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What Is Comcast’s High-Speed Internet Business Strategy?

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Comcast’s usage based pricing and prepaid plans

A core growth driver of Comcast’s (CMCSA) cable communications business in fiscal 2Q16 was the company’s High-Speed Internet business. In late July, Comcast announced Xfinity Prepaid services, which would allow people to renew their subscriptions or sign up for Comcast’s television or Internet service for a duration of seven or 30 days without a credit check or signing a contract.

Early this year, Comcast had also announced that by June 1, 2016, all 300 GB (gigabyte) data plans in Comcast’s trial markets will be shifted to a terabyte plan, “regardless of the speed.” For customers who want a data plan that is more than a terabyte, the company will offer an unlimited data plan option at an additional cost of $50 per month, or customers can purchase additional buckets of 50 GB at $10 each.

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High-Speed Internet business

As the above graph shows, Comcast’s High-Speed Internet business had 23.9 million customers at the end of fiscal 2Q16, up by 6% over fiscal 2Q15.

Comcast was asked at its fiscal 2Q16 earnings call about its move regarding usage-based pricing and its decision to roll out prepaid services. The company stated that regarding its terabyte plan, it has implemented the terabyte plan in 14% of its markets that have usage-based pricing.

The company further stated regarding usage-based pricing, “We think we’re going to continue to adjust and look at it as the market evolves and as usage evolves. We have different pricing models, some based on speed, some based on usage, and we’re going to be flexible and kind of let the market tell us which way is best for consumers and how we add the most value.”

Comcast also noted that when it comes to Xfinity prepaid plans, it is targeting a customer base that is low income, “may or may not have a credit card,” and may not meet the company’s credit standards for its customers.

High-Speed Internet business in fiscal 2Q16

Comcast’s High-Speed Internet business had had revenues of $3.4 billion in fiscal 2Q16, up by 8.6% year-over-year. The business had customer additions of 220,000 at the end of fiscal 2Q16. This was Comcast’s best second-quarter result for its High-Speed Internet business in eight years.

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