Comcast beefs up broadband services in face of competition
CHELMSFORD -- Facing strong price competition from telephone companies, Comcast Corp. moved yesterday to bolster its broadband Internet access services, doubling existing customers' connections to 3 megabits per second for no extra charge.
For Comcast customers the upgrade means even quicker access to digital entertainment such as movie trailers and video clips. With the higher maximum download speeds, a 15-song compact disc will download in about three minutes instead of six.
Comcast also launched a premium $58-a-month home broadband service that allows up to five computers in a home to share a 4-megabit broadband connection. The service uses a single cable modem box that offers both wireless and Ethernet cable connections for computers in the home and provides a security "firewall" and a router to network together the home computers.
Additionally, Comcast deployed an upgraded Comcast.net portal featuring video clips and slide-show style news and entertainment photographs, as well as access to RealNetworks' Rhapsody music service for $10 a month after a free seven-day trial. Rhapsody provides unlimited access to 400,000 songs that can be played over the computer or downloaded for 79 cents per tune.
The moves by the Philadelphia cable giant, which has more than 450,000 broadband Net subscribers in Massachusetts and New England, come as it faces stiffer competition from Verizon Communications Inc. and SBC Communications Inc. that have cut prices for their 1.5-megabit high-speed Net services to as low as $30 a month when combined with local and long-distance phone plans.
In an interview at Comcast's regional network management center in Chelmsford, Greg Butz, Comcast senior vice president of marketing and business development, reiterated that rather than engage in a price war, Comcast is looking to enhance the value of its broadband services, which currently cost $43 a month combined with TV or phone service or $58 as a stand-alone service.
"Our message is that not all high-speed Internet services are created equal," Butz said. "We're really making a commitment to putting more value in the product and offering more broadband applications that take advantage of the increased downstream capacity."
To get the 3-megabit service, all existing Comcast customers have to do is unplug the power cord from their cable modem, wait 60 seconds, and plug it back in, which activates the higher speed. Most of Comcast's 4.8 million customers nationally had been upgraded to the faster service prior to yesterday's moves in New England, and the company expects to complete the switch by the end of next month across all its franchises.
Bruce Leichtman, principal analyst with Leichtman Research Group in Durham, N.H., which follows the cable TV and broadband markets, said, "It is important to keep in mind that this game is as much, if not more so, about customer retention as it is about acquiring new subscribers." As of late September, nearly 23 million US households had broadband Net access, with cable modems accounting for nearly two-thirds of the market but starting to lose their sales edge to phone companies' cheaper digital subscriber line plans.
Cable's early subscribers have tended to have higher incomes and value Net access more than average consumers, Leichtman noted.
"By providing more, Comcast and other cable companies are giving this important first wave of consumers reasons not to leave just to save a few dollars," he said.
Leichtman added that despite Comcast's current resistance to considering cheaper "broadband lite" plans, a $30-$35 cable modem service to compete with Verizon "likely will be in Comcast's plans not too far down the line."
Peter J. Howe can be reached at email@example.com.
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