Comcast wants Internet users to pay more because customer growth has stalled

Comcast has a problem – it’s not signing up many new broadband customers. But Comcast also has a solution – to get more money from existing subscribers.

Comcast failed to add any broadband customers in Q2 2022, holding steady at 32,163,000 residential and business Internet customers combined. In its Q3 income statement Comcast, released yesterday, said it gained just 14,000 broadband users in the most recent quarter. Comcast also lost 561,000 video customers and 316,000 VoIP phone customers.

That’s why Comcast executives focused on ARPU (average revenue per user) in the an earnings call yesterday. With few new customers, Comcast is looking to increase the average amount each existing customer pays.

“We expect ARPU growth to continue to be the primary driver of residential broadband revenue growth in the near term,” said Comcast President and CFO Michael Cavanagh.

Comcast can get more customers by expanding into new territory or by connecting homes in areas where some people are stuck without broadband even though their neighbors have Comcast Internet service. But Comcast seems content to stay in its current territory, often refusing to provide new connections unless homeowners pay tens of thousands dollars in advance—or even $210,000, as described in one of ours recent stories.

The CEO doesn’t expect much growth in subscribers

Comcast CEO Brian Roberts said the nation’s largest cable company “continues to be in a challenging environment in terms of depressed relocation activity and increased competition from new entrants.” Robert said there are four main drivers of growth in Comcast’s cable division: “residential broadband divisions, residential broadband ARPU, wireless and business services.”

“While we do not expect the residential broadband division to be a significant driver, we expect to maintain healthy growth in the other three, which will lead to continued strong cable financials for the foreseeable future,” Roberts said. Kavanagh said, “Broadband revenue increased 5.7 percent year over year due to growth in ARPU and our customer base. Broadband ARPU increased 3.7 percent year-over-year, in line with growth in the second quarter.” .

Comcast also discussed ARPU growth in its earnings call three months ago, suggesting that price increases helped boost revenue per user in Q2. “In broadband alone, we had a really healthy ARPU growth of 3.6 percent, half of which was driven by rate and the other half was driven by just how we manage the bundle level,” Comcast’s cable division CEO David said at the time Watson.

Meanwhile, Roberts stressed yesterday that Comcast is “returning a significant amount of capital to our shareholders. We pay nearly $5 billion in dividends annually and have repurchased $9.5 billion of our stock year-to-date through the third quarter.”

Broadband revenue

Broadband revenue was $6.135 billion in three months. That works out to about $63.55 monthly per subscriber, but includes both business and residential accounts. Broadband revenue in Q3 2022 was up from $6.107 billion in Q2 2022 and $5.8 billion from Q3 2021.

Comcast has several ways to get more money from existing subscribers. That includes the sale of mobile data plans — Comcast added 333,000 wireless lines in the quarter, bringing its total to 4.95 million wireless lines. Wireless revenue increased 30.8 percent to $789 million. Comcast also sells home security services.

But Roberts and Kavanagh’s statements referred specifically to “broadband ARPU”, suggesting they want to continue to raise broadband bills. This could include raising base monthly rates, increasing fees that raise the cost above advertised prices, or requiring subscribers to buy xFi Complete for $25/month add-on to get unlimited data and faster download speeds.