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Comcast: DSL won't sever cable's lead

The company's cable broadband unit will carry on poaching customers from DSL providers despite a price war that has had Comcast playing catch-up, says the division's chief.

Comcast's broadband unit is sitting pretty despite playing catch-up in a price war between cable and DSL providers, said the division's top executive.

Comcast Cable Communications is looking forward to drawing customers away from broadband rivals, not losing them, unit president Stephen Burke said during a conference call with analysts Thursday.

His comments followed a first-quarter earnings report in which Comcast said its broadband unit added 400,000 new customers in the past three months. However, the Philadelphia-based cable company posted a first-quarter net loss of $297 million, or 13 cents a share, compared with a loss of $89 million, or 9 cents a share, a year earlier.

"We don't see a major change in the competitive environment," Burke said during the analyst call. "We would ultimately like to gain subscribers from DSL" (digital subscriber line) providers such as Verizon Communications and SBC Communications, he added.

Earlier this week, Verizon slashed its monthly rate for broadband access by 30 percent to $35, undercutting Comcast's price by about $15. Analysts believe that Verizon's price cut should help it sell more high-speed Internet service, which it offers via DSL connections.

Although cable broadband is more expensive than DSL, it remains the dominant technology choice for broadband access in the United States. This lead is credited to cable's fast download speeds and its availability in nearly every major U.S. market. About 10 million U.S. homes get broadband access from cable providers such as Comcast, while about six million use Verizon and other telephone companies' DSL services.

The price wars between cable and DSL providers began a year ago, according to Burke, when Verizon and SBC offered promotional $35-a-month DSL subscriptions in about 75 percent of Comcast's markets. (Verizon's price cut is now its standard rate.) Comcast answered back, offering promotional plans that cut its usual $50-a-month subscription rate in half to about $25.


Consumers, BYOA providers and cable
companies--not Verizon--will be the
winners of the price war.

The results, Burke said, are in, indicating last quarter's rise in new subscriptions. Comcast said it expects to add even more customers for the fiscal year 2003 than previously estimated.

The price cuts at Verizon underscore the technical challenges that keep DSL in the background, Burke said. While cable operators have no trouble providing Web service at speeds of 1.5mbps or higher to all of their customers, DSL networks are notoriously less successful at offering that same Web surfing experience to homes or offices more than 12,000 feet from a DSL network core.

Verizon spokeswoman Bobbi Henson said the carrier is addressing that speed problem by adding remote terminals to push the DSL signal well beyond the 12,000 foot range. "The technology issue is a thing of the past," she said Thursday.

"Cable's 70 percent market share is no secret," she said. "They have some immense advantages, but that's starting to change."

SBC spokesman Michael Coe said DSL subscriptions have been on the rise in general. In some markets, such as San Francisco and Los Angeles, DSL subscribers now outnumber cable broadband subscribers. "Making DSL affordable is a very important step to take in this process," he said.