Posted by: Tom Nolle
September 20 2007: Comcast management admits that both Verizon and AT&T are taking video customers from them, but questions whether the spend (for Verizon in particular) on video will earn a good return for shareholders. This thread of comment is a departure from the dismissive view Comcast has taken in the past. The reason is clear; both Verizon and AT&T are ramping up their services and have targets that could reduce Comcast profit significantly. One problem Comcast faces is that its internal rate of return, and thus its ROI expectations are higher than those of the telcos. Another problem is that losing customers in an established area means the profit from a given cable span is reduced for Comcast, making its service less financially attractive. The largest problem the telcos bring, though, is forced modernization by Comcast. There is no way to selectively upspeed cable plant; you have to make the change for the entire span. Any success by a telco in supporting any service that requires more bandwidth forces the cable companies to counter, and their counter forces them to invest, creating the very problem for Comcast that its executives speculate Verizon has–questionable return on capital.