Bit Rate

Comcast's CableCard Cost: $50 Million In Q1

4/30/2008 7:08 AM

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.

March