Navigating what he described as the most competitive broadband market he has ever seen, Dave Watson, chief executive for the cable side of Comcast’s business portfolio, believes investor focus should remain on Comcast's stable revenue picture, and not the currently volatile visage of customer additions. 

“Our No. 1 focus is growing revenue,” Comcast Cable president and CEO Watson said Tuesday, while appearing in Boston at the JP Morgan Media and Communications Conference. (A full audio playback is available here.)

Also read: U.S. Broadband Customer Growth Slows to Pre-Pandemic Levels in Q1, With Every Sector Losing Steam

It has been noted by equity analysts for some time that Comcast has the data to back up this narrative. 

Also read: Comcast Prices StreamSaver Bundle at $15 a Month

Amid a toxic milieu of increased competition from fiber and fixed wireless, combined with the slowing creation of new households, Comcast’s broadband customer growth — once so robust during the pandemic — has reached negative quarterly terrain. The company lost 65,000 high-speed internet users in the first quarter. 

For Comcast, however, there has been no significant corresponding decline in average revenue per broadband customer, which was 4.2% in Q1.

That represented a slight drop versus the 4.5% reported for the first three months of last year, but fits the “3-4%” range Watson referenced several times during Tuesday’s JP Morgan sitdown. 

“We've been focused on the value between volume and rate,” said Watson, who played up the importance of market segmentation. 

On the higher end of that spectrum, Watson said that by the end of 2024, 50% of his company's footprint will be covered with the labor- and cost-intensive process of conducting “mid splits” of optical nodes, a process necessary to integrate multi-gig symmetrical broadband service via Full Duplex DOCSIS 4.0 conducted over a virtualized network. 

Watson said this capital-intensive upgrade is the best response to fiber-to-the-home, which he believes poses Comcast's greatest long-term competitive threat. 

On the low end, he believes the company’s recently introduced Now Internet and Now Mobile prepaid services are a solid hedge amid the sunsetting of the Affordable Communications Act, which he also believes will further cut into broadband growth over the coming quarters as less well-off customers see their subsidies disappear. 

"We are competitive in every segment,” Watson said, reiterating that Comcast “feels confident“ it will be able to maintain its 3-4% quarterly ARPU, regardless of the market circumstance. 

While the industry grapples with labor shortages for skilled fiber technicians as incumbents and competitors alike build out massive fiber networks, Comcast Cable CEO Dave Watson and Liberty Global CEO Mike Fries told the opening general session of the SCTE Cable-Tec Expo that the so-called “talent gap” is largely dependent on the projects at hand.

“There is so much activity going on all at once,” Watson told a Tuesday audience at the Pennsylvania Convention Center. “Every operator is dealing with not only a significant upgrade to the networks, all mapped out, anticipated to improve multiple assets of connectivity, but there are also new things like new passings. …There’s a bit of a crunch in terms of the sheer amount of people needed to pull all of this off.”

Also read: Home Networks Are the New Industry Battleground (Expo) 

Watson said providers that are changing their networks, or large components thereof, to virtualize and add capability need a different set of skills.

“It does require that people get trained up on how to do this,” Watson said. “Our people are adaptable. The front-line leadership is on their toes, working hard, and they’re dealing with all of these changes.”

At Liberty Global, which derives about half of its revenue from mobile, the needs are different. Fries said LGI isn’t having much trouble finding people with experience in 5G or other mobile tech, but he sees a gap in attracting people who can help the company move into new businesses.

“It’s the things we want to do,” Fries said. “We need more data experts, we’re finding it hard to find  people who can help us get us into new revenue streams.”

For most cable companies, 10G is one of those new products with the most potential, and it’s also one of the main themes of the Cable-Tec Expo. Fries said 10G is the technology he is most excited about because he’s already deploying it: Liberty Global has rolled out a 10G product in Switzerland for $50 per month.

Comcast hasn’t rolled out 10G yet, but earlier this month it launched a multi-year initiative to bring multi-gig internet to 34 cities by the end of 2025. Comcast intends to eventually put multi-gig service in front of 50 million homes and businesses.

“It really pieces together an efficient and effective network evolution for us,” Watson said.

Fries added that the European competitive landscape — he estimated that nearly 100% of Liberty Global’s markets will be overbuilt with fiber over the next three years by another company — makes the 10G evolution a necessity for him.

“It’s urgent for us,” Fries said. “It’s not a ‘nice to have’ — it’s life or death.”

Both Watson and Fries thanked the tech side of the business for keeping the networks running during the pandemic, a period that put an unprecedented strain on the infrastructure as usage ballooned as most of the country had to work and learn from home.

While both Fries and Watson praised cable for stepping up to the challenge, Fries said the goodwill associated with cable broadband during the pandemic is also an opportunity the industry shouldn’t let pass.

“Let’s bottle that magic,” Fries said. “During that pandemic, not only did we rise to the occasion and our networks did everything that we hoped they would do, we built up a lot better relationship with our consumers, and the businesses we serve, hospitals and regulators and government. That’s a special thing we have to hold onto. We’ve got to build on that. We can’t just take that for granted.” ■

Fixed wireless access broadband could add more than 10 million subscribers in the next five years, driven by programs geared toward rural markets, according to a report by Wells Fargo telecom and media analysts Eric Luebchow and Steven Cahall.

In their report, the analysts predict that total broadband subscriber additions will accelerate to 4.5-to-5 million annually in 2023 and 2024, fueled mainly by FWA and fiber overbuilds. Over the next five years, Luebchow and Cahall predict FWA will rise from 7.1 million total subscribers at the end of 2021 to 17.6 million in 2027. That growth will come at the expense of cable operators, who the analysts predict will watch their market share erode quickly over the next few years. 

While fixed wireless has been around for awhile, Luebchow and Cahall expect competition to heat up significantly in the next three years as federally funded programs spur both wireless and fiber build outs for broadband. In their report, they estimate that FWA would capture 60% of net additions through 2024. Then momentum shifts to fiber overbuilders as new inventory comes on the market. 

“In total, we expect +50 [million] new premises to be connected with fiber through 2027 that will reach [two-thirds] of addressable locations,” Luebchow and Cahall wrote. “The competitive dynamics will make the net add story increasingly difficult for the cable players, as we project cable’s share of industry net adds will fall to ~30-35% in 2023 and beyond (vs. ~94% on average the past three years).”

Wells Fargo estimated that fiber builds passed about 50 million homes in 2021 and would more than double that pace to 102 million by 2027. 

While there has been some concern around the lack of a labor force to build fiber networks the analysts believe that is less of a factor with bigger telcos. 

Initially, Luebchow and Cahall see FWA as being the biggest disruptor, mainly because of its low price -- in some cases as much as 50% lower than wireline broadband offerings -- and adding about 5 million new customers in 2022 and 2023. Fiber will take hold in 2024 and beyond, about the time that many of the build out projects started in the past few years will be completed. While that includes some cable operators -- Altice USA plans to pass 6.5 million homes with fiber by 2025 and Charter and Comcast have extended their fiber reach by about 1 million homes per year over the past few years -- Luebchow and Cahall don’t believe it is enough to reverse the coming share shift.

“The net impact is cable players will have to face stiffer competition within their footprints, and they threaten to be crowded out of a secular story that only has room for [about] 3-5 million net adds per year,” they wrote, adding they expect cable’s share of broadband net additions to drop from 87% in 2021 to 30% to 40% by 2027. 

Cable has punched back by bundling broadband and wireless phone service -- Comcast and Charter are both pairing high-speed data service with mobile offerings at a discount. 

T-Mobile and Verizon Communications have been most aggressive on the fixed wireless front, adding 532,000 FWA customers in Q1, according to Leichtman Research Group.  But so far, most cable companies claim they haven’t seen much impact from the service, which for the most part has been concentrated on less populated areas and has targeted business customers like food trucks and construction trailers. 

At the MoffettNathanson Media & Communications Summit May 18, Comcast Cable CEO Dave Watson said so far, FWA hasn’t been a major competitive factor, but that the company is keeping a close eye on the service.

“It doesn't mean that it's not competitive. It doesn't mean that we're going to take it lightly. We're not,” Watson said at the conference, adding that fixed wireless has some issues around speed and latency. T-Mobile advertises FWA speeds between 33 Megabits per second and 182 Mbps, while Verizon FWA service can range from 300 Mbps to 1 gigabit per second. Watson added that two-thirds of Comcast broadband customers take 300 Mbps and higher.

“We're coming from a position of strength in regards to network performance and WiFi performance in the household and we're not going to stop,” Watson said at the conference. 

In their report, Luebchow and Cahall noted that FWA speeds are lower than cable, but they are more than adequate for the most popular applications like streaming video.

“FWA should not be dismissed and will be a viable competitive threat, particularly in rural areas and for customers that prioritize a lower price vs. higher speeds,” the analysts wrote.  ■ 

Comcast chairman and CEO Brian Roberts got a 4% raise in 2021, with total compensation of $34 million, fueled mainly by a 27% gain in stock awards for the year.

Roberts’ annual salary actually dipped 5% to $3.2 million from $3.4 million in the prior year, but a 27% increase in stock awards -- from $10.6 million to $13.5 million -- helped lift the media chief’s total compensation for the year.

NBCUniversal CEO Jeff Shell, who oversees the company’s content unit, including its streaming service Peacock, got the biggest lift in total compensation -- 30% -- as his 2021 haul rose to $21.6 million from $16.5 million in the prior year. Shell also saw a slight decline in salary, by 4% to $2.5 million, while a 48.6% increase in stock awards (to $5.5 million from $3.7 million) and a 67% increase in the value of his nonequity incentive plan compensation (to $9.9 million from $5.9 million) more than made up the difference. 

Peacock ended 2021 with 24.5 million monthly active users, about three-quarters of the way towards its 2024 goal of 30 million to 35 million users. The streamer said it would double its content spend in 2022 to $3 billion. NBCUniversal as a whole saw revenue rise 26% in 2021 to $34.3 billion.  

Comcast Cable CEO Dave Watson made $22.7 million in 2021, a 15.5% increase over the prior year. Watson’s salary rose 10% for the year to $2.2 million from $2 million, but the biggest increase came in stock awards (60% to $6.7 million) and a 51% increase in nonequity incentive plan compensation ($8.9 million from $5.9 million). 

Comcast chief financial officer Mike Cavanagh’s total compensation rose 8.3% for the year to $27.4 million, including $10.1 million in stock awards (a 44% increase) and $8.6 million in nonequity incentive plan compensation. ■

The slowdown in cable broadband subscriber additions may be even slower than anticipated after executives at two of the top three publicly traded cable companies -- Comcast and Altice USA -- hinted that customer growth is trending at an even more decelerated pace than expected. 

Comcast Cable CEO Dave Watson touched off a mini firestorm on Dec. 7, telling the virtual audience at the UBS Global TMT Virtual Conference that he expected to end 2021 with 1.3 million additional broadband subscribers. That is lower than the 1.4 million Comcast added in 2019 and implies that Comcast would add about 185,000 high-speed data customers in Q4, its lowest growth since Q2 2017. 

