When--not if, according to company executives--Comcast (Nasdaq: CMCSA) completes its acquisition of NBC Universal, it will be in an excellent position to "play a constructive role" in what has recently been a destructive process of retransmission consent/non-consent.
"By being a cable operator and a broadcaster, perhaps we can foster ideas that will not have the consumer caught in the middle," said Comcast Chairman-CEO Brian Roberts during a question and answer session after the company announced third quarter earnings. "We'll just have to take it one step at a time, but we think there's an opportunity to play a constructive role."
Roberts' comments were among several insights corporate executives provided during the extended Q&A. Among other topics touched were ...
Subscriber Losses
Comcast picked up a lot of first time pay TV subscribers by offering them special one-year plans when broadcasters transitioned from analog to digital in 2009. Those one-year plans are ending and a lot of the new subs, faced with real cable prices, are opting out of pay television.
"That happens sometimes with promotions but there was an awful lot of that happening in the second and beginning of the third quarter," Roberts said.
Neil Smit, president of Comcast Cable Communications added that the MSO hopes that renewed marketing efforts will bring some of the subs back into the fold--or at least keep more from leaving--but he was resigned to the losses, especially as they seemed to come from low-end subscribers returning to over-the-air reception, not over-the-top content.
"Forty-two percent of the customers we lost were basic customers," he said, noting that he wouldn't favor "overly discounting the product but more looking at the value of the services we're offering."
Over-the-top
Comcast is ready for increased traffic that will come as its subscribers search the Web for content and resigned to the fact that it can't provide everything.
"There's an awful lot happening but I think with a new series of devices that allow people to consume more you're seeing actual usage go up. That's just the business," said Roberts, who added it's "great for the broadband business."
That broadband business itself is a high point for the MSO which has now rolled out DOCSIS 3.0 to about 83 percent of its footprint and which achieving better ARPU for services that run at the higher ends of the speed spectrum.
"Over 20 percent of our customers subscribe to the higher speed tiers at a block level which is 8 meg (Mbps) and above," said Smit. "If over-the-top comes into being and there is more consumption of online video, we feel really good about our capacity."
Comcast itself is even getting into the Internet device space with applications to run on the increasingly ubiquitous iPad, which Roberts first demonstrated last May at The Cable Show.
"It gives us a chance to start from scratch with a user interface that is using Web technology, not cable box technology," Roberts said. "High end consumers have wanted this and now we're going to bring this to everyone who has a few hundred dollars and a tablet."
TV Everywhere
Comcast calls its TV Everywhere service, which it rolled out of beta trials this week, Xfinity TV.
"The platforms are getting enabled and we're just starting to look at each new device and new window in the home and potentially out of the home," Roberts said.
There are, of course, problems that accompany any launch, including getting access to all the programming anyone could want to see on multiple device platforms. The other is getting consumers to understand the model of seeing what they want, when they want and on a schedule that's not quite worked out.
"It would be wonderful if there was an expectation by the consumer that they would know where the shows are and in what (time) windows" those shows will be available, Roberts said. "It's all over the place right now. People are experimenting with different models. Until there is enough content that there is an understanding by the consumer it will be adopted by some but not by all. Our job is to make it simple, ubiquitous and have the technical platform to handle the volumes we hope will ultimately come."
Programming costs
They fluctuate quarter-to-quarter based on the terms of deals that are being renewed but they're not going away anytime soon, said Smit.
"We're getting more value out of our programming relationships in terms of VoD and online availability of content (but) we're not able to increase our video rates that the rate the programming costs are going up and that's a trend that will probably continue," he said.
The set-top box
The box is not dead, nor should it be, said Roberts.
"The most exciting products we're working on that allow you to have tremendous functionality right on the TV do have set-top boxes involved," he said. "Ultimately one could say there will be less and less boxes perhaps needed over time but I don't think it's an event that's going to happen any time soon."
Putting content in the Internet cloud, though, and different architectures could change that, but for now the set-top box is where it's at, said Smit.
"It's important to manage (content) rights and the set-top box is something that enables that," he said.
Wireless
Here, probably more than anywhere, the Comcast execs were a bit fuzzy. Roberts dodged the obvious question about the ultimate mobile wireless service by pointing to "the last foot" option of interfacing with a WiFi-enabled device connected to a set-top.
"We're continuing to monitor the wireless business but I think we're really pleased with where the overall data business is and that's really how we look at wireless," he said.