Comcast to Set Data Limit for Users - Analyst Blog


The largest cable MSO in the U.S., Comcast Corporation ( CMCSA ) plans to restrict data download limit to 500 GB per month, in the next five years. Initially, the company may announce a 350 GB data cap and eventually settle on a higher 500 GB plan, depending on customer requirement.

Higher proliferation of smartphones and tablets, increased deployment of high-speed 4GLTE connections and availability of HD quality videos not only drives data usage but also increases network congestion.

Hence, to overcome this problem, Comcast raised the existing 250 GB data limit to 300 GB data in 2012. Subscribers who exceed the limit will be charged $10 for every 50 GB data used.

In order to discourage chord cutting activities by customers, the company intends to set a very high data cap range, which will not only support video streaming services but will also check subscriber churn.

As per Sandvine (which deals in data management tools), nearly 1.5% U.S. broadband users consume over 250 GB data every month while only 1% exceeded the 300 GB data limit. However, it has been noticed that most customers use only 29 GB data per month. Thus, based on the report, Comcast is confident that a 500 GB data plan will satisfy customer requirements over the next few years.

On the flipside, data consumption is increasing in leaps and bounds. Moreover, Netflix, Inc. 's ( NFLX ) new 4K standard video services are contributing substantially to Internet traffic at peak hours. With the progress in technology, high resolution videos are increasingly available which require considerable data usage. Thus, we remain doubtful whether a 500 GB plan will be enough in the days to come.

Meanwhile, Comcast reached an agreement to acquire the second largest cable MSO in the U.S. - Time Warner Cable ( TWC ) - for $45 billion. The deal is expected to close by the end of 2014, subject to regulatory clearance. The merged entity will have around 32 million high-speed broadband (Internet) and 33 million video subscribers.

Currently, Comcast Corporation carries a Zacks Rank #3 (Hold).

A better-ranked stock worth considering in this sector is Belden Inc. ( BDC ) with a Zacks Rank #1 (Strong Buy).

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COMCAST CORP A (CMCSA): Free Stock Analysis Report

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TIME WARNER CAB (TWC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BDC , CMCSA , NFLX , TWC

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