Comcast has a lot to lose if municipal broadband takes off
You can check out any time you’d like, but you can never… well, you know the song.Aurich Lawson
Comcast could lose a significant amount of revenue in cities that build their own municipal broadband networks, a new analysis suggests. Comcast and trade groups that Comcast belongs to made some well-placed political donations as elections next week in Seattle, Washington, and Fort Collins, Colorado, could determine whether the cities pursue municipal broadband projects. With that in mind, the Institute for Local Self-Reliance’s Community Broadband Networks Initiative analyzed how much revenue Comcast stands to lose if both cities build their own broadband networks.
“Evidence from other cities suggests that a real choice in broadband services could reduce Comcast’s revenues by millions of dollars per month,” the group, which advocates for municipal broadband projects, wrote in a policy brief. “Competition in Fort Collins would cost Comcast between £5.4 million and £22.8 million per year. In Seattle, robust competition would cost between £20 million and £84 million per year.” That’s not much compared to Comcast’s overall revenue, which totaled £62.6 billion in the first nine months of this year.
But Seattle and Fort Collins are just two cities out of Comcast’s national footprint that spans 39 states and Washington, DC. The hit to Comcast’s business could be substantial if lots of cities and towns gave residents another choice for broadband access and cable TV service. That’s why broadband lobbyists have pushed for state laws that restrict municipal broadband, an effort that has been successful in about 20 states.
And it’s why Comcast and similar companies don’t stand idly by when individual cities and towns think about building their own networks.
Muni broadband in local elections
In Seattle, Comcast Cable donated £25,000 to a political group that is run by the Seattle Chamber of Commerce; the chamber group is campaigning for mayoral candidate Jenny Durkan, who doesn’t want the city to build a municipal broadband network. CenturyLink also donated £25,000 to the chamber group. Durkan’s opponent, Cary Moon, wants the city to build a network.
In Fort Collins, residents will vote on a ballot question that would authorize the city to build a broadband network. Comcast is a member of two groups that have collectively spent £210,000 to fund a campaign against the municipal broadband proposal, Motherboard noted in a recent story. Those two groups are the Colorado Cable Telecommunications Association and a group run by the city’s chamber of commerce. (CenturyLink is also a member of the chamber of commerce.)
Christopher Mitchell, director of the Community Broadband Networks Initiative, thinks that Comcast is likely pushing the campaign against Fort Collins municipal broadband. Comcast told Motherboard that it hasn’t made any public statements about the Fort Collins ballot question, but it acknowledged that “We are involved in the Chamber of Commerce and in the Colorado Cable Telecommunications Association.” We contacted Comcast Thursday and haven’t heard back yet.
CenturyLink declined to comment when contacted by Ars. As the election approaches, the anti-municipal broadband campaign is funding ads warning that a publicly-funded network in Fort Collins would take money away from other infrastructure initiatives. The network would be funded by bonds, and supporters say it will be self-sustainable because of subscriber fees.
“Small price to pay for monopoly profits”
If Comcast can avoid competition, its political donations will be well worth the cost. “A few tens of thousands of dollars is a small price to pay to secure tens of millions in monopoly profits per year,” the Community Broadband Networks Initiative policy brief said. Comcast had about 138,000 subscribers in Seattle at the end of 2016 and about 37,000 in Fort Collins.
Based on municipal broadband networks in other cities, “we would expect Comcast to lose between 20 and 30 percent market share” and suffer a drop in ARPU [average revenue per user] “from remaining subscribers due to more intense price competition,” the brief said. Nationwide, Comcast has more than 25 million broadband subscribers and more than 22 million TV subscribers. The municipal broadband effect can be seen in Chattanooga, Tennessee, where Comcast unsuccessfully sued the Electric Power Board (EPB) to prevent it from building a fiber network in April 2008.
EPB built the network and ended up turning a profit while serving tens of thousands of customers. The competition spurred Comcast to upgrade its network in the city to fiber in 2015; Chattanooga was one of the first US cities to get fiber home Internet service from Comcast. When Comcast takes a hit from competition, local residents benefit, the Community Broadband Networks Initiative said:
If Comcast faced more competition, the lost revenues wouldn’t just disappear.
It would remain in the pockets of subscribers in the form of lower monthly rates and in the salaries of people working for the new competitor.
Money that today flows to Comcast executives and shareholders far outside these cities would be more likely to stay in the local and regional economies.
- ^ analyzed (muninetworks.org)
- ^ policy brief (muninetworks.org)
- ^ revenue (www.cmcsa.com)
- ^ about 20 states (arstechnica.com)
- ^ donated £25,000 (web.pdc.wa.gov)
- ^ political group (casecampaigns.com)
- ^ campaigning (motherboard.vice.com)
- ^ wants the city to build a network (www.geekwire.com)
- ^ ballot question (www.fcgov.com)
- ^ spent £210,000 (www.fcgov.com)
- ^ recent story (motherboard.vice.com)
- ^ imposing restrictions on municipal broadband (ecfsapi.fcc.gov)
- ^ unsuccessfully sued (arstechnica.com)
- ^ turning a profit (arstechnica.com)
- ^ upgrade its network (arstechnica.com)