Wireless

Helped by cost cuts and by growth in Internet and phone subscribers, Comcast on Wednesday reported a 22 percent jump in earnings for its third quarter.

The cable provider saw net income of $944 million, or 33 cents per share, for the quarter ended Sept. 30, compared with $771 million (26 cents per share) in the year-ago quarter. Sales also rose, hitting $8.8 billion, up from $8.5 billion in 2008's third quarter, though revenue was slightly below analysts' estimates.

Comcast's third-quarter sales

(Credit: Comcast)

For the quarter, the number of TV subscribers dropped 2.7 percent to 23.7 million from 24.4 million a year ago. But the loss was more than offset by gains in Internet and voice, two services that Comcast has marketed heavily, especially as part of its Triple-Play service.

The number of Internet subscribers rose 6.4 percent to 15.6 million, while Comcast phone customers jumped 20 percent to 7.3 million. Overall, the company saw a quarterly increase in customers of 3.4 percent to 46.8 million. Subscriber growth helped boost third-quarter sales for the cable segment by 2.8 percent to $8.4 billion.

Comcast Internet and voice customers grow.

(Credit: Comcast)

With a focus on trimming costs, capital expenses declined 6.1 percent to $1.2 billion, due in large part to lower spending at the company's cable divison.

"The strength and resilience of our businesses combined with our continued emphasis on expenses and prudent capital management helped us achieve healthy operating and financial results in the third quarter," Brian Roberts, chairman and chief executive officer, said in a statement.

Comcast revealed no new details over its intent to acquire a leading stake in GE-owned NBC Universal. Early last month, reports surfaced that the company wanted to buy a 51 percent chunk of NBCU, with GE owning the rest, to create a new joint venture. If it goes through, the deal could transform Comcast into a major media powerhouse, with control of NBC as well as variety of TV networks and cable stations.

Comcast is getting into the wireless broadband business by bundling Clearwire's 4G wireless service with its existing broadband products.

The largest cable operator in the U.S. will launch the new service in Portland, Ore. And it will expand the service to other Comcast cities later in the year, including Atlanta, Chicago, and Philadelphia.

(Credit: Comcast)

Comcast invested in the new Clearwire in 2008, along with Google, Intel, Time Warner Cable, and Sprint Nextel, which gave Clearwire its 2.5GHz spectrum. Clearwire's plan has been to roll out its service nationwide. The service is now up and running in a few cities, including Atlanta, Baltimore, and Portland, Ore. And the company has plans to roll it out to 80 markets by the end of the year.

Some of the cities where it plans to launch the service include, Las Vegas, Chicago, Charlotte, N.C., Dallas/Ft. Worth, Honolulu, Philadelphia, and Seattle. And it plans to launch the network in cities such as New York, Boston, Washington, D.C., Houston, and the San Francisco Bay Area, in 2010.

Clearwire is using a technology called WiMax, which offers faster speeds than current 3G wireless technologies, but offers wider coverage than other high-speed wireless technologies such as Wi-Fi. Clearwire claims that it can provide up to 4Mbps for downloads and 500 kbps for uploading, which is more than double what consumers can expect using a 3G wireless connection.

Comcast will be selling 4G wireless access as part of an Internet bundle to Comcast subscribers. To entice new subscribers, Comcast is offering the new 4G wireless with its 12 Mbps download cable modem service, plus a free 802.11g router for $50 a month for the first 12 months.

The data card used for the 4G wireless, which fits into a laptop, costs $99. But subscribers who sign up for the package with a two-year commitment get the data card for free.

After the first 12 months, subscribers will then pay $43 per month for the 12 Mbps broadband service and $30 extra per month for 4G wireless service. The 4G wireless service is only available in Comcast's cable territory, but subscribers who travel to other cities where Clearwire's network is operational will be able to access the network at no additional cost.

New customers signing up for Comcast's triple play bundle of TV, phone, and Internet can add the 4G wireless component for $30 extra a month. So with the introductory price of $99 a month for the first year, the total would be $130 a month. After the first year, that bundle increases to $130 per month, so it would cost subscribers with the 4G wireless service $160 a month.

