Comcast's CableCard Cost: $50 Million In Q1
The FCC’s rule that requires most MSOs to deploy CableCards with their digital set-tops ended up costing Comcast about $50 million in additional capex for Q1 2008, according to Comcast CFO Michael Angelakis.
Angelakis, speaking on the operator’s earnings call this morning, noted that Comcast deployed 900,000 digital set tops in the quarter.
That works out to be about $55.55 additional cost per box. While that’s lower than previous NCTA estimates that CableCards add between $72 and $93 of cost per set-top, it is still a significant premium.
And what does that $55.55 buy you?
In a word: Nothin’. Not a thing. The whole point of CableCards is to function in exactly the same way the cheaper, integrated set-tops do. Refresher: The FCC imposed the "common reliance" mandate on the industry, theorizing that if CableCards were used by the MSOs themselves, it would fuel a market for third-party CE devices that use CableCards.
Has the policy worked? Maybe, maybe not.
Through mid-March the top 10 MSOs deployed 4.18 million CableCard-based boxes (times $55.55 = $232.2 million) whereas they had supplied customers with about 347,000 standalone CableCards for use in TiVos and other devices, up 25% from 278,000 six months earlier.
Did those customers who ordered standalone CableCards do so because their provider is now using the CableCards in their own set-tops? Almost certainly not. More likely, they are hooking up more attractively priced TiVo HD DVRs, which came to market last fall.
Now — do the TiVo with CableCards work better because of the integrated set-top ban? I can’t see how it would have had any major effect.
Comcast is awaiting a ruling from the U.S. Court of Appeals for the D.C. Circuit on its appeal of the FCC’s denial of a waiver request for certain low-end set-top boxes. (See the cover story by Multichannel News’ Ted Hearn from March, "The Appeal of Court.")
For now, Comcast — and, ultimately, its subscribers — will be paying incrementally more, the result of what may have been a well-intentioned FCC policy but one that holds no practical value… for anyone.
Dave commented:
I would maintain that most consumers have NO idea of what a cablecard is when they buy their cablecard ready television. I would also suggest that most consumers, oblivious to the existence of a cablecard (and certainly never advised by a cable providers that they could use a card) merrily rent a bulky cable box even though they never use the additional features, such as pay for view, afforded by these boxes. I, on the other hand, love my cablecard when it works and am quite happy not to have ONE MORE remote in my home. Plus, I\’m very happy with my TVGOS, even though Comcast doesn\’t seem to advise TG of channel lineup changes.
Off the Mark commented:
I partially agree. What the FCC needs to require is that cable companies either supply EVERY channel through their cablecards or stop offering those channels completely. Yes, this will mean the industry will have to release new bi-directional CableCards rather than stalling the standardization forever. Making them screw with their existing boxes doesn\’t help at all. They need to release the bidirectional, SDV-compatible cards!