Comcast to Offer Prepaid Data Plan - Analyst Blog
February 20 2013 - 5:00AM
Zacks
Comcast
Corp. (CMCSA) − the largest cable MSO (multi service
operator) in the U.S. will be the first cable operator to offer a
pre-paid Internet service to new customers, hence completely
outwitting the business model of the cable industry.
At the end of 2012, Comcast tested
the new business model with downloading speed of 3 Mbps in the
state of Philadelphia. Following the success of this new strategy,
the company plans to nationally implement its new pre-paid Internet
service plan, thereby targeting a new market worth $7 billion.
Comcast will offer its new service
through Xfinity Internet Prepaid Service brand, well supported with
dedicated website and more than 70 stores across the parts of
Philadelphia, Delaware and New Jersey. Moreover, it will also sell
its pre-paid data service through wireless retail outlets of Alpha
Wireless Communications, T-Mobile USA, Speed Wireless and
Leap Wireless International
Inc.’s (LEAP) subsidiary Cricket
Communications Inc.
The customers residing near the
Comcast-operated areas without an active company account will be
able to access the pre-paid data service through a cable wire and
Arris Group Inc. (ARRS) manufactured DOCSIS 3.0
modem. The whole service kit inclusive of modem, cable wire and a
30 days activation code comes at $69.95.
In order to target the low income
group and college students, Comcast has kept its prices as low as
possible with services starting at $15 for seven days and $45 for
30 days with 3 Mbps downlink and 768Kbit/s uplink speed,
respectively. However, 1 Mbps downlink speed is lower than FCC’s
set standard of 4 Mbps downloading speed for broadband.
Moreover, Comcast's 6 Mbps
Performance Starter service starts at $49.95 per month, while it’s
20 Mbps service costs $62.95 per month. Additionally, $7 per month
will be charged on customers going for leased modem from the
operator.
In the recently concluded quarter,
High-Speed Internet revenue for Comcast was $2,438 million, up 8.7%
year over year with 9.955 million Internet customers (up 6.6% year
over year). However, lower than Time Warner
Cable’s (TWC) 10.935 million Internet customers. So we
believe that the opening of new pre-paid data platform will further
bolster the High-Speed Internet revenue growth, consequently
expanding Internet subscriber base in the cable industry.
On the flip side, the new pre-paid
market may give rise to cannibalization, thus denting post-paid
data market margins unless the pre-paid network speed is not slowed
or the data cap limits are not set for the pre-paid customers.
Comcast currently has a Zacks Rank
#3 (Hold).
ARRIS GROUP INC (ARRS): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
LEAP WIRELESS (LEAP): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
To read this article on Zacks.com click here.
ARRIS International plc (NASDAQ:ARRS)
Historical Stock Chart
From May 2024 to Jun 2024
ARRIS International plc (NASDAQ:ARRS)
Historical Stock Chart
From Jun 2023 to Jun 2024