Roberts Likes Comcast’s Chances

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Comcast chairman and CEO Brian Roberts told an audience at an investor conference Monday that he believes that the nation’s largest cable operator is poised well for growth, fueled by its existing triple play bundle and in the future, by commercial phone service and interactive advertising.

“In past cable hasn’t always been a value play, but in these bundles we really are,” Roberts said at the Merrill Lynch Media and Entertainment conference in Marina Del Ray, Calif. on Monday. “As long as have superior products, I think we’re well positioned.”

Comcast’s existing product line continues to grow and capture market share, despite a slowdown in subscriber additions in the second quarter.  Roberts said that 58% of Comcast’s high-speed data customer additions in the second quarter were former telco digital subscriber line subscribers. And he added that Comcast will continue to innovate with that product, working with CableLabs to roll out DOCSIS 3.0, a set of standards that would make 200 megabit per second speeds possible for cable modem service.

Roberts had touted those 200 Mbps speeds at the National Show in May and added at the current conference that a cable system would need to find four channels on its system that it could devote to data service.

“We will begin rolling that out next year,” Roberts said. “We believe that the specs are set, manufacturers are building it. It’s very, very exciting.”

Roberts added that commercial telephone service is expected to begin rolling out next year.

Roberts estimates that the small business telephone market is a $12 billion to $15 billion business in Comcast’s footprint. The goal, he said, is to have 20% penetration in that market in five-to-seven years.

But first, Comcast has to get the infrastructure in place – it is hiring about 500 employees to handle the business phone product – and has to have an 8-line VOIP telephone that works. It currently has a two-line phone.

“We’re think we’re in the final stages of doing that by the end of this year and we hope that in 2008 and beyond we will really be in a position to go out and market that product,” Roberts said.

Local ad sales, which represent about 6% of total revenue, were disappointing in 2006 – Roberts said it was “one of the worst years we’ve had in maybe forever” – but added that interactive advertising could close that gap quickly.

“Interactive advertising is one of our major goals,” Roberts said.

Interactive advertising, long on cable’s wish list, could start to become a reality next year, Roberts said. Already Comcast and other cable operators are working with CableLabs to develop standards that would allow the entire industry to roll out an interactive advertising product on the same platform.

“If that works, we can have the aggregation effect, whatever our video market share is, the way that Google does in [Internet] search,” Roberts said. “We can go to the broadcasters and say would you like to use this interactive platform. We can go to our competitors if we choose and offer the same. If it’s a great monetization machine, the value is going to inure the cable operator who has this technology.”

Roberts didn’t seem quite as enthusiastic about Comcast’s wireless venture with Sprint. While he said the Pivot phone is doing well, he talked about a recent visit to a Sprint store where they were selling the phone.

Roberts said that he entered a Sprint store in Boston recently and asked about the Pivot phone and store personnel were knowledgeable about the product – one even said it was “Comcastic,” Comcast’s own marketing tag line.

“That’s the good news,” Roberts said. “The bad news is I was the only one in the store. We have to create more enthusiasm around that.”

Roberts said that Comcast is working well with Sprint – he said the Sprint JV is his preferential entrance into the wireless business – and that both Sprint and Clearwire have approached Comcast about working together with their joint Wi-Max venture. But he said that he also is glad that Comcast, along with a handful of other cable companies, purchased a large portion of AWS spectrum in an FCC auction last year.

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