Comcast Preps Digital Cutover In Portland Area

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Comcast this week is mailing letters to subscribers in Salem, Ore., notifying them that the operator will eliminate most of the analog channels from the expanded basic lineup and instead make them accessible via digital-to-analog converter boxes it plans to distribute.

The project was cited by Comcast chief operating officer Steve Burke on the operator’s Oct. 29 earnings call. He said the Portland market was “getting ready to go as we speak with the new ‘D-to-A’ boxes, which are now in stock and in test homes.”

Comcast spokeswoman Alana Davis confirmed that Salem, Ore., is the initial market where the company will deploy digital-to-analog devices.

The digital-to-analog boxes, which are smaller and less expensive than regular digital cable set-tops, are designed to replicate the basic cable lineup and allow an operator to reclaim that spectrum for other purposes. Even after cutting over a system to “all digital,” Comcast will continue to distribute approximately 20 limited-basic channels in analog depending on the market.

Comcast would not disclose how many D-to-A devices subscribers in Salem, Ore., are eligible to receive. The MSO has ordered such devices from Motorola, Pace and Thomson.

Comcast chief financial officer Michael Angelakis, also on the earnings call, said the operator “will be purchasing millions of D-to-A converters in the fourth quarter as we begin the all-digital transition in up to 20% of our systems.” Multichannel News has reported that Comcast will buy as many as 6 million DTA boxes in 2008.

Across all its divisions, Comcast expects the digital conversion to “spill into ’10,” Burke said last week.

In the initial Portland rollout, most of the D-to-A boxes will be self-installed, according to Burke. While “a very material percentage” of the devices will be self-installed, he said, “whether it’s 50% or 70%, we are going to need to sort of monitor the initial rollouts.”

Added Burke, “It clearly increases headcount and marginally reduces operating cash flow when you take a market to D-to-A. There’s a certain amount of phone calls, there’s a certain amount of truck rolls, there’s a certain amount of marketing and activity level and that’s all baked into our plans, but it does have an effect on the profitability of that system when it is going through that conversion.”

Comcast will not use encryption initially with the D-to-A devices, Burke said.

“The way this will work is you will need to have a D-to-A to receive the expanded basic digital signal, so it will be secured initially by the fact that you need to have a D-to-A. Right now, you don’t… so in many senses, it will be more secure than the analog distribution,” Burke said, adding that the absence of encryption “is fine in terms of our programming contracts.”

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