Most analysts had expected Comcast to end 2021 with about 1.4 million additional broadband customers. In a recent research report, MoffettNathanson principal and senior analyst Craig Moffett predicted Comcast would add about 286,000 broadband customers in Q4. Moffett expects Charter to add 271,000 broadband customers and Altice to add 3,000 high-speed internet subscribers in the period. 

While Charter may well hit Moffett's target, chances are that Altice USA, coming off a third quarter where it lost 13,000 broadband customers, could see negative growth in Q4.

“We probably are trending -- and we still have a big month of December coming up -- slightly negative in Q4, which probably leads us to be down in a range of 5,000 to 10,000 for the year,” Goei said at the UBS conference.

He added that the declines are in markets where Altice USA competes with Verizon Communications’ Fios Internet product, which Goei described as heavily promotional. 

“These losses are in Fios zones,” Goei said. “I think Fios has been saying they have not lost momentum. We’ve slowed momentum relative to Fios and we really need to drive to the first quarter when we have a better mobile product.”

The news sent Comcast shares down 7% on Dec. 7, as well as the rest of the sector. At the end of the day, losses eased a bit -- Comcast stock closed down 5%, Charter down 3% and Altice USA fell 2%. But the fear that sluggish broadband growth could last a while longer didn’t seem quite as irrational as the day before. Between Dec. 6 and Dec. 8 the three stocks fell 6.5%, 4.6% and 6.4%.

Charter Communications chairman and CEO Tom Rutledge spoke at the UBS conference on Dec. 8, and avoided making any specific broadband predictions. Rutledge did say that as the spike in pandemic-fueled consumer acceptance of the broadband product begins to unwind, there is still plenty of runway left. 

“I do think that the opportunity to grow the business is pretty much unchanged,” Rutledge said at the UBS conference. “If you look at it on a four- or five-year growth rate trend, it’s pretty solid, pretty straightforward and pretty consistent. I think that that future will look more like the trend than it will look like the third or fourth quarter.”

Cable operators have consistently denied that stepped up telco 5G wireless and fiber broadband initiatives would cut into their businesses, and at the UBS conference tried to stress that in addition to strong opportunities ahead for broadband, their other services are even more robust. Watson said at the conference that wireless subscriber additions should break records in Q4, and added that cable EBITDA growth should be between 7% and 8% in the period, exceeding analysts expectations.  

Watson said Comcast would add a record number of mobile customers in Q4, after signing on 285,000 additional Xfinity Mobile customers in Q3, its best quarterly performance since launching the wireless product in 2017. At the UBS conference, Watson said Comcast expects cable EBITDA growth to be in the 7% to 8% range in Q4, while net cash flow growth will be in the low double-digit percentages. 

“In wireless, we’ll  beat Q3 in Q4,” Watson said. “We’ll set a record.”

Rutledge didn’t make any wireless subscriber predictions, but said mobile service will be Charter’s biggest growth engine going forward, likening the mobile opportunity to that of the wireline telephone business several years ago. Back then, traditional phone companies were offering wireline phone service for $72 per month. Today, cable companies are selling wireline service for $13 per month and dominate the industry, with Comcast and Charter the two largest wireline phone companies in the U.S. 

“We took that business,” Rutledge said. “So, what kind of upside is there [to the mobile business]? That kind of upside.” ■ 

The Cable Center said Tuesday that it has rescheduled its 23rd Annual Cable Hall of Fame virtual celebration to Nov. 15 at 8 p.m. (ET).

“As we continue to navigate the world of Covid and the necessary rescheduling of various industry events, we made the decision to move our Cable Hall of Fame celebration to a later date,” Cable Center president and CEO Jana Henthorn said in a press release. 

This is the fifth time the Cable Center has rescheduled the event. Originally it was to take place at the Ziegfeld Ballroom in New York City on April 30, 2020,  but the pandemic pushed that date to that fall of that year. In June 2020, the date was again pushed ahead, to April 29, 2021 because of pandemic concerns, and in February 2021 said it would try to hold the event both live in New York and virtually on Oct. 20. In June 2021, the Center said the event would be held virtually-only on Oct. 20. 

On Tuesday, the Center said the event will premiere on C-SPAN 3 and be available to view simultaneously online at CSPAN.org. The program will also be featured in the C-SPAN Video Library and available for on demand viewing immediately following the event.

The Cable Hall of Fame selected seven industry leaders in March 2020 for this year’s class:  Baker Media CEO Bridget Baker; former Charter Communications EVP IT and Engineering Jim Blackley; Urban One founder and chairwoman Cathy Hughes; TV One chairman and CEO and Urban One CEO Alfred C. Liggins III; Cable Pioneer Jeff Marcus; Comcast Cable president and CEO Dave Watson; and WarnerMedia News & Sports president and president CNN Worldwide Jeff Zucker.

The Bresnan Ethics in Business Award will also be presented to Ted Turner, Environmentalist and Philanthropist, during the Cable Hall of Fame celebration.

As video subscriber losses continue to rise across the board in the pay TV segment, Comcast Cable CEO Dave Watson and Charter Communications chairman and CEO Tom Rutledge told a virtual industry audience Wednesday that a new double play that ties wireless and broadband is beginning to emerge. 

Comcast lost about 491,000 video subscribers in the first quarter, up from the 409,000 it lost in the prior year and a trend that Watson said would likely continue. While the cable operator will continue to focus on high-end video subscribers who want a full package of video, at Wednesday’s MoffettNathanson Virtual Media & Communications Summit, Watson said the company is not ignoring the growth at its wireless unit.

Comcast launched Xfinity Mobile in 2017, part of its MVNO agreement with Verizon Communications, and has grown the business to about 3.1 million customers. The mobile unit had its best quarter ever in Q1, adding about 278,000 customers (its highest quarterly number) and becoming profitable for the first time.

Watson said the mobile product has “energized our sales channels,” including digital, call center agents and retail. 

“I think there’s definitely an opportunity to combine an elegant and seamless broadband- mobile offering. We’ve done it in a whole bunch of our go-to-market approaches and for the right segment, it's a great way to start the relationship,” Watson said. He added that tacking on the Xfinity Flex product to that double play could make it even more attractive. 

“That is a really unique proposition that we have that no one else has,” Watson continued.  “Over time, look for us to do more of that.”

Later on in the conference, Rutledge said that wireless is an integral part of the company’s connectivity strategy, adding that that ultimate goal is to converge wireless and broadband.

Charter, which also has an MVNO agreement with Verizon for its Spectrum Mobile service, added about 300,000 wireless customers in Q1. It ended the quarter with 2.7 million wireless customers. 

“I look at our opportunity to create customers that buy mobile services, and create those customers along with the capabilities that we have added through our broadband network, which are vast, and to converge the product itself into a single product,” Rutledge said. "If you look at the total prices that people pay for these products today, I think we could gain significant market share at much lower pieces than people are currently paying. I think mobile represents the opportunity for us to save people money and give them better products than they have today. .... The combination of the product is bigger than the component pieces.”  

Rutledge added that profitability for Spectrum Mobile isn’t that far off. 

“They [Comcast] reached a point that we will reach,” Rutledge said. “From a break even perspective, we said previously that about 2 million customers is all we needed to make the business profitable. That’s true and that proved out to be true. The difference between us and Comcast at the moment, I believe, is where we are in the cycle and how much new growth we have versus how much base.” 

Rutledge added that he expects mobile to be a real contributor to profitability going forward.

“To the extent  you create a customer that raises your ARPU but saves the customer money on their household spend and creates additional EBITDA per customer for you, that both allows your existing base to be more profitable and your incremental growth opportunities to be greater because you more valuable, that’s a really attractive model,” Rutledge said. “I think that’s what mobile does for us.”

On the flip side, some have complained that the emergence of streaming apps and the trend toward content companies shifting content -- like sports -- to their direct-to-consumer products, adds more pressure to carriage negotiations.   

“Obviously it changes the dynamic,” Rutledge said, adding that in the current climate, content distributors would be “much better off not blowing up the existing model just now," mainly because it generates much more revenue than its streaming counterpart. 

The dilemma, he continued, for content companies is in deciding whether to keep raising linear prices while premium content is available on streaming apps and risk being dropped by traditional distributors, or maintaining or lowering rates to preserve that distribution relationship. 

Rutledge guessed that content companies would choose the second route, which would mean less money “but it’s still better than the alternative.”  

And despite continued pay TV subscriber losses -- MoffettNathanson estimates that pay TV is losing about 7% of its video customer base per year -- Rutledge believes there is still some life left in the traditional linear video business.

“It’s hard for me to believe that there won't be linear TV at all in the near term,” Rutledge said. “I think the model is under pressure, it's been under pressure for a  long time. I don’t think it’s about to collapse, but I do think it's shrinking rapidly. I think the most likely scenario is that rate changes will moderate and you’ll still have a pretty expensive linear model. I don’t see it just collapsing.”  

Comcast chairman and CEO Brian Roberts saw his total compensation dip about 10% in 2020 to $32.7 million from $36.4 million in the prior year, the result of lower incentives and a change in the interest gained on his pension awards. 

Roberts’ base salary rose slightly to $3.4 million from $3.3 million, and though his stock awards and option awards nearly doubled to $10.58 million and $10.6 million, respectively, those gains were nearly erased by declines in the interest gained on his pension. 

According to Comcast’s proxy statement filed with the Securities and Exchange Commission April 23, the interest gained on Roberts’ pension was $150,134 in 2020, compared to $7.6 million in the prior year. Other compensation -- which includes contributions to retirement plans and personal use of company aircraft -- was significantly less, dropping to about $200,158 from $4.9 million in the prior year. 

Also Read: Comcast Touts 4G Speeds from DOCSIS 4 Device

Roberts also saw his non-equity incentives decline from $9.9 million in 2019 to $7.7 million in 2020.

Chief financial officer Michael Cavanagh’s total compensation dipped about 5.8% to $25.25 million from $26.8 million, mainly due to a decline in “other” compensation. Cavanagh received $62,088 in other compensation in 2020, compared to $2.28 million in 2021.

 Jeff Shell, who was named CEO of NBCUniversal last year, received $16.5 million in total compensation in 2020, including a base salary of $2.6 million, stock and option awards of $3.7 million each, respectively and a non-equity incentives valued at $5.9 million. There was no comparison in the proxy to the previous year. 

Comcast Cable CEO Dave Watson was the only senior executive who saw an overall increase in compensation, with his total take rising 16.7% to $19.7 million from $16.9 in the previous year. Watson, who received 100% of his annual bonus due to record performance at the cable unit, got a  big lift in non-equity incentive compensation (to $5.9 million from $4.6 million). His stock awards and option awards rose nearly $1 million each in the period, to $4.2 million each, respectively. 

