A select group of industry analysts gathered at the Comcast Technology Center in Philadelphia in March 2023 to hear from Comcast Business leaders about the company’s progress and success around its network and technology capabilities, go-to-market strategies and emerging portfolio segments. The event included a state-of-the-business update from Bill Stemper (president of Comcast Business) and Dave Watson (president and CEO of Comcast Cable), and an update on Comcast’s consolidated business performance from Brian Roberts (chairman and CEO of Comcast Corp.), as well as presentations focused on areas including the Masergy acquisition, portfolio strategies, customer case studies and security. The event also included roundtable sessions in which analysts participated in detailed discussions with Comcast Business executives around specific business areas.
The 2023 Comcast Business Analyst Conference showcased the company’s significant progress since its last on-site analyst conference held in September 2019. The event highlighted the company’s evolution from primarily serving local small businesses with traditional connectivity solutions during its infancy to its current ambition of competing as a leading global provider of secure networking solutions, supported by the Masergy acquisition and Comcast Business’ burgeoning enterprise business.
TBR believes Comcast Business is steadily gaining market share from rival service providers, as the company grew its annual revenue to approximately $10 billion in 2022 and its customer base to over 2.5 million customers. Unlike its largest competitors, AT&T, Verizon and Lumen Technologies, Comcast Business is not challenged by customer erosion from legacy network solutions as the company continues to enhance its hybrid-fiber-coax (HFC) network, including through the implementation of DOCSIS 4.0 technology over the next several years. Comcast Business is also targeting growth through its Masergy acquisition and adjacent solutions in areas including mobility, SD-WAN, unified communications, security and IoT, and multiple executives reiterated during the event the company has the potential to take up to $80 billion (including in off-net markets) in market share from its rivals.
Comcast Business faces challenges, however, that will limit the company’s market share. These challenges include competitors that are expanding their fiber networks, the growing availability and adoption of fixed wireless access (FWA) services, and businesses implementing 5G private cellular networks independently or with competitors.
Impact and Opportunities
Comcast Business Advances Enterprise and Midmarket Opportunity Via Masergy Acquisition
Comcast Business is expanding its footprint among enterprises and midmarket businesses through its Masergy acquisition, in which Comcast inherited Masergy’s existing base of about 1,400 customers in 100 countries. The Masergy purchase builds on prior acquisitions including Deep Blue Communications, Blueface and BluVector, and has enabled Comcast Business to strengthen its managed services portfolio in areas including SD-WAN, Unified Communications as a Service (UCaaS), security, and Call Center as a Service (CCaaS). The acquisition is also providing significant cross-selling opportunities, especially among U.S.-based companies with multinational operations, as Comcast’s network provides a strong backbone to support Masergy’s portfolio. The Masergy acquisition has significantly expanded Comcast Business’ distribution channels as Masergy leverages indirect channel partners for about 90% of sales, whereas Comcast Business has historically leveraged its direct sales channels for about 90% of sales and its indirect channels partners for the remaining 10% of sales.
The Masergy acquisition, which closed in October 2021, was timely for Comcast Business as it enabled the company to more effectively capitalize on the transition to distributed workforces spurred by the pandemic. To support hybrid work environments, Comcast Business is leveraging Masergy’s portfolio in areas including unified communications and SD-WAN solutions, augmenting its existing remote work solutions such as Comcast Business at Home, which offers enterprise-grade in-home connectivity solutions that are billed to employers. Additionally, Masergy’s robust cybersecurity capabilities, which are supported by its Fortinet partnership, help reassure Comcast Business clients as their organizations implement SASE (Secure Access Service Edge) network architecture to safeguard their distributed workforces.
Comcast Business Will Enhance its Network Capabilities as it Transitions to DOCSIS 4.0
Broadband services remain at the core of Comcast Business’ strategy due to all companies’ essential need for internet access, which in turn provides Comcast Business with the opportunity to upsell and bundle adjacent services such as SD-WAN. Comcast is in the early stages of its current network evolution strategy, dubbed the Xfinity 10G Network, which includes the transition to DOCSIS 4.0 technology beginning in 2H23 in initial markets to enable symmetrical, multigig speeds. Comcast expects to expand DOCSIS 4.0 availability to reach 50 million homes and businesses by the end of 2025.
