Comcast introduces high-definition TV, video-on-demand
Copyright 2003 Knight Ridder/Tribune Business News
Copyright 2003 Boston Globe
Three months after completing its $45 billion acquisition of AT&T Broadband, Comcast Corp. this week plans to start putting its own brand on the dominant cable provider and is beginning to roll out two service innovations: video-on-demand and delivery of high-definition television signals over cable.
Comcast said that in May it will offer on-demand access for 800 to 1,000 hours of movies and cable shows to some digital cable customers in New England. It expects to make its "On Demand" service available to all of its 2.2 million regional customers next year. In addition to 24-hour movie rentals for $3 or $4, Comcast plans to make several hundred hours of shows available free for viewing any time as part of digital cable subscriptions.
Starting today, subscribers who own high-definition TV sets will be able to get five channels of cinema-quality HDTV programming by paying an extra $2 a month for a special set-top box. The service will include about 50 to 100 hours of shows available each week from the HBO and Showtime cable channels and from Boston network affiliates including WCVB-TV (Channel 5) and WHDH-TV (Channel 7).
Few people own a high-definition TV set, which displays a wider and far crisper image than a traditional set. In making high-definition signals available now, Comcast is looking to projections that as many as one-fifth of U.S. homes will have HDTV sets by 2006. However, Comcast may have no more than 100,000 HDTV-capable set-top boxes in service by the end of this year nationally. "This is all about the future," said Kevin Casey, Comcast senior vice president for New England.
The new programming features are some of the first tangible impacts of the conversion of AT&T Broadband to Comcast, which for many Greater Boston and southern New Hampshire cable customers will be their third or fourth cable provider in barely six years.
Comcast also plans over the next six weeks to replace the AT&T Broadband name with Comcast on customer bills, 2,500 trucks, 6,000 employee uniforms, and 365 offices. The company will also launch a wave of television advertisements featuring champion bicyclist Lance Armstrong.
The revolving door of cable franchise owners has made Greater Boston a national laggard in video-on-demand, which has emerged elsewhere in the United States as one of the cable industry's major tactics to fend off competition from satellite TV and drive new revenues from a stagnating base of TV subscribers.
The services enable people who have upgraded to 200-channel digital service instead of cheaper conventional cable with 50 to 80 channels to use their remote controls to pull up an on-screen menu and order from a much bigger list of titles than are available in traditional pay-per-view service. Charges are added to consumers' monthly bills.
Comcast's efforts come amid a push by upstart RCN to add video-on-demand and HDTV in its own Boston service area, which covers only parts of the city and 14 suburbs. Comcast owns cable franchises in Boston and more than 210 Bay State cities and towns.
Of about 66 million American homes receiving cable now, about 22 million are in areas where video-on-demand is available, according to cable industry analyst Bruce Leichtman of Leichtman Research Group in Durham, N.H. Only 8 million of those 22 million, however, have upgraded to the digital service needed to get access to video-on-demand, Leichtman said.
Comcast's Casey said about 32 percent of Comcast New England customers take digital cable, which costs $5 to $44 a month more than standard based on what channels and packages subscribers select.
Video-on-demand is "both an offense and a defense for cable," Leichtman said. Cable companies must "increase the value of moving up to the digital platform, and they have to counter competition from direct broadcast satellite" systems that can offer 500 channels or more, he said.
Comcast's Greater Boston video-on-demand offering will closely mirror service it launched last year in its home base of metropolitan Philadelphia, where 48 percent of customers with digital service are using at least some on-demand programming.
"The endgame for us is not for us to make $2.95 a movie," said Mike Doyle, president of Comcast's northeastern division. "The endgame for us is driving more customers into digital who become more satisfied users" and are less likely to switch to satellite.
Compared to Time Warner or Cablevision, Comcast has generally put more emphasis on on-demand access to programming that is either free or already included in premium cable packages. Last month, Doyle said, about 90 percent of all on-demand video content requested by users was free content such as children's programming and shows included in premium monthly movie-channel packages.
With a heavier focus on using cable lines to get local phone customers, AT&T Broadband lagged far behind Time Warner Cable, Comcast, Cox, Charter, and other cable providers in offering video-on-demand. By late last year, AT&T had started only small trials of video on demand in Atlanta and Los Angeles.
Marc Lumpkin, a spokesman for EchoStar Communications Corp.'s Dish Network, which has 8 million U.S. subscribers, said satellite providers can provide many of the benefits of digital cable video-on-demand at much lower prices. In Greater Boston, EchoStar now offers a package of local stations and 50 national channels for $34 a month, or $40 for a package with about 115 channels in all. It also provides personal digital recorders for $5 a month, or $300 for outright purchase. They can store up to 80 hours of satellite programming indefinitely as an alternative to cable customers being restricted to 24-hour rentals of a fixed list of titles.
"We point customers to the fact that we have the lowest all-digital pricing in America," Lumpkin said.
Comcast's local launch of high-definition programming comes four years after Time Warner Cable first began offering some subscribers access to HDTV. About 4 million high-definition sets have been sold nationwide, typically for prices ranging from $1,500 to $5,000. Only about one-quarter of owners have also paid for the extra $350 tuners needed to bring in the limited amount of over-the-air HDTV, with most owners using sets only for watching high-quality digital video discs.