All four executives also donated 100% of their salaries from April 1 to Sept. 30 to charities supporting COVID-19 relief efforts. According to the proxy, that amounted to $1.7 million for Roberts, $1.2 million for Cavanagh; $1 million for Watson and $1.25 million for Shell. 

The Cable Center said Wednesday that it will reschedule its 23rd annual Cable Hall of Fame celebration to Oct. 20 at the Ziegfeld Ballroom in New York City.

This is the fourth time the Center has had to reschedule the event. It was originally scheduled for April 30, 2020,  but was pushed to the fall of that year because of the pandemic.   In June 2020, it was rescheduled again to April 29, 2021.  

The Cable Hall of Fame inductees are: 

Bridget Baker: CEO Baker Media Inc.

Jim Blackley: Former EVP, IT and Engineering Charter Communications

Cathy Hughes: founder and chairwoman, Urban One

Alfred C. Liggins III: CEO, Urban One; chairman and CEO TV One

Jeff Marcus: Cable Pioneer

Dave Watson: president and CEO Comcast Cable

Jeff Zucker: chairman, WarnerMedia, News & Sports and president, CNN Worldwide 

The Bresnan Ethics in Business Award will also be presented to Ted Turner during the celebration. For those unable to gather in-person, the Cable Center said it will host a virtual celebration.

The Center said it is still confirming its plans for 2021 honorees. For more information on the celebration, visit www.cablehalloffame.com.

Comcast said it’s looking for ways to expand its Xfinity Flex OTT platform beyond its footprint of high-speed internet homes. 

“There are opportunities, including smart TVs, that could leverage scale,” said Comcast Cable CEO Dave Watson, during the cable giant’s Q4/full-2020 earnings call Wednesday. “Right now, it’s looking great in our footprint, but we’re making plans beyond that, whether it’s a device or software solution.”

Comcast offers the Flex device for free to its broadband-only users. And there are more of those than ever. Comcast said it added another 538,000 high-speed internet customers in the fourth quarter, and 2 million for all of 2020. Meanwhile, customers who also pay for a full-featured pay TV service from Comcast dropped another 248,000 in Q4.

Flex delivers popular over-the-top apps, including Netflix, HBO Max—and soon, Disney Plus—in a voice-controlled interface that shares many of the same features found in Comcast’s flagship X1 video platform. 

Importantly, Flex has been an important early driver to Comcast/NBCUniversal’s nine-month-old streaming service, Peacock, with Comcast internet customers getting the robust $4.99 iteration of the service for free on their Flex devices. 

Comcast is particularly excited with the advanced advertising schemes it has been able to implement on Flex for various NBCU properties, including Peacock and AVOD platform Xumo, acquired last year. Certainly, having a streaming world controlled by Roku and Amazon doesn’t fit that agenda. 

Comcast has already had discussions with entities including Walmart about shipping TV’s powered by the X1/Flex OS. 

“I think we’ll have more to talk about throughout the year,” added Comcast CEO Brian Roberts.

Dave Watson, president of Comcast Cable, has been elected chairman of the board of NCTA - The Internet & Television Association, succeeding Cox president Pat Esser. 

New to the board, meanwhile, is James Kilar, recently appointed CEO of HBO Max parent WarnerMedia. Kilar, who previously led Hulu, will be the corporate programming director. He succeeds John Stankey, who ran AT&T's entertainment division before being tapped to succeed AT&T CEO Randall Stephenson.

Also elected were Pat McAdaragh, CEO, Midco, vice chairman; Tom Rutledge, chairman & CEO, Charter, treasurer; Bob Bakish, CEO, ViacomCBS, secretary; and Esser, president, immediate past chairman. 

The announcements came at the association's board meeting June 3. 

Comcast Cable CEO Dave Watson said that the operator has now deployed 1 million Xfinity Flex devices.

Xfinity Flex is a thin-client set-top that delivers a slimmed down version of Comcast’s X1 pay TV experience, including Voice Remote. Since September, Comcast has offered its broadband-only users free access to Flex, which not only supports popular OTT apps such as Netflix and Hulu, but Comcast’s new streaming service, Peacock.

Visit Next TV to read more stories like this one. 

Peacock is set to launch nationally on July 15, but Comcast has already deployed the streaming service with its X1 and Flex customers.

Comcast lost 409,000 linear video customers in the first quarter, but gained 466,000 high-speed internet users.

The cable operator doesn’t break out how many of its broadband customers only take internet service. But Comcast did say it had 10.8 million one-service homes at the end of Q1. That means there are millions of more potential Xfinity Flex deployments in the offing.

Speaking at a virtual MoffettNathanson investor conference Monday, Watson said Comcast is “pleased” with Flex’s progress, and that it has aspirations for the device beyond merely being a tool to drive broadband customer growth.

"I think there is a longer term opportunity in how we monetize things between advanced advertising capability [and] participation in app revenue," Watson said.

Comcast Cable CEO Dave Watson said that the operator has now deployed 1 million Xfinity Flex devices.

Xfinity Flex is a thin-client set-top that delivers a slimmed down version of Comcast’s X1 pay TV experience, including Voice Remote. Since September, Comcast has offered its broadband-only users free access to Flex, which not only supports popular OTT apps such as Netflix and Hulu, but Comcast’s new streaming service, Peacock. 

Peacock is set to launch nationally on July 15, but Comcast has already deployed the streaming service with its X1 and Flex customers. 

Comcast lost 409,000 linear video customers in the first quarter, but gained 466,000 high-speed internet users. 

The cable operator doesn’t break out how many of its broadband customers only take internet service. But Comcast did say it had 10.8 million one-service homes at the end of Q1. That means there are millions more potential Xfinity Flex deployments in the offing. 

Speaking at a virtual MoffettNathanson investor conference Monday, Watson said Comcast is “pleased” with Flex’s progress, and that it has aspirations for the device beyond merely being a tool to drive broadband customer growth. 

"I think there is a longer term opportunity in how we monetize things between advanced advertising capability [and] participation in app revenue," Watson said.

Comcast chairman and CEO Brian Roberts received $36.4 million in total compensation in 2019, a nearly 4% increase over the prior year, according to its annual proxy statement filed with the Securities and Exchange Commission.

Roberts’ annual base salary rose slightly to $3.3 million from $3.2 million in the prior year, and his stock and option awards remained steady at about $5.3 million each.

Roberts, along with chief financial officer Mike Cavanagh, Comcast Cable CEO Dave Watson, NBCUniversal CEO Jeff Shell and Sky plc chief Jeremy Darroch pledged their 2020 salaries to various charitable organizations during the COVID-19 pandemic. 

In addition, Comcast has devoted about $500 million to support its employees through continued pay and benefits where operations have been paused or impacted by COVID-19, and has committed significant resources to support its customers.

According to the proxy statement, Cavanagh received the biggest increase among top executives at the company, with total compensation of $26.8 million, up 23% from the $21.7 million he received in 2018. That gain was mainly fueled by a 71% rise in stock awards to $6.7 million from $3.9 million in the prior year.

NBCUniversal chairman Steve Burke, who stepped down as CEO in January and said he would retire in August, received $42.6 million in total compensation in 2019, up 7% from the $39.9 he received in the prior year.

Watson’s total compensation rose 14% to $16.9 million from $14.8 in the prior year, while senior executive vice president Dave Cohen got a 5% raise, with total compensation of $20 million in 2019, compared to $19.1 million in the prior year. 

Growing up in the Virginia suburbs of Washington, D.C., Dave Watson thought his future would be in soccer. He played for the University of Richmond and even got a U.S. Soccer coaching license. Although he didn’t continue in sports, building and coaching strong teams has always been important to him.

The son of an attorney, Watson thought he might pursue law while studying political science. Instead, he got into the wireless phone business. It was 1984, and the recent breakup of AT&T had made new spectrum available. He opened a Washington, D.C., sales office for Bell Atlantic Mobile, and then moved two years later to Metrophone, a privately owned mobile company, where he handled marketing and sales. By 1991, Metrophone’s owners were entertaining a number of offers to buy the company. Comcast wasn’t among the likely suitors, but was interested in getting into the mobile business. Comcast even recruited Watson for a senior marketing job in Philadelphia, which he declined.

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A few weeks after Watson turned down the offer, Metrophone announced it would, in fact, be sold to Comcast. Assuming he was already out of favor with the new owner, Watson figured he’d soon be out of a job. When a group of Comcast executives arrived at the office, he was ready for the axe to fall and was surprised when CEO and founder Ralph Roberts asked to meet with him privately. “My stomach dropped,” he recalled. “Not only did I think I was about to be fired, but by the founder himself.”

However, he said, “Ralph sat me down and, instead of sending me packing, he laid out his vision and asked me to stay.” Watson remembers this pivotal moment in his career as a “remarkable gesture that, I learned, was very much in character for Ralph.”

Watson joined Comcast Cellular Communications and led the company until its sale in 1999, when he transitioned to Comcast Cable as executive VP of marketing and customer service. “It was an exciting time for the industry, and cable had incredible potential,” he remembered. “Our entire organization was thinking ahead and working to build a next-generation network that today, two decades later, continues to power our technologies and innovation.”

Following Comcast’s 2004 acquisition and integration of AT&T Broadband, Watson was elevated to executive VP of operations, becoming chief operating officer in 2010, and then CEO of Comcast Cable in 2017. He has been responsible for driving Comcast Cable’s operating strategy and execution, leading its emergence as the nation’s largest gigabit speed internet provider and pay TV service and creating a business services organization that is the company’s largest contributor to revenue growth.

Far removed from the soccer field, Watson remains focused on his team. “If you’re part of a team, your job is to make the team successful,” he said. “If you’re leading a team, make sure the members of the team are great. And when you find opportunities, do something about them.”

The Cable Center named seven industry luminaries to its 2020 Cable Hall of Fame class, tapping a wide range of industry executives who will be feted at an April 30 red carpet event at the Ziegfeld Ballroom in New York.

The honorees were chosen for leadership, entrepreneurship and innovation in the cable industry. Since 1998, 140 individuals have been inducted into the Hall of Fame.

“The 2020 Cable Hall of Fame class represents every facet of our industry,” Michael Willner, Penthera CEO and chairman of The Cable Center’s board of directors, said in a statement. “They have helped to change the entertainment world we now live in and continue to create new and innovative video consumption models.”

The 2020 class members are:

Bridget Baker, CEO, Baker Media, and co-founder of CNBC

Jim Blackley, adviser to the CEO and former EVP of IT and engineering, Charter Communications;

Cathy Hughes, founder and chairwoman, Urban One;

Alfred C. Liggins III, CEO of Urban One and chairman and CEO of TV One;

Jeff Marcus, Cable pioneer and founder of Marcus Cable;

Dave Watson, president and CEO, Comcast Cable;

Jeff Zucker, chairman WarnerMedia News & Sports, and president, CNN Worldwide.