The move to DOCSIS 4.0 technology will enable Comcast Business to optimize service quality as data usage continues to escalate and will support clients as more companies implement advanced technologies that require higher bandwidth and lower latency, such as AR/VR, AI and machine learning, to transform their businesses over the next several years. The move to DOCSIS 4.0 also entails Comcast furthering its implementation of virtualized network technologies, including the deployment of a virtual cable model termination system (vCMTS), which will provide internal cost savings and enable Comcast to more easily implement the latest software solutions and more quickly respond to customer service disruptions.
Comcast Business will face competitive challenges from rivals including AT&T, Lumen and Verizon, all of which are expanding their fiber footprints aided in part by government stimulus. Though TBR believes Comcast Business’ current network capabilities will be sufficient to compete against rivals’ multigig fiber offerings for most customers, Comcast Business could face potential disruption from competitors launching aggressive promotional pricing offers in tandem with their fiber rollouts. Comcast Business is also facing competition from FWA providers, though to a lesser extent compared to Comcast’s residential business.
TBR believes the greatest disruption from business FWA services providers is occurring among small businesses, which are seeking to reduce connectivity expenses, as well as companies that need to quickly launch new branch locations as FWA is quicker to install compared to fixed broadband. TBR believes FWA disruption is less prevalent among larger enterprises due to their more stringent network requirements and service-level agreements, though many companies have begun deploying FWA as a backup failover solution in case their primary fixed broadband connections are disrupted.
Comcast Business Positions for Growth in the Wireless Market
Comcast Business is positioning to support its clients’ wireless needs, including through the launch of Comcast Business Mobile in July 2021. TBR believes the offering is gaining traction due to its competitive price points as well as its ability to enable businesses to enroll in wireline and wireless services from the same provider. Comcast Business Mobile is also helping to accommodate businesses as they shift from fixed voice services to using wireless voice services exclusively. Comcast Business Mobile availability is currently limited to small businesses that have a maximum of 20 lines. TBR believes expanding Comcast Business Mobile to midmarket and enterprise customers would help the company further its traction within these segments as rivals including AT&T and Verizon remain entrenched in certain larger clients due to their ability to combine wireline and mobility solutions as part of clients’ contracts.
Private cellular networks are an emerging segment for Comcast Business as the company has deployed these networks at initial locations including the Wells Fargo Center and the Arlen Specter US Squash Center in Philadelphia; and the Sonoma County Fairgrounds in Santa Rosa, Calif.; and the Sound Hotel Seattle Belltown. Though Comcast expects fixed broadband connectivity paired with Wi-Fi will remain sufficient for most use cases in the foreseeable future, leveraging private cellular networks will enable Comcast Business to tailor its solutions to clients’ needs and position the company to support advanced solutions in areas such as IoT and computer vision that are more suitable for 5G.
Comcast Business also briefly discussed the opportunity the edge computing market provides, though the company has yet to announce a commercial offering within the segment. TBR believes Comcast’s vast real estate footprint, including its central offices, would provide a strong foundation for Comcast Business to compete in the edge computing market, though establishing partnerships with hyperscalers such as Amazon Web Services, Microsoft Azure and Google Cloud would be vital due to their foothold and technology advantages within the market.
Comcast Business is well positioned to sustain revenue growth over the next several years through its core broadband services, growing portfolio of value-added services, and cross-selling opportunities provided by the Masergy acquisition. Creating a stickier ecosystem through adjacent services such as Comcast Business Mobile and SD-WAN will help the company retain its core base of business broadband subscribers as it faces competitive pressures from rivals’ fiber, FWA and private cellular network offerings. Additionally, by advancing its network capabilities via DOCSIS 4.0 as well as its foray into 5G private cellular networks, Comcast Business will position itself to retain clients long-term as they seek to support next-generation use cases and applications.
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