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 – get more money from existing subscribers.

Comcast failed to add any broadband customers in the second quarter of 2022, holding steady at 32,163,000 home and business Internet customers combined. In Q3 income statement published yesterday, Comcast said it gained just 14,000 broadband customers last 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 earnings call yesterday. Since new customers are few and far between, Comcast aims to grow the average amount each existing customer pays.

“We expect ARPU growth to continue to be the primary driver of our 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 neighborhoods where some people are left without broadband even though their neighbors have Comcast Internet service. But Comcast seems content to stick to its current turf and often refuses to provide new connections unless homeowners pay tens of thousands of dollars up front — or even $210,000, as described in one of our recent stories.

The CEO does not expect much growth in subscribers

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

“While we don’t expect residential broadband units to be a significant driver for now, we expect to maintain healthy growth in the other three, leading to continued strong cable financial performance for the foreseeable future,” Roberts said. Cavanagh said “Broadband revenue increased 5.7 percent, driven by ARPU growth in our customer base as well compared to last year. Broadband ARPU increased 3.7 percent year over year, in in line with the growth rate 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 really solid ARPU growth, 3.6 percent, half of which was driven by rates and the other half was just how we manage the tier mix,” Comcast cable CEO David Watson said at the time.

Meanwhile, Roberts emphasized yesterday that Comcast “returns 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 the three-month period. That works out to about $63.55 per month per subscriber, but includes both business and residential accounts. Broadband revenue in the third quarter of 2022 was up from $6.107 billion in the second quarter of 2022 and from $5.8 billion in the third quarter of 2021.

Comcast has multiple ways to get more money from existing subscribers. That includes selling mobile 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 refer specifically to “broadband ARPU”, suggesting they want to continue to drive up broadband bills. This could include increases in base monthly rates, fee increases that raise the price above advertised rates, or requiring subscribers to purchase the $25 per month xFi Complete add-on to get unlimited data and faster upload speeds.