“Our industry would not be the same without the significant contributions of the 2020 Cable Hall of Fame honorees,” The Cable Center CEO Jana Henthorn said in a statement. “What an honor it will be to recognize them at our Cable Hall of Fame celebration on April 30.”

In addition to the class of 2020, the ceremony will also recognize this year’s winner of the Bresnan Ethics in Business Award, who had yet to be announced at press time.

Profiles were written by Erica Stull.

For more information on the celebration, visit cablehalloffame.com.

Comcast Cable CEO Dave Watson doubled down on the company’s stance to make broadband its flagship product, telling an audience at an industry conference that the video market will be “tough” going forward.

Comcast, like other operators, has said that connectivity has quickly evolved into its central product. As far back as its Q3 2017 earnings conference call with analysts, chairman and CEO Brian Roberts called broadband the “epicenter” of its cable business. 

At the Deutsche Bank Media, Internet and Telecom conference in Palm Beach, Fla., Tuesday, Watson continued on that tack, telling the audience that Comcast won’t chase unprofitable video subscribers.

Watson said video service is currently profitable for Comcast, adding that it also serves as a complement to its more profitable broadband offerings.

“For the right segments, video becomes a great complement to broadband. Broadband is the foundation of which we start the relationship,” Watson said. “Video can be a great supporting part of that package.”

But Watson said Comcast is cognizant of the shift in viewing habits toward streaming video. While Comcast’s X1 operating system is more than holding its own, the company is aware that some consumers are migrating towards over-the-top providers.

“I think the video marketplace is going to be tough,” Watson said, adding that Comcast will be ready for any unique video opportunities that arise. “But I don’t see the video marketplace changing. And again it’s because of the sheer amount of virtual over-the-top providers as well as the amount of choice. ...We’ll pick and choose the segments, primarily focused on broadband. But I think the video marketplace will continue to be a tough one for at least the near term.”

Watson added that Comcast, which has already struck integration deals for its X1 platform with Netflix, YouTube and Amazon, could expand on that relationship with other providers.

“There’s a new niche video direct-to-the-consumer product introduced every other month,” Watson said. “There’s more choice than ever for consumers to piece together whatever they want. We’re positioned on one hand -- X1 could be that platform. If I’m a direct-to-consumer video provider, I’d want to be on X1. We’ll think about those applications over time. At the same time, because of consumer choice, because of all this competition, we’re just not going to chase video. [We’ll] stay very centered on broadband, we’ll package video where it makes sense and do that profitably.” 

C-SPAN's board of directors has tapped Comcast Cable President Dave Watson for a second term as chairman of the executive committee. The committee sets stategy and oversees finances for the public affairs network funded as a public service by the cable industry.

Cable One President Julie Laulis and WOW! CEO Teresa Elder have been elected to full two-year terms. Both had joined the call earlier this year. Laulis is also a trustee of the C-SPAN Education Foundation.

Rich Fickle, president of NCTC, and Jeffrey DeMond, president of Vyve Broadband, were re-elected to serve two-year terms on the board.

John Evans, chairman of Evans Telecommications, was elected to another three-year term as a senior director. He has been on the board since C-SPAN's founding in 1978.

Comcast, perhaps the most video-focused cable company over the past several decades, continued its shift toward a more broadband-centric model  in the second quarter, including putting more emphasis on broadband-only services.

The move comes after Comcast reported its best Q2 broadband growth in 10 years, as video subscriber losses increased four-fold.

On a conference call with analysts to discuss Q2 results, chairman and CEO Brian Roberts said many of those video losses were due to increased competition from virtual Multichannel Video Programming Distributors (vMVPDs), adding that Comcast has adjusted accordingly.

Related: Despite Video Losses, Comcast Has a Strong Q1

“We remained focused on segments that we can serve profitably as part of a broader relationship with the customer centered on a whole-home experience,” Roberts said.

“As more people rely on faster and faster broadband and more capacity, that gave us a marvelous opportunity to make investments to take the innovation machinery our engineering and technology teams have built and repurpose them partially to focus on innovation around broadband with our XFi products and our XFi brand,” he continued. “The whole company understands that connectivity.”

Comcast chief financial officer Michael Cavanaugh said the broadband gains – 260,000 net additions compared to 175,000 in the prior year – was in part due to Comcast proactively promoting broadband-only packages.

The company also said it added 204,000 new customer lines for its XFinity Mobile wireless service, ending the period with 780,000 customer lines.

Related: Comcast Adds 197K XFinity Mobile Customer Lines in Q1 

“We have been very focused on broadband and the connectivity side both residential and commercial for some time,” Comcast Cable CEO Dave Watson said, adding that the company has increased broadband speeds every year for 17 years. “Our focus is delivering speed, coverage and control all under the XFi brand.”

Broadband customers have outnumbered video customers at Comcast since 2015 as the company, and the rest of the industry, has focused more on higher-margin high-speed internet customers.

Comcast has long recognized the shift toward streaming video. Roberts said last year that broadband was becoming the “epicenter” of the business. 

Cavanaugh said that customer data usage has soared – median monthly data usage now exceeds 150 Gigabytes per customer and the average home connects 11 devices to the network.

Roberts said driving that usage is video.

“One of our strategies is to have diversification in such a way as new technologies comes, it’s not all or nothing and we’re benefitting more than I think we’re losing from additional competition,” Roberts said. “Broadband is growing faster than in recent years. Why is that? Because video over the internet is more reliable, there are more devices and more bits per consumer and more bits per home. All of those are great trends for us.”

Roberts added the shift also could help its NBC Universal programming unit, giving it more opportunities to sell its content to new packagers.

“This is a dynamic time, and we’re uniquely positioned as a company to benefit from these changes,” Roberts said.

Investors appeared to be pleased with the shift – Comcast stock was up nearly 5% in early trading to $35.02 per share. The stock slipped slightly in later trading, priced at $34.38 (up 3%) at 10:14 a.m. on July 26. 

WASHINGTON — The issue of network neutrality remains D.C.’s biggest digital divide, and one that shows no sign of healing anytime soon.

Last week’s trigger of the Republican Federal Communications Commission’s net neutrality regulation rollback fired up the ongoing angst of activists, along with the branding battle between those forces and their computer company allies against internet service providers and fans of broadband deregulation.

Related: Net Neutrality Activists Get It in Gear

What both sides have in common is that they were each calling for help from Congress, in very different forms. But there were no signs that either legislative approach was a near-term solution to the split over how the government should regulate the net, and who should get regulated.

ISPs are willing to accept a return of some of the regulations that were recently eliminated, and under the FCC’s authority — just not under Title II — and likely with some wiggle room for pro-consumer paid prioritization. Opponents consider that last phrase an oxymoron, except for carve-outs for items such as telemedicine and connected cars.

Stirring the Branding Pot

There was also a big branding battle being waged over just what the rollback meant.

The doom and gloom predictions of the death of the internet were branded as chicken little overreaction by ISPs, while promises by the big web providers that nothing about users’ online experience would change were branded as a strategy to lull consumers into a false sense of security before turning up the blocking and throttling heat, like web user-lobsters in an ISP pot.

Net-Neutrality Rollback Fans: Sky Isn't Falling

USTelecom even used activists’ own online protests, which were based on their assertions that speech could be blocked, to demonstrate that those swift net roads were still open.

The activist legislative push is for the Congressional Review Act nullification of the rule rollback, which its backers said was still a going concern, despite the fact that it is almost 50 votes short of even getting it placed on the House floor calendar for any vote.

On the other side, ISPs, joined by their Republican allies, continue to call for bipartisan legislation. That still sounds like a nonstarter for Democrats, though, a development that House Energy & Commerce Committee leadership was putting a pin in even as they called for support for their draft legislation.

“After repeated attempts to start good faith negotiations, it appears our Democratic colleagues are more interested in coming up with political slogans than legislative solutions,” said House Energy and Commerce Committee chair Greg Walden (R-Ore.) and Communications & Technology Subcommittee chair Marsha Blackburn (R-Tenn.).

Meanwhile, the Federal Trade Commission, which as of last week is the primary cop on the network neutrality enforcement beat, signaled it was on patrol, but that it too might need some congressional backup.

“Using our existing authority, we will work hard to ensure broadband providers keep their promises to consumers and are not engaged in anticompetitive practices,” said an FTC spokesperson. FTC chairman Joseph Simons was not available for comment. “As we monitor the marketplace, we will work with Congress to address any additional resources we might need.”

Tag Team Enforcement

One criticism of the FTC as net neutrality enforcer involves whether it has the needed technical expertise in network management and how traffic is handled. But the FTC and FCC have said they will work together and share resources in their tag-team net enforcement regime.

The FCC’s principal role will be to enforce enhanced ISP transparency requirements, which must be publicly posted.

The nation’s largest ISP, Comcast, was promoting as well as posting last week, with Comcast Cable CEO Dave Watson pointing out in a blog post that the MSO doesn’t block, throttle, prioritize for pay or discriminate in favor of its own content.

That is an enforceable commitment, but could change if Comcast shifts its business plan and informs the FCC and the public accordingly. But the FTC could still take action if it concluded the company’s business model was unfair or anticompetitive.

In addition to the legislative attempts at regulatory certainty, the U.S. Court of Appeals for the D.C. Circuit will again be weighing in, given the multiple legal challenges to the reg rollback that will be heard in that court.

As cable stocks have hit new 52-week lows over the past few weeks as investors fear that cord-cutting is accelerating in the pay TV distribution arena, Comcast Cable CEO Dave Watson told an industry audience Monday that its stance towards video hasn’t changed.

Cable stocks have fallen out of favor in the past few months, some say driven by fears that Comcast has lost its faith in the business and is instead turing its attention to international assets – like its March bid for British satellite giant Sky – and rumors that it is also interested in acquiring Fox assets currently pledged to The Walt Disney Co.

At the MoffettNathanson Fifth Annual Media & Communications Summit, Watson said that the only thing that has changed in the past several months is that a scaled media investment – Sky – came up for sale.

“We didn’t anticipate it,” Watson said of the Sky sale. “We have a very good track record in M&A, but by no means does the fact that we look at an opportunity mean we’ve lost confidence in our core business. Cable is a great business.”

Watson added that while Comcast tries to keep customers through a variety of programming and broadband packages, but added that when a customer leaves as a result of price, the impact is actually favorable to the company.

“We segment the marketplace,” Watson said, adding that when a low-end customer drops video service over price, but keeps their broadband service – at a higher monthly charge – the company makes out better.

“It’s actually accretive when that happens,” Watson said. “It’s a manageable transition.”

And while broadband customer growth has slowed down over the years, Watson said there is still runway, particularly with homes that have slower-speed services like DSL.

Watson said about 75% of Comcast’s broadband customers take service at 100 Mbps or higher and he estimated that there are about 4 million DSL customers.

As more and more apps demand higher and higher bandwidth, he added that Comcast is “positioned very well to be competitive.”   

