Comcasts Digital Focus Away from DigiNets

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Continuing its aggressive digital progress, Comcast Corp.
expects to have nearly 1 million digital subscribers within the next two years, according
to Steve Burke, president of Comcast Cable Communications Inc.

But those subscribers may not see a wide array of
digital-basic and interactive services for at least two years, as the MSO continues to
push multiplex-premium and pay-per-view services as part of its initial digital phase.

With 100,000 subscribers already signed up for its
113-channel digital-premium, PPV and music service, Comcast expects to quickly sign more
households over the next six months to one year through aggressive marketing and
promotion, Burke said at last week's CTAM Digital & PPV Conference in New
Orleans.

The company is currently marketing digital to about
one-third of its footprint, with that number expected to double within three months.

"We think that 100,000 subscribers is just the
beginning," Burke said. "I wouldn't be surprised if in a couple of years,
you see us with over 1 million digital subscribers."

Further, Burke predicted that one-half of Comcast's
5.5 million subscribers will be digital in five years. By 2009, digital will be so
prevalent, Burke predicted, that Comcast and the industry will be in a position to phase
out analog technology altogether.

"I've never seen a product that has the ability
to change the industry for the positive like digital," Burke said, adding that the
MSO is generating $100 in incremental revenue per year, per digital subscriber.
"Digital represents the revolution for the cable business."

As for the future, Burke said the company is about 12 to 18
months away from upgrading its digital platform, which could include a mix of interactive
services, video-on-demand and digital-basic services.

"That may happen in the future, as the industry
evolves, the new 'diginets' get more sophisticated and the programming gets
better," Burke said. "Even with all of these interactive applications, the
majority of people will want more channels and more movies, and for those people, the
killer app is the product that we have out there now. The majority of people will want
more channels, and they would not be interested in upgrading."

For subscribers who do want to upgrade, Comcast expects to
possibly move existing boxes to other outlets inside the home or to redistribute the boxes
somewhere else within its digital footprint.

Even if it has to recall those boxes, rolling out digital
today is still a sound investment.

"If we saved 1 percent of [subscribers] from dropping
our service [through digital today], that's probably worth what it would cost to
recall all of those boxes," Burke said. "And those boxes that are out now will
be in homes 10 years from now."

Burke pointed to increased competition from
direct-broadcast satellite services as a primary reason for Comcast's aggressive
ramp-up of digital, even as other MSOs continue to wait for the new generation of digital
boxes to roll out.

"Digital allows us for the first time to have a
product that is not only competitive with, but in some way superior to, our major
competitor, which is satellite television," he said.

"Digital is also our way of putting the right product
in the hands of the consumer and using that as a way to drive cable's image. The best
thing that you can do to improve your image is to put a brand-new product with a
high-technology component into a consumer's home," he added.

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