For subscribers who want more ubiquitous coverage, Comcast is offering a 3G/4G service that provides wireless connectivity on the Clearwire 4G network when it is available and on Sprint Nextel's 3G wireless service in other areas where 4G is not available. The cost of this service is an additional $20 per month.

Existing Comcast customers can add the new service for $30 more a month to their existing packages. And they can add the nationwide access with 3G access for $20 more per month.

Comcast has had its eye on the wireless market for quite sometime. The company bought wireless spectrum in the Federal Communications Commission's wireless spectrum auction in 2006. So far, the company hasn't said what it plans to do with that spectrum. But it has at least 10 years to decide, after which time the FCC could ask for the licenses to be returned.

Comcast has also worked with other cable operators to form a joint venture with Sprint Nextel in 2005. This joint venture was supposed to allow Comcast to bundle its broadband, TV, and telephony services with Sprint's wireless services. But the partnership never really got off the ground.

This time, Comcast thinks it has the right service package that will finally offer consumers a compelling product mix. The company is interested in not only using the service to help it win new customers but to also help it keep existing ones who may be tempted to defect to phone company competitors.

"This is really our first entree into expanding our in-home broadband service in combination with a wireless Internet service," said Catherine Avgiris, the company's senior vice president and general manager of wireless and voice services. "We are trying to get those consumers, who may not have chosen Comcast's broadband services in the past, to see that they can get the best and fastest in-home and wireless service from Comcast. But we are also trying to make sure we can keep the customers we do have from going to a competitor."

While it's clear that Comcast is using this new service to compete against its phone rivals, namely AT&T and Verizon Communications, it will also be competing against its partners Clearwire and Sprint Nextel, which will also be selling the same WiMax service to consumers.

Clearwire's service called Clear starts at $20 per month for in-home wireless broadband. And its mobile Internet plans start at $40 per month. Customers can also get a day pass for $10. The company also allows customers to add voice service to their in-home package for $25 per month.

Sprint is also offering a 3G/4G wireless service for people living and traveling regularly to places with 4G wireless coverage. For about $20 more a month, Sprint wireless data customers can get access to its 3G network plus the 4G Clearwire network for $80 per month. Sprint's regular 3G wireless data service costs about $60 per month.

AT&T and Verizon haven't included their 3G wireless data services into their in-home broadband and TV services, but the companies have been offering special deals for wireless customers. And both operators have announced Netbook offers where they subsidize the cost of these mini-laptops in exchange for a two-year service commitment. AT&T has also given free Wi-Fi access for its more than 20,000 Wi-Fi hotspots around the country to its broadband customers as well as some smartphone users.

AT&T isn't the only Wi-Fi provider that could compete with Comcast's 4G wireless service. In cities, such as San Francisco, there is already quite a lot of Wi-Fi in public places thanks to services like X. And in Philadelphia where EarthLink had deployed a citywide Wi-Fi network, Wi-Fi is still available for free in some locations.

Comcast isn't completely down on Wi-Fi. The company also offers a Wi-Fi solution in cooperation with Cablevision, a cable operator serving the New York area. The two companies are deploying Wi-Fi hotspots in train stations and on train platforms along the North East corridor from Philadelphia to New York City. The Wi-Fi access is free to Comcast and Cablevision broadband subscribers.

But Wi-Fi doesn't offer ubiquitous coverage. So these networks aren't the best answer for every consumer. But the success of Comcast's 4G wireless service is very much dependent on price. The company has priced the first year of the service extremely well, making it the hands down winner in terms of value for consumers. But it will be interesting to see if consumers are still interested in the service once the promotion is over.

The other potential downside to the service right now is that consumers will only get one USB laptop card per account. This might make it hard for families with multiple family members who want wireless broadband service outside the home. And this is also a problem for small businesses, which Comcast is also targeting with this service.

That said, Avgiris said that Comcast is working on a solution and will be offering multiple wireless cards for an additional cost. But the exact pricing of these cards and service hasn't been determined just yet.

An "e-mail counter issue" is at the root of at least some confusion over the status of e-mail sent during a Saturday outage to Comcast.net free residential e-mail, Comcast says.