Dave Watson, president and CEO of Comcast Cable and senior executive vice president of Comcast Corp., will be a featured speaker during the SCTE/ISBE Leadership Institute Executive Education program at Dartmouth.

SCTE/ISBE said Watson will share his perspectives on the industry and leadership during a fireside chat and subsequent question-and-answer session with program attendees on Monday, May 7. 

Watson, a featured speaker at last fall’s Cable-Tec Expo in Denver, will be joined at SCTE/ISBE-Tuck by Tony Werner, president, Technology and Product, for Comcast Cable.

SCTE/ISBE-Tuck will be conducted Sunday, May 6 through Friday, May 11 on the Dartmouth College campus in Hanover, N.H.

The SCTE•ISBE Leadership Institute at Tuck Executive Education at Dartmouth, entering its eight year,  attracts top execs, including senior directors, vice presidents, senior and executive vice presidents, as well as C-level executives from across the cable industry, the organization noted.

Pat Esser, president of Cox Communications, was featured at the 2017 program, and previous guest lecturers have included Michael Powell, president and CEO of NCTA—The Internet & Television Association; Neil Smit, now vice chairman of Comcast; Michael Angelakis, now chairman and CEO of Atairos; Balan Nair, now president and CEO of Liberty Global’s Latin American and Caribbean operations; Bob Stanzione, executive chairman and chairman of the board of Arris; Phil McKinney, president and CEO of CableLabs; and Jerry Kent, chairman and CEO of Suddenlink Communications prior to its acquisition by Altice. The late Glenn Britt, the former chairman and CEO of Time Warner Cable, began the program’s tradition of industry guest lecturers in 2011, SCTE/ISBE noted.

“Year in and year out, our fireside chat tradition of bringing C-level insights to attendees is among the most highly anticipated elements of the SCTE•ISBE-Tuck curriculum,” Mark Dzuban, president and CEO of SCTE/ISBE, said in a statement.  “We’re very grateful to Dave Watson for committing his time and energy to enrich the educational experience for the next generation of industry leaders.”

Comcast Cable CEO Dave Watson has been named chairman of the C-SPAN board's executive committee.

That came at C-SPAN's board meeting in New York.

Watson joined the board earlier this year, succeeding Comcast CEO Neil Smit after he stepped down.

Also joining the board of the public service networks funded by the cable industry were Dexter Goei, president of Altice N.V and chair/CEO of Altice USA, and Wide Open West CEO Steven Cochran.

Elected to additional two-year terms were board members Pat McAdaragh, president of Midco; and Alan Block, chair of Block Communications.

The executive committee can be empowered to set strategy and over see finances on behalf of the 15-member board.

There are no flukes in Cable.

Just ask Comcast, which was the first cable operator to report a full year of positive video subscriber growth in a decade, ending 2016 with 161,000 more customers than in the previous year. That Comcast managed to do that just as over-the-top and alternative video delivery systems were proliferating, gaining legitimacy and chipping away at traditional pay TV customer rolls was remarkable enough, but it was no fluke.

The Distributor of the Year Issue:Comcast's Makeover Yields Results|Five Ways Comcast Is Leading in Tech

That growth was a planned, concerted effort that not only yielded a video customer surplus, but was also profitable. Comcast finished the year with a 6.6% increase in cable-systems revenue and a 5.6% rise in cash flow. And it did it all the hard way, with no aggressive promotional pricing or special deals to attract customers that will drop the service in six months.

Instead, Comcast put its collective head down and focused on the fundamentals, rolling out new products like Xfinity Home and Xfinity Mobile at a steady pace and pumping hundreds of millions of dollars to beef up customer service.

The path to positive subscriber growth was a multiyear process, starting with the hiring of former Charter Communications CEO Neil Smit in 2010. It was Smit who initiated a multipronged plan to improve customer service, beef up the network and steer the company on a path toward product innovation and network superiority.

Smit stepped away from day-to-day operations in April — he is now vice chairman of Comcast Corp. — and handed the reins to 20-year Comcast veteran Dave Watson, who moves up to Comcast Cable CEO after serving as the cable unit’s chief operating officer for the past seven years, implementing the plans that he and Smit developed. Watson takes over just as subscriber growth is expected to decline in the wake of two massive storms that devastated homes in Houston and Western Florida. Comcast has said it expects the impact of Hurricanes Harvey and Irma to result in the loss of 100,000 to 150,000 subscribers in the third quarter.

MoffettNathanson principal and senior analyst Craig Moffett observed that the declines weren’t that surprising given that the video subscriber estimates, even at best-in-class Comcast, will have to come down.

Infrastructure Advantage
“We’ve spent 18 years repeating a simple mantra: Cable operators are not media companies, they are infrastructure providers,” Moffett wrote in a research note. “Their infrastructure is still advantaged. Comcast will be just fine.”

But the company is confident that it will continue to hit its financial targets, as well as continue its pace of innovation. For those reasons and more, Comcast is the 2017 Multichannel News Distributor of the Year.

For Watson, Comcast’s success has been the result of the company’s decision to stick to three basic tenets.

“The key for us is that we’re very focused on our core set of operating principles,” Watson said. “Staying focused on sustainable, profitable growth, driving innovation, that’s a big part; and third is to continue to improve the customer experience.”

While that may sound oversimplistic, Comcast has managed to make it work. In the past five years (2012-2016), overall revenue has grown at a 6.2% annual clip while cash flow has risen 7.2% per year. This year, the growth is even more dramatic — in the last 12 months between the first half of 2016 and the first half of 2017, revenue has grown 9.4% to $41.6 billion and cash flow is up 10.2% to $14.1 billion. This in a year that has seen competitive pressures increase as Hulu (25% owned by NBCUniversal) launched its Hulu Live offering, AT&T unveiled its over-the-top product DirecTV Now and networks are queuing up to release direct-to-consumer versions of their channels.

Comcast has used the X1 platform expertly in driving forward what Watson said is its newest mantra — becoming an “aggregator of aggregators.” That means not only offering access to subscription video on demand and over-the-top competitors, but embracing them.

Xfinity subscribers can access Netflix directly from their set-top boxes and over the years Hulu, YouTube and music service Pandora have been added to the lineup. Earlier this year, Comcast reached a deal where Sling TV — the over-the-top MVPD service from Dish Network — received a coveted spot on the set-top (mainly for international and multicultural programming). Just last week the cable operator expanded its relationship with YouTube, allowing customers to launch the online video app merely by speaking “YouTube” into their X1 voice remote.

Including those products is all part of the overall strategy of offering customers best-in-class products in almost every category, Watson said.

‘Aggregator of Aggregators’
“We look at each part of our business, every major product area, and we look at innovation opportunities at each one,” Watson said. “With X1, I think we are delivering in its early stages the promise of being an aggregator of aggregators — the best in linear, the best of on-demand, a terrific DVR, a great app, data and applications integrated. Netflix is a good example and soon-to-come will be You Tube. … To me this is constant improvement of our major product areas.”

That’s a far cry from the past, when a Netflix app embedded in any cable operator’s set-top box would have signaled the end of the world. But the evidence continues to mount that SVOD services like Netflix, Hulu and YouTube aren’t replacements for cable, but can complement the service. And making it easier for an X1 customer to access their SVOD subscriptions only enhances the cable operator’s stature in the customer’s mind.

That shift, along with a continued focus on innovation — Comcast still has a mandate to roll out a new product or product enhancement at least once per quarter — has been a key part of Comcast’s success. In the past five months, Comcast has rolled out a new wireless service, Xfinity Mobile, part of its mobile virtual network operator agreement with Verizon Communications; xFi, a cloud-based home WiFi management platform; and enhancements to XFinity Home that allow consumers to remotely control home functions like heating, cooling, lighting and security cameras through their voice remote.

The voice remote, launched in 2015, is one of those product enhancements that has fared even better than its staunchest proponents had hoped. Comcast has deployed about 17 million voice-remote devices and customers now make about 1 billion voice commands per quarter.

“It’s just remarkable,” Watson said of the product.

Comcast has also embraced products from programmers such as AMC Premier from AMC Networks and 21st Century Fox’s FX+, ad-free versions of the AMC and FX pay TV networks available for an additional fee. In an interview, Comcast executive vice president of Xfinity Services Matt Strauss said the offerings are part of an overall evolution of the video product, and of the strategy to entice customers to buy into the entire Xfinity family of offerings, not just one or two things.

Strauss said the strategy could be traced back to Comcast’s initial investments in infrastructure that laid the foundation for the product suite that is available today.

“We’re now at a point where it’s really about scale, and how do we continue to deliver innovative products and services and accelerate how we get deeper and deeper into our base,” Strauss said.

The answer, Strauss said, is to provide elegant, easy solutions to customer problems even before subscribers know they are problems. For example, as the TV audience became more and more fragmented and finding shows grew more difficult, X1 provided a user interface that made it easier to navigate through the thousands of linear and on-demand content choices. Later, X1 added a voice remote, which made navigation even easier.

For high-speed data, the solution was faster speeds. Comcast has increased data speeds 17 times in the past 16 years and by the end of 2017 will have fully deployed DOCSIS 3.1, which will enable speeds of 1 Gigabit per second.

“Speed is important, but access is equally important,” Strauss said. “Most people now connect devices via WiFi. Ensuring we have the best WiFi in the home, as well as the best WiFi out of the home is also very core to the strategy and that’s where you’re seeing us deploy our newest wireless gateway, the XB6 (xFi) which can deliver the fastest in-home WiFi speeds.”

From there, xFi customers would naturally migrate to Comcast’s XFinity Home product, which again incorporates the aspects of other company products, like the voice remote, to control household functions. Comcast is truly selling a bundle, and that bundle is interconnected.

“When we look at the future, today we typically sell on price,” Strauss said. “And the more products you take, the better the price. The challenge there is when you sell on price, essentially you’re making yourself a commodity.

“What we really want to transition to is selling an experience,” Strauss added. “The more products you take from us, you will of course get a better price, but you will also get a better experience. Starting to weave together the portfolio and reinforcing that, I think, is a big opportunity. A lot of that you’re going to see solidly around the home. There is a big opportunity around the digital home.”

The company is obsessed with giving more choice in the video-on-demand side of the business. “We’re breathing new life into what it means to get video,” Strauss said. “Now we have 130,000 choices, the top 100 Nielsen-rated shows, 900 series fully stacked. We added Netflix, not just as an app, but integrating Netflix contextually.”

As a result, on-demand is growing again — this year, Comcast customers are spending an average of 32 hours a month watching on-demand shows, up 20%.

“When people have said video is in a decline, ratings are in a decline, we see something different,” Strauss said. “We see more and more video consumption moving to time-shifting, we see while live ratings may be declining, the total video consumption is increasing, instead that more is happening outside of traditional measurement. It’s like dark matter, people aren’t seeing it, but we think the total video pie is increasing. And we’re continuing to build the platforms and the capabilities to all people to watch TV smarter and on their terms.”

