Comcast’s $10 Broadband Could Create New Cord Cutters

Comcast (s CMCSA) is working diligently to ensure that the deal to merge its cable networks with the assets of NBC Universal (s GE) gets regulatory approval, but one concession could have the cable provider introducing low-income families to more web-based content.

In the Comcast 12-23-10 Ex Parte released before the holidays, Comcast detailed multiple concessions it discussed with the FCC aimed at convincing the commission that the deal would be in the public interest. The broader concessions are aimed at easing concerns about hyperlocalism, broadband deployment and adoption and public broadcasting and spectrum, but one particular concession — centered around making broadband available for $9.95 a month to low-income households — could open the door for more users to watch web video instead of TV.

The $10-a-month broadband plan, which it calls the Comcast Broadband Opportunity Program (CBOP), targets poor households in its footprint. To be eligible for the CBOP, households must have at least one child that qualifies for the National School Lunch Program (NSLP), which gives free lunches to students whose households have annual incomes of less than 130 percent of the poverty level. In addition to cheap broadband access, the program is also designed to provide subsidized computers to qualifying households and to educate them about using that equipment and Internet access.

While the CBOP might go a long way toward extending broadband access to low-income households, the thinking behind the proposal isn’t entirely new: The National Cable and Telecommunications Association (NCTA) proposed a broadband adoption plan for low-income families in late 2009 that also linked aid and heavy discounts to the NSLP.

Cable providers are having a tough time retaining their poorest customers, particularly as the economy has sputtered along over recent years. At the same time that many in the United States have been battling hard times, cable bills have increased an average of 5 to 10 percent a year. That’s one reason Time Warner Cable (s TWC) recently announced its TV Essentials package: a lower-priced subscription plan aimed at low-income households.

For households choosing between cable TV and broadband, most have sided with the former. Comcast notes in its filing that for households with incomes below $20,000, only 40 percent sign up for broadband services. Comcast says more than a quarter of those households qualify for the proposed CBOP program under the National School Lunch Program rules.

But the possibility of a $10 broadband option also creates the opportunity for Comcast to introduce households in its broadband footprint to cheaper online video offerings. The ad-supported version of Hulu, for instance, carries much of the same scripted content that is available on broadcast networks, but is available for free. If subscribers want a wider amount of content, they can also pay for services like Netflix, (s NFLX) which come much more cheaply than traditional pay TV packages.

That’s not to say that a change in consumer behavior is guaranteed; after all, the low-income families that would qualify for the program are also least likely to be computer- or Internet-literate, which means that they might not be aware of broadband programming options. They are also less likely to have equipment necessary to watch online video options on the living room TV. But by making these options more widely available to the demographic least likely to have access to them currently, Comcast could also be undermining its more traditional pay TV offerings.

And for cord cutters with kids, here’s our guide to entertaining the young ones without cable:


Photo courtesy of (CC-BY-SA) Flickr user Akarsh Simha.

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