According to spokesman Charlie Douglas, subscribers who regularly access Comcast e-mail through external POP clients may notice a discrepancy between the number of new e-mails displayed on the company's site and in their actual in-boxes. This may be leading people to believe that they have lost e-mail when, in fact, they have not.

Douglas said the company is working on a case-by-case basis with subscribers who are experiencing issues like this one, posted by CNET reader "jeninmd":

When I was finally able to log on to the Comcast Web site about 5 p.m. Saturday, April 4, it told me I had 31 new messages (which sounded about right). But when I clicked on the link to see them, it said I had none...I went back to their Web site today, Sunday, April 5, and it said I had 3 new messages. But the same thing happened; they disappeared when I clicked on my in-box!

Douglas reiterated on Monday that the company believes that intermittent disruptions in service Saturday, which lasted about 10 hours, did not result in lost e-mails but rather in delayed arrivals of messages. And he said the next version of Comcast's SmartZone Web mail interface, expected to debut this summer, will correct the message-counting discrepancies.

Via e-mail, however, the same reader who complained of 31 phantom messages--Jennifer Brasher--said she has "proof" of lost messages. "I called my sister, and she had sent me three, which I never got," she said. "I also know for sure that Telecharge e-mailed me a ticket I had purchased."

Brasher said a Comcast customer service representative with whom she spoke Monday afternoon "reluctantly admitted that e-mails were lost when I backed him into a corner."

The representative "did briefly mention an issue with external clients, but I explained to him that I wasn't running my POP client (Windows mail on Vista) because it couldn't access their server, so I took it down," Brasher wrote. "I am a former career software developer, so I wasn't buying his lame excuses."

Other users are voicing their concern as well. Responding to a story about the outage on AppScout, reader "Pamela" on Monday morning wrote, "Well, here it is two days later, and no e-mail. I am waiting for confirmation of my e-filed taxes. Um, this is not good at all!!!"

Responds Comcast's Douglas: "We're working with the engineers to investigate any claims. We take this very seriously."

Updated to reflect that e-mail service is back and to add comments from Comcast.

Comcast e-mail customers: no, it's not just you.

Comcast e-mail servers experienced an outage, according to the company's Twitter feed and this message on Comcast.net. A fix arrived hours after expected.

(Credit: Comcast)

Users of the company's e-mail service have been out of luck accessing the service since "at least" 6 a.m. PT, according to an e-mail tip received by CNET News on Saturday.

Although Comcast did not immediately respond to a request for comment on the matter, its Comcastcares Twitter feed, as well as its Comcast.net service hub, did confirm the outage. It has been communicating with the "server company"--the maker of the server--to help resolve the problem.

While a fix was previously expected at 11 a.m., according to the Twitter feed, e-mail is still down.

"I do apologize," tweeted Frank Eliason, director of digital care for Comcast. "I am waiting for an update on the new errors."

Update at 2:45 p.m.: Eliason now says, "Mail is starting to come back online and will take time for all to be uploaded...Ugh! What a day!" A reader also confirms (via her Comcast.net e-mail address) that her access has returned.

Update at 4:15 p.m.: Eliason just e-mailed me, saying the e-mail server that suffered the outage was owned by Comcast. He declined to disclose the name of the company that built it.

Update at 11:15 a.m. Sunday: Comcast spokesman Charlie Douglas tells me that the cable giant is still investigating the cause of the Saturday e-mail outage. Engineers are not yet certain whether it was initiated by a failure in power, hardware, or systems. It is also trying to determine how many e-mail servers and customers were affected by the outage, of which it became aware at 4:30 a.m. PT Saturday.

"Our priority is getting the systems stabilized," Douglas said.

No outgoing or incoming e-mail has been lost by users of its residential e-mail system, SmartZone, he assured me. Those accounts come free with Comcast's high-speed Internet service, to which he said 14.7 million people subscribe.

"There's quite a backlog" of messages in the server queue, he said, that are expected to fully clear out in the next few hours, depending on the volume.

Douglas did not have a figure for how many subscribers actively use the free residential e-mail accounts, but he did clarify that Comcast's paid business-class e-mail accounts, which rely on Microsoft Communication Services, were not affected by the outage.