The emergence of over-the-top players has added to that shift and is continuing to challenge the model, Strauss said, but Comcast doesn’t see any compelling reason to join the OTT fray.

“Part of what is happening in the market, especially on the video side, is you are seeing a lot of increased competition, you’re seeing a lot of competitive offers — in some cases you’re even seeing some of these OTT players offer video at negative gross margins. We’re not going to chase that.”

But the evidence is mounting that younger consumers are increasingly looking outside the traditional pay TV ecosystem for their content needs. Pay TV subscribers fell by more than 900,000 in the second quarter, the worst Q2 performance in history. That’s after a record first-quarter loss of more than 750,000 video customers.

Moffett, who raised his rating on Comcast to “buy” earlier this month after downgrading the stock to “neutral” in June, said he sees the company as the standard for the pay TV business. But he also estimated that the MSO will lose almost 1 million video customers in the next five years, ending 2021 with 21.7 million subscribers, down from 22.5 million in 2016. The analyst does see Comcast adding about 5 million broadband customers in that same time frame, finishing 2021 with 31.1 million high-speed data customers compared to 26 million in 2016.

Competition is also heating up. Google’s YouTube TV expanded to eight additional markets earlier this month, growing its total markets to about 48 cities. In addition, AT&T began pricing its DirecTV Now service even more aggressively in the quarter, at $10 per month for any unlimited wireless subscriber, and returned to offering free Apple TV devices with a three-month commitment.

While weakening subscriber metrics shouldn’t come as a surprise, Moffett said, they aren’t a calamity, either. Pay TV companies, he said, still have broadband pricing power, which should help them in reaching financial targets. That’s just what Comcast said when it predicted the Q3 subscriber loss.

Strauss noted that all the panic over OTT and cord-cutting could be unwarranted. There is no doubt, he said that viewing habits are changing, but life stages and household economics also need to be considered.

As an example, Strauss pointed to Xfinity on Campus, Comcast’s multiscreen managed IPTV service for college students. When the product was in development, Strauss said Comcast realized that the last thing college students wanted was to be tied to a set-top box. So the MSO had to rethink the idea, creating a product that allowed students to download the Xfinity Stream app, offered a cloud-based DVR and would let them watch live TV anywhere on campus. The product has been highly successful and, as students returned for the most recent fall semester, it is deployed in more than 100 schools.

“Millennials do watch TV as much as any other segment,” Strauss said. “They just have different needs and how they want to consume and access it.”

That, Strauss said, has led to Xfinity Instant TV — an in-home, in-footprint, managed IPTV service slated for a Q3 launch — as well as ad-free versions of networks that consumers can buy for a fee. Comcast reached a deal with AMC Networks in August for AMC Premiere, an ad-free version of the popular AMC network for an additional $4.99 per month. A month later, FX Networks announced a deal to offer an ad-free version of its flagship FX channel — called FX+ — to Comcast customers for $5.99 per month.

Strauss said those channels and other services like it are just an example of how Comcast’s foresight in investing in content, infrastructure and innovation have translated into meeting needs even customers didn’t know they had.

“The future we’ve always talked about has finally come, at least for us,” Strauss said. “I think that is because of decisions that we made, not six, 12 or 24 months ago, but years ago, based on where we saw the puck going and ensuring that we would have the technology capabilities and the infrastructure in order to deliver upon the innovation that we believed we were going to need to stay competitive. As a result you’re seeing us deliver on a lot of these products and services. But this didn’t happen by accident. It really happened because of very important strategic decisions we made years ago.”

Comcast Cable CEO Dave Watson still doesn’t believe an out-of-footprint, over-the-top video offering makes economic sense for the largest cable operator in the country, but said if a model emerges, its X1 operating platform would be ideal.

Related > Out of Bounds: Mapping Out Cable's Prospects for Going OTT [subscription required]

Comcast has said repeatedly that it didn’t see a model that works for an out-of-footprint service. Watson’s predecessor, current vice chairman Neil Smit, reiterated that position a year later, saying last year that the operator hadn’t found an OTT model that “really hunts.” A few weeks later at the INTX show in Boston, Comcast chairman and CEO Brian Roberts reiterated that position.

Related: New CEO Watson Won’t Disrupt Comcast Cable Momentum

At the MoffettNathanson Media & Communications Summit in New York Thursday (May 18), Watson said programming rights issues still make an outside OTT product unfeasible.

“We have some rights, but they’re not complete,” Watson said. “If you want to go out and get all of the rights connected to it, it is very little to no margin. We’re not questoning others and their approach. We’ll compete, when they come into our footprint, aggressively with X1 or broadband. When we look at taking that similar approach and that same model, we haven’t seen one that works.”

But Watson said if a feasible model emerges, its X1 platform would be ideal for a nationwide OTT offering.

“X1 would be a great technology solution for outside the footprint as well as inside,” Watson said. “We just haven’t found something that works.”

Charter Communications chair/CEO Tom Rutledge had been re-elected chairman of NCTA-The Internet & Television Association.

Cable execs were in Washington this week for the Cable Hall of Fame and NCTA's Near Future conference.

Also re-elected for second, one-year terms, on the board were Pat Esser, president, Cox Communications, vice chair; and John Skipper, ESPN president and co-chair, Disney Media Networks, secretary.

Dave Watson was elected to a first term as treasurer. He is president of Comcast Cable and EVP of Comcast Corp.

Bob Stanzione, executive chairman of Arris, was re-elected to a two-year term.

Elected at-large programmer directors were: David Zaslav, president, Discovery Communications; Peter Rice, chairman, Fox Networks Group; and Josh Sapan, president, AMC Networks, each to two-year terms.

Bob Bakish, president of Viacom, was elected for a one-year term.

Elected at-large system directors to new, three-year terms were John Evans, chairman, Evans Telecommunications, and Pat McAdaragh, president, Midco.

Nancy Dubuc, president of A+E Networks, and Alfred Liggins, president of Radio One and chairman of TV One, were named to at-large director seats for two-year terms.

Making his debut before analysts as Comcast Cable’s new CEO Thursday, Dave Watson pledged not to tinker with the pay TV juggernaut’s momentum, focusing his efforts on profitable growth, innovative products and services and constantly improving customer service.

Watson, who has been with Comcast since 1991, became CEO of the cable unit on April 1, after former CEO Neil Smit transitioned from day-to-day operations to vice chairman of Comcast Corp. Watson had most recently been chief operating officer under Smit, so the transition he said, was no major undertaking.

“I’ve been working with Neil on our strategy for awhile,” Watson said on a conference call with analysts to discuss first quarter results. “It’s no great surprise that I’m going to stay focused on what’s working.”

Watson takes the cable helm at a critical point for Comcast – it is launching a new wireless product, called Xfinity Mobile, and pay TV operators are facing a growing potential competitive onslaught from virtual MVPDs, 5G wireless and skinny bundles.

Watson doesn’t appear to want to take Comcast in a radical direction. On the call he said he would focus on profitable growth areas including business services, innovative products and customer service. On the customer service front, he said his goal is to take the customer experience to the next level, focusing on key moments such as when existing customers move or new ones come onboard.

“There is some real traction around that,” Watson said. “It’s good for customers and I think this is the right way to drive healthy and sustainable efficiencies.”

Watson said on a personal note, he will miss working closely with Smit.

“He was a great partner and a great boss,” Watson said. “However, I am excited about this next chapter and with a very good cable team, we are going to go after the opportunities in front of us.”

And one of the biggest opportunities is wireless.

Earlier this month Comcast unveiled its long awaited wireless service – Xfinity Mobile – taking advantage of its existing MVNO agreement with Verizon Communications. Currently in employee-only tests, the offering is expected to be available to customers throughout the footprint later in the year.

This isn’t Comcast’s first attempt at a wireless play. The company sold its Comcast Cellular business, which Watson formerly headed before joining the cable operation, in the 1990s and other subsequent wireless partnerships have failed. But Comcast chairman and CEO Brian Roberts said he had no regrets.

“The question of where wireless is, where it’s going, I think we’ve done a really good job of making sure that product is in our bundle,” Roberts said. “It’s going to be a fabulous value for customers with the brand new product.”

Roberts pointed out some of the more attractive features of the product – the combination of the cellular and Wifi networks, the ability to access Xfinity services by logging in just once and flexible packaging that allows customers to buy unlimited plans or pay only for the Gigabits they use.

“That gives us what we need,” Roberts said. “We are always looking at where future technologies are going and things of that nature, but right now we look at our results today compared to anything we’ve seen, I couldn’t be more pleased with the portfolio of our company and the trajectory we’re on.”

Other competitors like AT&T and Verizon have set the wheels in motion for the next generation of wireless technology – 5G – but Watson said Comcast is in no rush to follow them.

“The main thing about 5G is that it’s early,” Watson said. “We’ve been through this before. There are really promising aspects of new technologies, but it takes time to scale. While there may be early-stage applications of something like 5G, we compete today with microwave applications to MDUs and dense urban areas. We’re going to stay close to it, we’re testing some fixed mobile aspects of it. The main question for 5G for us is with its higher frequency range, can it broadly, reliably and economically deliver fixed wireless broadband? I don’t believe at this stage at all that it’s a significant threat on the wireless fixed broadband side.”

In the meantime, he said Comcast is not standing still, adding that DOSCIS 3.1will be available to about 65% of its footprint by the end of the year.  

In a major leadership move, Comcast said Dave Watson will become president and CEO of Comcast, succeeding Neil Smit, who will transition to a new role as vice chairman of Comcast Corp., effective April 1.

Smit, who will work closely with Watson to ensure a smooth leadership transition over the next few months, will then work part-time with Comcast leaders to “develop future technology-oriented business opportunities,” the company said.

Smit, formerly the CEO of Charter Communications and also an exec late of AOL and Nabisco, was named president of Comcast Cable in January 2010, and was promoted to president and CEO of the cable unit and EVP of Comcast Corp. the following year. Before his corporate career, Smit was a Navy SEAL, serving as a member of SEAL Team Six.

Watson, who joined Comcast in 1991, has served as COO of Comcast Cable since 2010, and has partnered with Smit in running the cable division since Smit joined the company. Prior to serving as COO, Watson has held several senior roles at Comcast, including those in product, sales, marketing and advertising.

Comcast, aided by the rollout of its X1 platform, has seen a steady improvement to its video business in recent years. The operator added 80,000 video subs in Q4 2016, enabling Comcast to add more than 160,000 video subs for the full year.

“Dave Watson is the perfect new leader of Comcast Cable,” Brian Roberts, Comcast’s chairman and CEO, said in a statement. “There are few people in the cable industry who have his breadth and depth of experience. Dave, along with Neil and the executive teams across the cable division, drove the operating strategy and execution that have led to phenomenal growth over the last several years as well as our focus on the customer experience and the improvements we have made recently.  Dave knows the business and has a track record of delivering results."

