Why Doesn’t Comcast Offer a National Streaming Service?

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Q. I read your story about AT&T TV and I was wondering why Comcast doesn’t have a streaming service that’s available across the country. I would think they would be able to get more subscribers that way. What’s the deal? — Tim, Fort Lauderdale, Florida. 

Tim, as you note, AT&T next week is scheduled to launch a nationwide streaming service called AT&T TV. The service is intended to be an alternative, and possibly, an eventual replacement for DIRECTV’s satellite business.

So, you ask, why doesn’t Comcast do this? The nation’s largest cable operator has roughly 20 million subscribers in the markets it serves, but it theoretically could expand that if it went nationwide with a streaming offering.

Right?

Well, not necessarily. Comcast has no plans to offer a national streaming service for three reasons:

1. Comcast wants you to get a box from them. 
The cable operator certainly wants more video subscribers, but the real revenue growth lies in its Internet service. With streaming rising, thanks to services such as Netflix, YouTube and Hulu, more Americans are willing to pay more money for high-speed Internet.

Comcast believes it has a better chance of selling the Internet to new customers if it includes it in a Double Play plan (cable and Internet) or Triple Play plan (phone, Internet, video). If the cable operator sold a separate streaming plan that didn’t require anything other than an app on Roku, let’s say, many consumers might order it and get their Internet from someone else. The more you engage a new customer in your services, the more likely it is that he or she will order multiple products.

Of course, Comcast could take the AT&T route and require the streaming-only customers to get a company-branded box to watch its entire video lineup; the set-top rental could be combined with Internet service. But it remains to be seen how effective that will be for the telco.

2. The unwritten rules of cable TV
Cable operators operate in cities where it has secured the local franchise rights from local governments. By example, Comcast has such franchise rights in places such as Miami, Boston, and Chicago.

While some franchise agreements specifically say additional cable TV operators can compete in these territories, they never do. It’s the cable industry’s unwritten rule; you don’t challenge a rival in its own market. It’s okay for satellite TV, but not cable. This gentlemanly agreement basically gives each cable operator a cable monopoly in each  franchise market.

Consequently, if Comcast were to offer a national streaming service, it would be effectively competing against all of its cable TV colleagues. That’s a no-no in the industry.

3. Comcast is not as bullish on streaming. 
The cable operator owns NBC, which plans to offer a niche streaming plan in the spring called Peacock. But generally speaking, company executives are not as enthusiastic about streaming as some others in the industry. Comcast believes that its basic infrastructure — video, phone and Internet distributed by coax cable — will be a revenue leader for years to come. And unlike AT&T, Comcast’s reach is effectively restricted by that gentlemanly agreement. The potential of offering a separate streaming service is more limited.

I expect Comcast to continue experimenting with niche streaming efforts such as Peacock in the near future, but I don’t foresee any attempt to stream its entire video lineup across the country, or even in its own markets.

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