) − 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
) 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.
) manufactured DOCSIS 3.0 modem. The whole service kit inclusive
of modem, cable wire and a 30 days activation code comes at
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,
Time Warner Cable
) 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
COMCAST CORP A (CMCSA): Free Stock Analysis
LEAP WIRELESS (LEAP): Free Stock Analysis
TIME WARNER CAB (TWC): Free Stock Analysis
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