Roberts added: "Neil has been an extraordinary leader and has helped transform Comcast Cable into the top cable and broadband company in the nation.  He is not only an exceptional executive, but he is also one of the finest individuals with whom I have had the privilege to work. Neil and his team have created an innovation engine at Comcast Cable, with countless new and game-changing products and businesses.”

“It is an honor to take the reins from Neil,” Watson added. “ I can’t thank him enough for his partnership during the last seven years,” said Dave Watson.  “Neil has taught us all lessons in leadership, team building, focus, and execution.  He challenged us to reinvent the television experience; to grow video customers; to make Comcast video positive; to invest in our plant; to grow broadband customers; and, to build business services essentially from scratch.  And, he succeeded on all fronts.”

“Leading Comcast Cable has been a wonderful experience,” Smit said, in a statement. “Brian has been a terrific partner and I have the utmost respect and admiration for his vision, leadership, and drive. It has been an honor and privilege leading this team.  I know I am leaving Comcast Cable in great hands with Dave Watson as its new leader. As I approach 60, and for reasons related to the injuries I sustained in my previous career, I am looking forward to spending more time with my family while also helping Comcast find new growth opportunities.”  

For Comcast Cable CEO Neil Smit, it’s always been about the team.

In each of the past jobs he’s held — as a cable company CEO, a marketing team leader at AOL and on a Navy SEAL team (he retired from the elite military unit as a lieutenant commander) — the most important aspect of the job has been the people that surround him.

That’s never been more true now as head of the Comcast Cable division for the past six years, Smith said. It was even obvious back when he first met with Comcast’s top brass — chairman and CEO Brian Roberts and then-chief operating officer Steve Burke, now the CEO of NBCUniversal — about possibly running the cable unit.

“My wife and I came out to meet Brian and his wife and Steve and [his wife] Gretchen Burke and the rest of the team and their spouses,” Smit said. “I asked her on the way home, ‘What do you think?’ She said, ‘I think they are good people with good values and you prefer working in a team environment.’ I felt the same way. That’s been the best part about being here, being able to work with that team day in and day out.”

Teams have been a big part of Smit’s career through stints at Nabisco, where he was a regional president, a five-and-a-half-year tour with the SEALs and at AOL, where he oversaw that company’s Internet access business. Smit also spent five years as CEO of Charter Communications, building up that midsized cable operator and steering it through a bankruptcy that freed up its crushing debt load and allowed it to invest in the business, a move that many believe laid the foundation for Charter’s success today.

He joined Comcast in 2010 as president of its cable unit (he was named CEO in 2011) and began setting the stage for what could be the first full year of positive video customer growth in a decade for the nation’s largest MSO. For that performance, Smit has been named Multichannel News’s 2016 Executive of the Year.

Related: X1: The Rocket Fueling Comcast Growth [subscription required]

‘LASER-FOCUSED’ EXEC

“Neil is one of the best and most thoughtful leaders I know,” Roberts said in an email message. “He’s smart, strategic and laser-focused on execution. He’s critical to our growth and evolution — driving our product innovation and transforming the customer experience.

“His passion, focus and optimism these past few years make him truly worthy of this wonderful and, in my opinion, very well-deserved recognition,” Roberts said.

Smit, in typical modest fashion, defers most of the credit for Comcast’s success to the cable company’s employees. But that sense of collaboration has been with him throughout his career, whether it be in the military, where the people that surround you make literal life-and-death decisions, to the business world, where the right team can mean the difference between success or failure.

“For me it’s less about the work and more about the people I get to work with,” Smit said.

But make no mistake about it, the work is important. Roberts crowed days after Smit was hired back in 2010 that the new cable division president came into the office on the weekend before he was officially supposed to start just to listen in on customerservice calls. It was a habit that Smit picked up when he was at AOL and brought with him when he took over Charter in 2005.

He still does that today, he said, adding that he makes all of his senior managers — including himself — follow up personally on service calls. When a customer gets a callback from Neil from Comcast, it could very well be Smit on the line.

Smit said he makes about three customer callbacks a week. “I think it’s important to stay in touch with the customer,” he said.

Keeping a sharp focus on the customer experience has been Smit’s mantra since he came on board, and it has paid off in spades for Comcast and its investors.

In the six years that Smit has been head of the cable unit — which accounts for more than 60% of Comcast’s total revenue and more than 75% of its cash flow — Smit has consistently improved the video and high-speed data businesses. In those six years, Comcast has improved video customer losses in 25 of 27 quarters, a pace that Smit picked up from Burke when he ran the cable unit, and high-speed data customers have increased nearly 30% in the same period.

At the same time, cable unit revenue has risen 33% since Smit joined in January 2010 and cash flow has improved by 35%.

That customer focus and the power of its state-of-the-art operating platform, X1, has led to six consecutive years of improved video subscriber losses. This year, Comcast is expected to report its first full year of video customer gains in a decade, with most analysts predicting the cable operator will add at least 100,000 basic video customers for 2016. It would be the cherry on top of a six-year period in which basic video-subscriber losses have been reduced 21-fold, from 756,000 in 2010 to just 36,000 in 2015.

Smit will give most of the credit to his team, a seasoned cadre of executives that includes executive vice president and chief operating officer Dave Watson; and president, technology and product Tony Werner, as well as the thousands of frontline employees under them who have served as the foundation for Comcast’s success.

“From an operations standpoint, he has a great appreciation for detail, but he lets his team go ahead and get the job done,” Watson said in an interview. “He has a tremendous focus, but he lets you get the job done.”

MoffettNathanson principal and senior analyst Craig Moffett agreed.

“His real success comes not just from the fact that he’s a smart guy, but because he’s an exceptionally good leader,” Moffett said. “Comcast over the last five years has really upgraded its talent immensely. It’s a double-edged sword — an organization with lots of talent can easily become unwieldy unless you have a good orchestra leader who’s able to make everybody play together. That’s really where I think he has distinguished himself.”

GOAL-SETTING FOR INNOVATION

Straight out of the box in 2010, Smit challenged Comcast employees by setting a goal of at least one new product or service enhancement per quarter. Nearly 24 quarters later, the company has released dozens of new offerings, including Xfinity on Campus, a service that lets college students watch live TV and on-demand content on IP-enabled devices while at college; various “skinny bundle” offerings; multiscreen streaming video-on-demand offerings such as Stream TV; and others.

While Comcast has excelled on all product fronts — it added about 8.4 million broadband customers since 2010 and its X1 operating platform is considered by many to be the gold standard for the industry — video has been at the heart of the company’s cable success, dating back to Roberts’ efforts years earlier to bolster its on demand libraries and rights.

“At a time when everybody else in the industry was starting to coalesce around the vision of broadband first, Comcast kept their eyes on the prize of video,” Moffett said. “They never lost their enthusiasm for video as the core product. That’s not to say they didn’t invest in broadband, but they always saw themselves first and foremost as an entertainment company.”

Smit said he knew from the start that he and Roberts were on the same page.

“What’s great about working for Brian is he’s in it for the long haul,” Smit said. “He invests in the future, he believes in growth, he’s entrepreneurial and he’s up for new opportunities and new challenges. I’m a big believer in continuously looking for growth opportunities, whether it’s in people or platforms or technologies. We have a really good relationship.”

Video is just as important today, fueling new entrants in the SVOD and OTT space, as well as providing added fodder for mobile products from a wide range of competitors.

But programming alone won’t keep customers loyal, especially in today’s environment. Smit said that Comcast realized at the outset that it was the overall customer experience which fostered that loyalty. Early on Smit, Roberts and the rest of the Comcast team moved to drastically improve customer service, he said.

The efforts started out small. Comcast first guaranteed one-hour appointment windows for service calls and allowed customers to track technicians via an Uber-like app, for example. In 2015, Roberts unveiled an ambitious three-year, $300 million plan to build three new call centers, hire 5,500 customer-service representatives and revamp Xfinity retail stores across the country.

Smit said that the idea is to get staffing to the proper level — he defined that as having the right people taking the right service calls — which allows customer issues to be resolved more efficiently. That includes putting the right tools in the hands of both customers and service reps, including a knowledge-based system that prompts the best agent response to customer problems, overlaid with artificial intelligence that should improve the quality of responses even more. On the technician side, Comcast gives its workers better diagnostic tools to identify problems.

Even the network is getting in on the act. Comcast’s network is smarter, Smit said, allowing the company to restart a customer set-top box remotely to solve problems before they occur.

“We’re getting smarter — we’re getting more information from the set-tops and modems that we can leverage to make a self-healing system,” Smit said.

Comcast has also built call centers in Albuquerque, N.M., Spokane, Wash., and Tucson, Ariz., and has plans for additional call centers in Charlotte, S.C. and Fort Collins, Colo. Comcast also has hired many of the targeted 5,500 workers and has added additional enhancements to its service including access to Netflix service on its X1 set-tops.

“We can turn pretty quickly when we all get aligned around a product or a major initiative like this, the customer experience,” Smit said. “We do big things well.”

The numbers also speak loudly. In the third quarter, customer-service calls were down about 14% and Comcast’s on-time arrival rate for technicians improved to more than 97%. First call resolution of service issues improved by 7% and the company’s response time on social media channels has improved by 95% during the same period.

The Netflix addition to X1 was a milestone, as the SVOD pioneer has largely been considered to be a direct competitor to cable and a key contributor to the pay TV industry’s woes over the past few years. But Smit said the decision to incorporate the Netflix app on X1 boxes was easy: It was all about ease of use.

“I spoke with [Netflix CEO] Reed [Hastings] about six months before we got the product out and we got a deal done and released the product in that period of time,” Smit said. “The speed at which new content or new features or functions come out, you need to have the platforms in place to do that. In order for the cable industry to compete longer-term, it needs to have great content as well as a great user interface.”

NEXT UP: WIRELESS

Comcast’s next big investment likely will be tied to its next big product, a wireless offering slated for mid-2017 that will be created through an existing mobile virtual network operator agreement (MVNO) with Verizon Communications. Comcast created a wireless business unit earlier this year — Comcast Mobile, headed by former executive vice president of sales and marketing Greg Butz — to address the new product.

Comcast hasn’t given any details on the new product, and Smit wasn’t about to buck that trend. But he did say that mobile continues to be an important area for the company.

“We think leveraging our 28.5 million customer relationships, our 15 million WiFi hotspots and our Verizon MVNO is a good value and will continue to reduce churn,” Smit said. “[Customers] want more value and we think we can add value with the launch.”

Comcast has been less optimistic about over-the-top pay TV services. It has said it can’t see a viable business model there, even as services proliferate like Sling TV, DirecTV Now and Hulu’s planned OTT service slated for next year. Comcast is a part owner of Hulu through NBCUniversal.

Smit echoed Roberts’s sentiments on the issue, adding that for Comcast the economics of OTT are simply not as clear as in other products.

