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How Comcast is changing tactics in response to cord cutters

Steven Max Patterson | Sept. 4, 2015
Comcast aims to hedge against cord cutters by enticing millennials to connect and levying higher access charges on heavy internet users.

The completely OTT consumer would use much more data than the average Comcast subscriber. According to Douglas, "92% of its customers use less than 300 GB of data per month, 85% use less than 200 GB, and 70% use less than 100 GB."

This means that 8% of the customers consume 300 GB or more, a tiny number of users that have a significant impact on Comcast's network. Douglas also said, "less than 10% of its customers use about half of all the data carried on Comcast's consumer internet network." Comcast could simply suspend the subscriptions of heavy internet users under its acceptable use policy, like it did a few years ago, but this anticompetitive behavior would start another consumer uproar and might raise the ire of the Federal Communications Commission, which recently ended Comcast's and other ISPs' levies against streamers like Netflix for carrying their content.

In the long term, Comcast faces the risk of becoming a commodity internet access provider if its television services are abandoned by consumers in favor of OTT streamed television, adding television transmission costs to its network without the related TV revenues. The other risk is that Comcast fails to attract large numbers of millennials, who purchase separately branded TV entertainment from commodity internet services to replace aging baby boomers, who bought both services together.

Cord cutting and cord shaving is a growing and very real phenomenon. Pay TV declined for the first time in the first quarter of 2015, and Tivo subsidiary Digitalsmiths reported that last year 8.2% of cable subscribers had cut the cord, growing by 18% over the prior year. This is just the beginning of new strategies and tactics by Comcast to adapt to the rapidly changing landscape of television and entertainment.

 

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