Triple Play’s Still a Winning Strategy

Comcast Sticking with The Bundle
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Despite snapping its nine-quarter streak of video-subscriber- loss improvement and a shift by its closest MSO peer to focus on a two-product bundle, Comcast said it is sticking with the triple play.

For the first time since the third quarter of 2010, Comcast’s video-subscriber losses rose in the first quarter, to 60,000 from 37,000 in 2012. The increase was due to two factors: a change in the way the MSO accounts for video customers in multiple-dwelling units (MDUs) and a price increase across a wider portion of its footprint, Comcast said on a conference call with analysts last week to discuss the results.

Comcast chairman and CEO Brian Roberts noted the increase in video losses, but said the company was still committed to growth.

“Our goal is to continue to make progress reducing video customer losses,” Roberts said on the call.

Comcast implemented a rate increase across 72% of its footprint in the quarter, compared with one affecting 62% of its territory in the year-ago period, Comcast vice chairman and chief financial officer Michael Angelakis said on the call. The change in the way it counts MDU customers accounted for about half of the losses; the rest were less-profitable single-play subscribers, Angelakis added.

That seemed to play out in the numbers. Video revenue for the period was up 3.7%, the biggest increase for the cable company in four years and primarily due to customers buying more advanced services.

And while high-speed-data customer additions were relatively fl at — 433,000 in the first quarter, compared with 439,000 last year — phone additions outpaced all expectations at 211,000, up from 164,000 in the prior year.

Time Warner Cable, the No. 2 U.S. cable operator, said on its first-quarter earnings call April 25 that it is deemphasizing the phone portion of the triple-play, noting that most of its customers have dropped landlines for wireless smartphones. That strategy showed up in its results — TWC lost about 35,000 voice customers in the first quarter and its new triple-play customers declined from 4.29 million to 4.25 million in the period.

Though he noted that he couldn’t speak for TWC, Comcast Cable CEO Neil Smit said on the call that Comcast triple-play customers tend to be more satisfied with their service and churn at a lower rate.

“The triple play has still been a very effective program for us,” Smit said.

Angelakis added that between 2011 and 2012, Comcast added about 300 basis points of triple-play penetration, and between 2012 and 2013 added between 300 and 400 basis points of penetration for the package. Currently about 41% of Comcast’s customer base is in a tripleplay package.

“It’s pretty clear those customers have higher satisfaction, lower churn and the best customer lifetime value,” Angelakis said. “We’re going to continue to focus on customer lifetime value.”

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