But the operator does see potential and value in one key component of OTT — the broadband network. Comcast has increased data speeds 17 times in the past 15 years as broadband consumption has increased 40% to 50% each year. Comcast has invested in new capacity, routers and DOCSIS 3.1, which promises Internet speeds of 10 Gigabits per second. On the programming side, NBCUniversal spent $3.8 billion to purchase DreamWorks Animation, a move that will add significantly to its content capabilities.

For Smit, those moves are merely another opportunity for collaboration and another chance for the team to prove its mettle.

“Brian and the team of us feel we can invest in the future of the company,” Smit said. “It’s a belief that the team can execute on those investments.”

Related > 'MCN' Exec of the Year Neil Smit: No Team, No Dream [subscription required]

With the prospect of its first full year of positive video subscriber growth staring it in the face, Comcast can point to many factors that have helped push the operator over the hump, but none perhaps with as much impact as its state-of-the art operating platform, X1.

Comcast introduced X1 in 2012 and to date it is available in about 45% of the cable company’s footprint, reaching 50% by the end of the year. With X1, Comcast customers get a state-of-the-art user interface, cloud digital video recording, home-streaming capabilities and other features, like an interactive voice remote. Those features have proven to be popular with customers.

For the cable company, the X1 architecture allows it to more easily overlay new services and products, essentially via software downloads from the cloud.

X1 also is having a big impact on customer retention and the uptake of new services. Customers of the platform are less likely to churn, DVR take rates for X1 users are about 3 times that of non X1 customers and X1 users are twice as likely to buy pay-per-view products.

FROM PLANS TO REALITY

Comcast Cable CEO Neil Smit said that X1 was still in the planning stages when he joined the company in 2010, adding that the platform dovetailed nicely with Comcast’s emphasis on video and the renewed focus on the customer experience.

In its final iteration, X1 had all the bells and whistles associated with new technology rollouts. But Smit said that at its core, X1’s message is simple.

“We invested in X1 and the on-demand content and the different platforms at a time when there was not a lot of significant investment going on,” Smit said. “Video is about great content but also about ease of discovery of that content — if you have great content and make it easy to find and you bring up new recommendations of things. We believed from the beginning we could achieve that.”

X1 was a collaborative effort from the beginning, Comcast executive vice president and chief operating officer Dave Watson said.

“One of the first things he did was prioritize the list,” Watson said in an interview. “We had so many things going on, a lot of promising things that were emerging post the early stages of DOCSIS — more VOD, all the standards we had invested in. The infrastructure stuff was for the most part coming to an end, but the product stuff was not. That’s where Neil came in and helped prioritize. X1 was at the top of the list.”

Watson added that in addition to X1’s chief architect — technology president Tony Werner and his team — Smit brought in other disciplines and executives to help shape the product.

“One of the things Neil did, he included [Comcast chairman and CEO] Brian [Roberts] in a lot of the early iterations of feature design,” Watson said. “A lot of others that were engaged — the marketing team, the rest of Tony Werner’s engineering team, there were a lot of people that were very focused.”

That sense of collaboration has been part of Comcast’s DNA for years, Watson said, but it was especially evident in the formation of X1.

INCLUSIVE PROCESS

“It goes back to that belief that an effective team gets better results,” Watson said. “You don’t roll out things at scale of this magnitude without having great teams on it.”

That kind of collaboration also led to one of the X1’s most popular features, the voice remote. The remote, which allows customers to search for shows and launch apps with voice commands, is one of the most popular features of X1. To date, about 10 million voice remotes have been deployed to Comcast customers.

Watson said Roberts championed the voice remote. “The engineering team had developed the capability, but Brian was focused on [the idea] that this could be special,” he said. “Neil then brought it to a whole other level. Neil got with his team and said, ‘Let’s scale this.’ And that’s what happened.”

Comcast recently incorporated the Netflix app into the X1, allowing for subscribers to the SVOD service to more easily access it. While that may have been unheard of several years ago — Netflix is considered a cable competitor by some — Smit said it fits in with Comcast’s overall philosophy.

“We’re all about saving the customers’ time,” Smit said. “Their time is precious and we have to respect that. The Netflix integration was saving the customer’s time; it was making it more convenient for them. They didn’t have to switch over to input B, they could just speak into their voice remote and say ‘Find Orange is the New Black.’ It was grounded in making the customer’s life more convenient and saving them time.”

The X1 has received rave reviews: Geekwire called it an “Escalade,” referring to the high-end Cadillac SUV. And Comcast doesn’t plan to keep the operating system to itself. It has already licensed X1 to two cable operators, Cox Communications in the U.S. and Shaw Communications in Canada, and hopes to add more licensees in the future.

WORKS FOR COX, TOO

At Cox, which markets X1 as New Contour, the platform has lived up to and exceeded expectations, executive vice president of product development and management Steve Necessary said.

Cox began rolling out New Contour in one market with 3,000 customers at the beginning of the year; by April, it was deployed in all 21 of the cable operator’s territories. By the end of the year, Necessary said Cox expects to have nearly 600,000 New Contour customers.

Because Cox has had the product less than a year, the operator hasn’t seen the full impact of the platform yet. But he said the company has seen a reduction in early life churn and customer satisfaction has risen. Necessary said New Contour has resulted in higher Net Promoter Scores — a more than 20-point lift for X1 users. And VOD usage has roughly doubled for X1 customers.

“The metrics we have to date are very positive and support or exceed our business expectations,” Necessary said. He expects the growth trajectory in 2016 to continue into next year.

San Francisco -- Even more than "convergence," the terms "clustering," "bundling" and "stickiness" were the buzzwords at the CTAM Summit here last week, as marketers gathered to discuss the challenges facing them in stepping up introductions of digital cable, telephone and high-speed Internet products.

The annual Cable and Telecommunications Association for Marketing conference drew a better-than-projected crowd of more than 2,600. General-session speakers such as AT&T Broadband & Internet Services CEO Leo J. Hindery Jr., CNET CEO Halsey Minor and Benchmark Capital general partner Bruce Dunlevie drew standing-room-only crowds in the large ballroom at the San Francisco Marriott.

Not all of the attendees were cable marketers: Because of its proximity to Silicon Valley, the summit drew attendees who were interested in the anticipated convergence between television and the Internet.

The show also drew a healthy number of international cable executives who were interested in hearing U.S. success stories. And there were more than a few well-known former cable and satellite executives between jobs who were as quick to exchange resumes as others traded business cards.

But their out-of-work status carried no stigma at the CTAM Summit, considering the fact that one of the more popular masters of ceremony there, CTAM Summit co-chair Lou Borrelli, is himself without a full-time gig.

Cable marketers were urged to get their operational houses in order before they move too quickly to new product launches.

"It's hard to do many things at once well," Dunlevie cautioned, saying MSOs would be wiser to improve customer service or programming than to branch out into local telephony.

"One of the key challenges I see is the healthy tension between deployment of new services and hanging on to our [current] customers," said David Watson, newly appointed executive vice president of sales and marketing and customer service for Comcast Corp.'s Comcast Cable Communications Inc.

Some of the things MSOs need to focus on operationally are answering the phones in a timely manner, solving customer problems and sending technicians out when they say they will, Watson said. "We have to do all of this right before we can go forward with the new services," he added.

At a Tuesday-afternoon panel, Watson recounted a complaint by a customer who had called Comcast with a problem only to have the operator hang up on him after saying, "I have nothing I can do for you."

Of course Comcast, like other MSOs, has started to deploy new services in some of its markets.

MSOs are doing so not just to put their collective marketing prowess to the test, but also as a defensive strategy against other communications industries and, probably more important, to make good on promises made to Wall Street.

Speaking of the importance of adding new services to help protect the core business, Hindery said, "Retention is always a challenge, especially in a fiercely competitive market. Our goal is to market bundled product and service packages that are so attractive and value-oriented that they become what I call 'sticky.'"

In a test in Fremont, Calif., AT&T Broadband is offering a 25 percent discount on long-distance and local telephone service for cable customers, although the bills are not yet bundled.

AT&T Broadband has 1.4 million digital-cable customers, with expectations of hitting 1.8 million by the end of the year, not including those expected to come over to it from MediaOne Group Inc. next year.

The MSO also aims to gain 25 percent penetration of homes passed for its AT&T@Home high-speed online service within the next five years, Hindery said.

Minor cautioned that the battle over open access to cable pipes could work against cable, advising cable marketers to remind potential data subscribers that other Internet brands are available through their broadband pipe.

"Open access is actually good because companies will pay cable operators for a place on their pipe, and it will make it good for consumers," he added.

Time Warner Cable, which just launched its first digital-cable markets earlier this summer, has already signed up nearly 40,000 customers in its first four markets, chairman and CEO Joe Collins said. The MSO is targeting a deployment of 400,000 digital set-top boxes by the end of the year, and it is in launch mode in 22 markets.

This fall, Time Warner will launch its Road Runner high-speed online service in Manhattan to heavy pent-up demand, Collins said. At the same time, the MSO will launch digital cable to New York City's outer boroughs, such as Brooklyn and Queens. Next year, Manhattan and the outer boroughs will have both services.

"The New York market is 1.2 million subscribers," Collins said. "We'd simply get overwhelmed if we offered our products to everyone all at once."

While continued clustering will help MSOs to advertise more efficiently across a given market, Collins expects that at least initially, Time Warner will only market as heavily as needed to fill the customer pipeline. "Otherwise, we have too many people in the backlog," he said, "and they get mad if they have to wait too long."

An early believer in the power of bundles, Cox Communications Inc. already has several-thousand customers who buy all three of its services -- voice, video and data -- although they're not yet bundled under a single bill.

"Ultimately, we want to give customers a choice of a single or multiple bills," Cox executive director of marketing David Pugliese said. "Some customers don't want to pay $150 at once for cash-flow reasons."

Pugliese added that Cox plans to offer bundles to drive revenues, to reduce acquisition costs by sending a single marketing piece instead of three, to discourage competitors from coming into its markets and "to make it difficult -- even painful -- for customers to downgrade" when they're pitched by direct-broadcast satellite, for example.

He stressed that brand extension would be crucial in the transition from a video-only provider to a supplier of multiple communications services.

"What good does it do you to offer new products and services if your customers only know you and trust you as a cable company?" Pugliese asked.

Even as MSOs protect their core video business and continue to roll out new services, they must keep at least one eye out for new consumer applications that are likely to gain force in the next five years, such as electronic commerce, video-on-demand and new services yet to be invented.

But not every new idea will win cable customers over.

"The saying, 'If we build it, they will come' just doesn't apply anymore," Oxygen Media CEO Geraldine Laybourne warned. "If you don't build it with the consumer in mind, they won't stay."

Collins gained some perspective on consumers' interactive buying habits through Time Warner's two-way Full Service Network trial in Orlando, Fla., in 1992.

Initially, it's hard to get customers to buy certain products, like clothing or curtains, online, Collins said, but consumers do like to buy stamps online.

"People don't like to go to the post office," he added. "It's kind of scary there."

Jim Forkan and Hank Kim contributed to this story.