The specifics will come later of course, but Comcast said it already has a pretty good sense of the technology playbook it will put into action if and when its proposed $45.2 billion acquisition of Time Warner Cable is successful.
That playbook will look a lot like the one Comcast has been pulling off, meaning an emphasis on all-digital upgrades, faster broadband speeds, more deployments of Wi-Fi, access to a growing video-on-demand library, and the expansion of its cloud-fed X1 platform, which, in Boston, recently added a cloud DVR component and apps that enable in-home streaming of Comcast's full TV lineup to PCs, tablets and smartphones.
“That playbook has given us real momentum at Comcast Cable,” Comcast chairman and CEO Brian Roberts said Thursday morning during a call with reporters, adding later that access to a bigger footprint "gives us room for growth and innovation of new products.”
Comcast plowed more than $1 billion into Project Cavalry, its all-digital initiative that has been fueled by tens of millions of Digital Transport Adapters to help it reclaim analog spectrum and pave the way for new services. Time Warner Cable has since embarked on a similar all-digital strategy, first in New York and Los Angeles, that is scheduled to expand to other markets through 2016.
On the speed front, Comcast said it would invest “hundreds of millions of dollars annually” to improve TWC’s networks. Comcast’s high-end DOCSIS 3.0 residential tier offers 105 Mbps nationwide, and offers a fiber-only 505 Mbps residential service that is currently only offered in its markets in the Northeast. By comparison, TWC’s top-end 100 Mbps D3 product is offered in select markets (Hawaii, Kansas City, Los Angeles and, just this week, in New York City), up to 75 Mbps in Dallas, and up to 50 Mbps in its other markets. TWC plans to offer downstream speeds up to 300 Mbps as part of its “TWC Maxx” upgrades.
Comcast also has intentions to extend X1, a next-gen video product that features cloud-based UI, to the TWC footprint, a decision that will allow Comcast to bring more scale to the set-top and software ecosystem behind the platform.
Comcast recently completed the process of making X1 available in all its markets and is in the process of accelerating customers deployments of X1. Time Warner Cable has developed its own cloud-based UI, and has rolled it out to about 3 million boxes in New York, Los Angeles, and other parts of the MSO’s footprint, and a current goal to roll it out to at least 6 million boxes this year. But the long-term use of TWC’s new guide could be fleeting if Comcast decides to move quickly to standardize everything on X1.
Comcast has a “formulaic approach” to its rollout of new products, whether it’s been about DOCSIS 3.0, advanced wireless routers, X1, and even its budding cloud DVR service, Neil Smit, president and CEO of Comcast’s cable unit, said on a call with analysts. “We’re disciplined in our approach. We know how to do it at scale.”
Roberts also emphasized that the combination will open up more opportunities on the business services front. Last year, Comcast pulled in $3.24 billion in revenues in the category, while TWC generated $2.31 billion. TWC, under the guidance of new EVP and COO of business services Phil Meeks, has assembled a plan to eclipse $5 billion in annual business services revenues within four to five years.
Both companies have been growing the category by serving mostly small- and mid-sized businesses. The combination certainly gives Comcast a broader reach into those markets, but the addition of major markets such as New York might also enable Comcast to go further up-market and target larger enterprise-class customers. Today, about 20% of Comcast's business revenue is derived from mid-sized commercial customers served by the MSO's Metro Ethernet platform.
