Speed Racer

Although Comcast‘s 2Q numbers reinforced the notion of a cooling broadband market, they also showed that cable is winning a heated online services battle against the telcos. The MSO’s net broadband adds totaled 278K, down 18% YOY but better than many analyst estimates and exceedingly superior to recent reports from AT&T and Verizon. 1 critical reason for the respectable numbers is the surfing speeds offered by Comcast/cable, said Comcast chmn/CEO Brian Roberts. "More and more people want to use video over the Internet," said Roberts, a growing phenomenon that helps "differentiate what it means to have faster, more reliable speed, and I think that proved out in this quarter." Comcast also capitalized on the continued market presence of DSL, which COO Steve Burke said "may be the new dial-up." Two-thirds of the MSO’s net broadband adds were former DSL subs, said Burke, who noted that additions of premium speed customers are outpacing those ordering economy speeds by a 4-to-1 margin. "There’s no question in my mind that consumers are going to go for higher speeds when they’re available," he said. "I don’t think [broadband market share] is about price." To wit: just last month, Verizon pres/COO Denny Strigl questioned the soundness of the telco’s erstwhile plan "to advance FiOS at the expense of DSL," and vowed to improve DSL speeds. The roll out of DOCSIS 3.0, or wideband, going forward may well provide auxiliary weaponry for cable—armaments that Sanford Bernstein analyst Craig Moffett believes aren’t a necessity right now. "Cable is taking share, and it is taking it in gulps," wrote Moffett. "When the book’s closed on 2Q reporting, cable will likely have gained 80-90% of the broadband net additions." Other Comcast results include 499K net phone adds, 138K basic losses, 320K digital adds and 38% rev growth in commercial services. Burke foresees "many more quarters of [phone] growth ahead" and a "substantial" uptick in basic subs due to the DTV transition. Approx 1-2mln homes in Comcast’s footprint must get cable or satellite before Feb because of an inability to access digital OTA signals, he said. Shares of Comcast (+4.6%), Time Warner Cable (+3.6%), Cablevision (+2.9%) and Mediacom (+2.8%) rallied Wed.