcast Sees Lots of Runway for Broadband Growth

Don't tell Comcast executives that broadband growth is slowing down in the US.

Despite indications that broadband penetration appears to be nearing the saturation point nationally, Comcast Corp. (Nasdaq: CMCSA, CMCSK) officials still see lots of growth potential ahead. In fact, they are sounding and acting more bullish than ever on broadband.

Speaking on the company's first-quarter earnings call Wednesday morning, Comcast executives said they expect to keep adding broadband subscribers at a brisk pace throughout their 50-million-home footprint even though US broadband penetration now tops 80% of all households. They are counting on new household formation, further expansion of their reach within their footprint and the superiority of their product to fuel that growth for at least several more years to come.

"We continue to be confident of broadband growth," said Comcast Senior EVP & CFO Mike Cavanagh. He noted that the cableco keeps rolling out new products to maintain its broadband growth momentum, such as its Xfinity xFi advanced gateway and corresponding xFi WiFi app,

Comcast -- the largest broadband provider in the US with 24.2 million residential data subscribers and another 2 million commercial data customers -- is certainly reaping the rewards of the broadband revolution right now. The MSO added 351,000 residential data customers ad 29,000 commercial data customers in the first quarter as it continued to roll out DOCSIS 3.1 technology and 1 Gig speeds across the nation. While these numbers represent a bit of a decline from the year-ago results, they are still pretty impressive.

In stark contrast, Comcast shed 93,000 residential video subscribers in the first quarter, reversing a gain of 32,000 subs a year ago, as cord-cutting and OTT video services continue to take their toll on the traditional pay-TV business. With its residential video customer base down by 310,000 in the last year alone, the company reported that its video revenues actually fell by $47 million, or 0.8%, in the quarter, compared to a year ago, despite some modest price hikes. (See Comcast Romps With Subs Gains, Sky Bid .)

"We have great momentum," said Comcast Cable President & CEO Dave Watson. "We really like the trajectory of our broadband business."

Cavanaugh said D3.1 and its corresponding gigabit service are now available to 90% of their footprint. He also noted that 75% of Comcast's residential broadband customers now subscribe to packages offering speeds of 100 Mbit/s or higher.

Questioned by analysts about broadband pricing, Watson said he's not concerned about Comcast raising its rates too high. As long as the cableco can keep offering a better broadband service than its rivals, he said, it should be able to keep gaining market share without having to engage in pricing wars.

"Our focus is very much centered on broadband," Watson said. "We'll continue to compete in video, we'll continue to be aggressive, but our focus has shifted to the connectivity business."

— Alan Breznick, Cable/Video Practice Leader, Light Reading