Comcast Cable President Discusses NBC Universal Opportunities

Neil Smit emphasizes the cable giant has no plans to introduce usage-based broadband pricing amid growing online video use and reiterates he sees no signs of cord cutting.

NEW YORK - Comcast Corp. continues to hope to close its NBC Universal acquisition by the end of the year, and the combination will provide more opportunities to use content on cable VOD, among other things, Neil Smit, president of Comcast Cable, said here Tuesday.

Speaking at an investor conference, he also said Comcast does not have any plans for usage-based pricing of broadband services, which FCC chairman Julius Genachowski recently supported. Some Wall Street observers expect more cable companies will introduce usage-based pricing to potentially make more money from growing online video viewership, which at least some fear will lead a growing number of cable users to discontinue their pay TV subscription.  

But Smit said Comcast broadband users on average utilize two to four gigabytes of bandwidth per month, well below the 250 gigabyte limit the company has set. "Usage-based pricing will preserve, and even enhance, the economics of cable's infrastructure..even if consumers eventually get some, or even all, of their video content over the web," Sanford C. Bernstein analyst Craig Moffett said in a report on Tuesday.

Discussing the NBC Universal deal, Smit said the deal provides "real opportunities in VOD," but also the chance to offer live interactive advertising. While content and distribution firms typically only come together every few years to fight over new program deals, the post-merger company will allow for a "very active test and learn conversation" between both sides of the business and more innovation, he said. The discussion did not go into likely conditions that regulators are expected to place on the deal partners.

Smit also reiterated that the company has not found any evidence for major cord cutting or a reduction of cable services by consumers driven by online alternatives, and the cable giant sees Netflix's streaming video service more as complementary than as a rival.

But he also warned that programming cost increases for Comcast will exceed video revenue growth, causing continued pressure on the cable business, even though operators get more value for program payments via access to more day and date and VOD rights.

"We have seen no evidence" of over the top broadband video services leading to cord cutting, he told the Wall Street crowd at the UBS Global Media and Communications Conference. But he also emphasized that "we're not ignoring the possibility."

Third-quarter cable subscriber declines were mainly due to heated competition and some customers' return to over-the-air TV antennas following last year's digital TV transition, during which cable firms had signed up over-the-air users with special offers, Smit argued. He mentioned that his team has been spending more time on customer retention as of late.

Asked if customers are cutting back on their cable bills, Smit pointed to a third-quarter increase in average revenue per user of 5.5%.

His take on Netflix was also relaxed. "Online video we view as complementary" to cable TV offers, he said, citing its convenience. That echoed similar views expressed a day earlier by Time Warner Cable CEO Glenn Britt.

Asked if Comcast is looking at lower-priced service offers for financially strained consumers similar to TW Cable's recently announced TV Essentials service, Smit pointed to a "digital economy" package that the company has offered for nearly a year that doesn't quite compare in scope, but stems from a similar focus on helping customers that are considering dropping their service due to economic consideratons. He said Comcast is not promoting it aggressively, but uses it to save customers in danger of departing.

Smit also touted that Comcast's iPad app that makes the tablet into a remote control will soon launch a "play now" feature that will allow consumers to watch content right on the iPad.