Comcast: We’ll Stick With Triple Play

Despite moves by its closest MSO peer to de-emphasize selling a three-product bundle of video, data and phone, Comcast told analysts this morning that it will continue to upsell customers into its triple play product bundle.

First quarter video subscriber losses rose for the first time since the third quarter of 2010 at Comcast to 60,000 from 37,000 in 2012. On a conference call with analysts to discuss quarterly results, Comcast said the increase was due to two factors: a change in the way it accounts for video customers in multiple dwelling units (MDUs) and a price increase across a wider portion of its footprint.

Comcast chairman and CEO Brian Roberts noted the increase in video losses, but said the company was still committed to growth.

“Our goal is to continue to make progress reducing video customer losses,” Comcast chairman and CEO Brian Roberts sad on the call.

Comcast vice chairman and chief financial officer Michael Angelakis said on the call that Comcast implemented a rate increase across 72% of its footprint in the quarter, compared to 62% in the same period last year. In addition, it changed the way it counts MDU customers, which accounted for about half of the losses. He added that the rest of the customer losses were less profitable single play subscribers.

That seemed to play out in the numbers. Video revenue for the period was up 3.7%, the biggest increase for the cable company in four years and primarily due to customers buying more advanced services.

And while high-speed data customer additions were relatively flat – 433,000 in the first quarter compared to 439,000 last year – phone additions outpaced all expectations at 211,000, up from 164,000 in the prior year.

Last week, Time Warner Cable said that it has been de-emphasizing the phone portion of the triple play package, adding that most of its customers have dropped landlines all together in favor of wireless smartphones. That strategy showed up in its results – TWC lost about 35,000 voice customers in the first quarter and its new triple play customers declined from 4.29 million to 4.25 million in the period.

Time Warner Cable aggressively promoted its Triple Play package about a year ago, which resulted in strong additions, but the company has noticed those efforts attracted mostly price-conscious customers said that canceled service as the promotions expired. “In many cases, we caused customers who didn't need or want phone to take a Triple Play offer just to get the low Triple Play rates,” Time Warner Cable chief operating officer Rob Marcus said on a conference call with analysts April 25. The new approach is to design packages more suited to customer needs, which in TWC’s case meant more single and double play additions. Marcus noted that revenue was up because people were spending more on higher tiers of data and video service.

Comcast cable CEO Neil Smit said on the call that while he could not speak for TWC, Comcast triple play customers tend to be more satisfied with service and churn at a lower rate.

“The triple play has still been a very effective program for us,” Smit said.

Angelakis added that between 2011 and 2012, Comcast added about 300 basis points of triple play penetration and between 2012 and 2013 added between 300 and 400 basis points of penetration for the package. Currently about 41% of Comcast’s customer base is in a triple play package.   

“It’s pretty clear those customers have higher satisfaction, lower churn and the best customer lifetime value,” Angelakis said. “We’re going to continue to focus on customer lifetime value.”