Comcast reported its fourth quarter earnings and the results were just fine although the outlook was a little light. But the big number that's worth watching is $42.44.
That sum, which was disclosed in Comcast's fourth quarter earnings (Techmeme), is the company's monthly average revenue per subscriber--a metric that would indicate pricing pressure from the likes of Verizon and AT&T, which are offering their own TV and Internet services. As many of you know, I bailed on Comcast for Verizon's FiOS service a few months ago.
The thought of a price war between cable incumbents and telecom companies just warms my heart, but the competition is mostly a mirage. Once the introductory offers wear off both the telecom and cable companies will hit you with price creep. To wit: Comcast's fourth quarter average revenue per subscriber was down from $42.86 in the third quarter and $42.89 a year ago. Simply put, increased competition has cost Comcast 42 cents in lost revenue on average. Perhaps, that saved you about 42 cents off your bill in the last three months. I feel better how about you?
Part of the reason for this minimal impact is that AT&T and Verizon's fiber to the premises (FTTP) aren't passing nearly as many homes as the cable players. Another reason: Verizon (and presumably AT&T) will raise its prices too--they have incentive to give you a great deal when you sign up, but after that you're locked in. After that the price list gets inflated--I got a notice from Verizon price increases a few weeks ago. There's a lot of nickel and diming going on. Consider:
- FiOS TV premier service as of Feb. 15 will go up to $47.99 from $42.99.
- Service repair visit charges were free--for the setup in 2007--but will increase to $79.99 in 2008.
- A cable card that cost you $2.99 in 2007 will cost you $3.99 in 2008.
You get the idea. The point: These dollars add up and neither cable companies nor telecom companies can resist these increases.
That's why despite consternation about Comcast's fourth quarter from Wall Street types, who were worried going into earnings, the cable giant will remain quite the cash cow. Comcast raked in 2007 revenue of $30.9 billion, up 24 percent from a year ago, and net income of $2.58 billion, up 5 percent from a year ago.