To the Editor: Steve Goldstein’s "As VoIP Goes, So Goes Comcast" [CableWorld, March 20-April 2] quotes analyst Doug Shapiro (no relation) on reasons why the "true value" of Comcast is not yet reflected in its shares. I agree that investors’ fear about competition is a major factor and that rapid deployment of Comcast VoIP will help change investors’ perceptions. The market’s gloom about Comcast and cable in general is misplaced. There is still a lack of appreciation of the transformation of cable into a multiproduct industry. Today’s average revenue per subscriber is 60% higher than in 1999 and has substantial headroom for growth as more cable subs take Internet access and VoIP, with wireless just around the corner. Even within cable’s core video category, more is being offered (digital tiers, on demand, DVR) and video ARPUs are increasing accordingly. And it has not yet sunk in that overall industry capex is declining now that the latest phase of network rebuilding has been completed. During the next few years, much of the cable operator’s ongoing capex will be success based. Although highly effective as multichannel video competitors, DBS operators are coming up short against cable’s two-way interactive products. Telcos’ strategy to capture Internet access market share by undercutting cable on price to the extent that the telcos no longer cover their own costs is not a long-term sustainable business model. It’s an open question whether the telcos have the stamina to persist in their extremely costly fiber network build-outs given that they cannot realistically expect to capture significant market share from competent and engaged cable operators. Third-party over-the-top VoIP and Internet TV have competitive limitations relative to comparable cable products. Despite perennial regulatory challenges that require persistent cable industry engagement, cable’s fundamental ability to grow and prosper no longer confronts material regulatory risks. As these factors play out, I believe that attentive investors will take another look at cable. Peter Shapiro
Lexington, Mass.
The writer is Principal, PDS Consulting and author of "Why Cable Shares Are Undervalued." Disclosure: Peter Shapiro owns shares of several cable operators, and PDS Consulting has worked on behalf of cable clients.

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