While Douglas said the company has not sent out an e-mail to subscribers regarding the outage, he said that in addition to the Comcastcares Twitter feed and Comcast.net, customers could find further information about the outage on the company's Comcast Voices blog, which launched at the end of March.

(Credit: Comcast)

In an effort to keep/acquire new broadband customers, Comcast is testing Wi-Fi service at about 120 New Jersey Transit rail stations, according to DSLReports. The trial is for existing customers only and is designed to gauge user interest, spokeswoman Mary Nell Westbrook said, adding that no formal announcement of the service has been made.

The move comes after Cablevision launched its Optimum Wi-Fi program throughout the tristate area last fall. The two companies are collaborating to extend the reach of their wireless networks, enabling Comcast customers to access their operator's Wi-Fi at train stations in Cablevision territory and vice versa.

Although the two companies worked together on technical tests, the Comcast and Cablevision services in New Jersey will remain entirely separate, though there will apparently be some gear cohabitation. "A Comcast customer cannot access any of the Optimum Wi-Fi Hot Zones," notes Westbrook. "For the trial, our services are both available at all of the locations that are included--generally New Jersey Transit commuter rail stations--but the two services are offered separately."

Rail stations with free Wi-Fi include those along the Northeast Corridor, Morris, Essex, Montclair-Boonton, Main-Bergen County, the North Jersey Coast, Pascack Valley, and Raritan Valley lines. Coverage areas at each station include platforms and parking lots, but do not extend to the trains.

AT&T is looking to put a kibosh on the proposed merger of Sprint Nextel's nationwide WiMax assets with those of Clearwire.

On Thursday, the nation's largest phone company filed a petition with the Federal Communications Commission, asking it to deny approval of the merger.

Sprint Nextel announced in May that it was teaming up with Clearwire to form a new joint venture that would combine both companies' WiMax assets to create a nationwide broadband wireless network. The deal, which has been valued at about $14.5 billion, is being backed by cable operators Comcast and Time Warner, as well as Intel and Google.

The FCC, which is currently reviewing the merger, must give its blessing for the deal to be completed.

In its filing, AT&T argues that the proposed merger, "openly state[s] that they (Sprint Nextel and Clearwire) intend to compete with other national wireless providers--including AT&T--yet they fail to make the required showings necessary for the commission's review."

It's funny that AT&T is putting up any kind of stink to the merger, considering that the company exists in its current state only because of several massive mergers in the past few years, including the multibillion dollar merger between AT&T and BellSouth, which put full ownership of the wireless operator under one owner, and the purchase of wireless assets from rural operator Dobson Communications last year.

But it's clear that AT&T is nervous about the new Clearwire's plans. AT&T is currently still deploying 3G technology throughout its territory and is busy upgrading its existing network. But it is years away from taking the next big leap toward building a 4G network, which will use a competing technology known as Long Term Evolution, or LTE. By contrast, WiMax technology is available and working today. And regardless of the outcome of the merger, Sprint expects to launch its first WiMax deployments in September. What's more, devices supporting WiMax have already been developed and will hit the market by year's end.

While analysts still aren't sure whether WiMax will survive in the long run as a mobile technology here in the U.S., it appears from AT&T's latest moves that it's at least a little bit scared that the new Clearwire network, with backing from heavyweights like Intel and Google, could get enough traction to threaten its current and future wireless business.

Federal Communications Commission Chairman Kevin Martin will recommend sanctions against cable company Comcast for allegedly blocking access to file-sharing traffic, the Associated Press has reported.

"The commission has adopted a set of principles that protects consumers' access to the Internet," the AP quoted Martin saying. "We found that Comcast's actions in this instance violated our principles."

The AP said Martin would circulate the order to his fellow commissioners on Friday, who will vote on the measure at an open meeting on August 1.

Comcast has been sharply criticized in recent months for slowing down peer-to-peer traffic on its network. The cable company said that traffic was using too much bandwidth, and caused degradation across the rest of its customers.

The FCC held hearings on the topic in February.

Martin's order would require Comcast to cease blocking the traffic, and give the Commission and consumers details about the practice, as well as detailed information on how it planned to manage its network in the future, the AP said.