Big ISPs and Everyone Else

Comcast truckMost of the news about our industry is about the largest ISPs – Comcast, Charter, AT&T, and Verizon. It’s easy to think that the things that happen to these big companies are going to happen to the rest of the industry, but on a smaller scale. Certainly in the past, small ISPs had a lot in common with the big companies. But I think we are now at a time when these big companies are pulling away from the rest of the industry to the point where they have become something very different. Let me look at Comcast as an example of this, but I could make a similar case for the other large ISPs. Consider this list of ways of how Comcast is already different than the smaller ISPs in the industry:

Content. Comcast is as much of a media company as they are a cable company. In fact, their stock prices now change more from the performance of their content than it does from the cable business. Comcast owns a lot of programming content. They own NBC Universal that operates the various NBC stations including MSNBC, CNBC. USA Network, E!, Bravo, Syfy, Sprout and others. They own Telemundo and a suite of Spanish language networks. They own 25% of the Weather Channel. They also own overseas content such as Movies 24 and the Style Network. The company is also in the movie business. They own Universal Studios which has already released fifteen new films in 2016. They recently brought Dreamworks. And Comcast owns 27 local NBC stations and affiliates in major markets like New York, Los Angeles, Chicago, Philadelphia, Washington CD, Dallas and Miami.

Sports. Comcast owns the Philadelphia Flyers including the Wells Fargo Center in Philadelphia. They own the rights to broadcast the Olympics in the US. They own Comcast SportsNet which has rights to professional and college sports in a number of large cities. They own the Golf channel and are part owners of the NHL Network and the MLB Network. NBC Sports also has broadcast rights for football and other major sports.

Other Assets. They own Universals Studios theme parks in Hollywood and Orlando as well as the real estate venture at Universal Orlando Resort. They own the ticket service Fandango. They operate Comcast Spotlight which produces and sells advertising for their cable company and many others.

OTT. Comcast is hedging their bets on cord cutting by being the largest owner of Hulu – which also broadcasts a lot of Comcast content. They also produce and distribute content through Comcast Interactive Media.

Cellular. The company has announced recently that they have major plans to become a big player in the cellular market. This business will also benefit from Comcast’s 9 million+ public WiFi hotspots.

Research and Development. One of the hidden gems for the company is Comcast Labs. The company recently bragged that the company could develop solutions in days that would take months by any other company. They also benefit from their role in the non-profit CableLabs. The company has used this research to develop proprietary software and hardware not available to the rest of the industry.

Security and Smart Home. In 2015 the company reported having over 500,000 customers to its Xfinity Home security and smart home platform. They will have the scale to make this a profitable business line where smaller companies will struggle.

Comcast and these other large ISPs are no longer like the rest of the industry. For example, while other companies suffer from shrinking profits on cable TV, Comcast buys a lot of content from their own subsidiaries and is more profitable than anybody else. And they have the luxury of being able to bundle cable customers with their many other product lines like Xfinity Home and the upcoming cellular product.

It was not too many years ago when the bigger cable companies were just bigger versions of smaller cable companies and mostly differed by scale. But for these large IPSs the landline business has just become one of their many other product lines – a luxury that smaller companies don’t have.

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