Comcast to Offer Data Services to Big Firms Nationwide
September 16 2015 - 4:40AM
Dow Jones News
Comcast Corp. said it would start selling Internet and phone
services to large businesses nationwide, even those located outside
its service area, as it seeks to steal away more customers from
telecom providers like AT&T Inc. and Verizon Communications
Inc.
The cable giant unveiled plans Wednesday to create a new unit to
offer data services to Fortune 1000 businesses across the country,
including those located in other cable companies' territories.
Comcast said it has struck wholesale agreements with cable
operators including Cox Communications Inc., Time Warner Cable
Inc., Charter Communications Inc., Cablevision Systems Corp. and
Mediacom Communications Corp., to offer services using their
pipes.
Comcast says it is seeking to bring together the cable industry
to provide a meaningful alternative to AT&T and Verizon, the
longtime incumbents in the market for selling network services to
businesses. Because cable companies are regional by nature, they
haven't been able to offer one-stop-shop, nationwide offerings for
big enterprises. "Sometimes, [big businesses] would just eliminate
us" when choosing a provider, said Bill Stemper, president of
Comcast Business.
Through these new wholesale arrangements, Comcast hopes that a
bank with locations outside of Comcast's service area, for
instance, can still sign up with Comcast and receive service at all
its locations. Comcast would pay wholesale fees to other operators
to service business locations outside of Comcast's footprint. To
help manage national accounts, Comcast said it acquired a company
called Contingent Network Services two weeks ago.
The move sets up Comcast to potentially compete with other cable
operators for business customers, threatening the longtime status
quo in the cable industry, where operators historically haven't
competed with each other for customers in the same geographic
areas. But Mr. Stemper believes there will only be "edge cases"
where Comcast ends up competing for the same customer as another
cable operator. He said that businesses naturally will align with
the operator that makes the most sense with where their branches
are located.
"We don't view it as new competition," said Todd Smith, a
spokesman for Atlanta-based Cox Communications Inc. If a business
picked Comcast's solution but had branches in Cox territory, "it's
still revenue for us," he noted, whereas if the business went with
a nationwide phone company like AT&T, it could cut out Cox
completely.
Cable executives said Comcast's plan is an extension of what's
gone on at a local level for years—where operators have sold
wholesale network capacity to other operators so they can serve a
business client's far-flung branches. "I'd look at it as a
positive, that we might be getting more customers that…haven't
chosen us before," said Tom Larsen, senior vice president of
government and public relations at cable operator Mediacom
Communications Corp.
Comcast is expanding its business-services division as it
contends with pressure in its core pay-television business.
Business services have become one of cable operators'
fastest-growing divisions as video subscriber losses have mounted.
Last year, Comcast's business-services division generated about $4
billion in revenue, up 22% compared with the year earlier. Mr.
Stemper said the total market opportunity nationwide for Comcast to
sell data services to businesses could be about $40 billion.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 16, 2015 04:25 ET (08:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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