Comcast is basically a utility, . . .
Actual utilities have two safety characteristics that arguably no longer apply to Comcast. The first is necessity, as in electricity or water. Cable was once pretty close to a necessity, but it’s not anymore.
The second is monopoly, generally on a local or regional level. That also applied to Comcast in the salad days of exclusive cable franchises, but as broadband becomes a larger part of its business, that’s no longer the case. It has a big head start with infrastructure in lots of places, but competition is growing from national wireless carriers, local telcos, and the lengthening list of outfits – public, private and nonprofit – that fall under the community broadband umbrella.
Google is experimenting with wireless broadband to the home through a receiver on the roof. Clearfield, which sells easy-to-install modular fiber cassettes and cabinets, reported 84% yoy sales growth yesterday. Its biggest market is community broadband. The CEO predicted more fiber-to-the-home connections will be made in the next five years than in history so far.
Conflating anecdotal customer experience with investment analysis is generally a bad idea, but my experience as a Comcast customer suggests their pricing is based very much on the consumer perception that they have a monopoly. They employ tactics like requiring rental of cheap modems, slowly but consistently raising the charge in nearly imperceptible increments, until one day you realize you have paid hundreds, maybe even thousands, of dollars for a piece of equipment you could buy for $100 or less.
In two jurisdictions where I recently lived, although Comcast was the broadband market share leader, rudimentary research revealed much better pricing for high-speed broadband from another vendor.
I don’t have as much faith in the invisible hand as some, but it seems to me that Comcast’s cable-era habit of constant price increases, combined with the inferior performance of broadband through shared cable feeds, might make its future cash flows a little less inevitable than they seem today. As a cash cow, it’s probably safe for a good long while, but I would venture that its competitive advantages are slipping away.