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CMCSA Expands Low-end Data Plan

Zacks Equity Research

Comcast Corporation(CMCSA) continued its strategy of targeting the low-end market with the introduction of Internet Essentials Opportunity Cards for low-income families with school children eligible for free meals under the federal aided National School Lunch Program.

With the availability of Internet Essentials Opportunity Cards from the second half of 2013, these underprivileged families can afford prepaid internet access at a much discount rate of $9.95 per month for 3 Mbps downlink and 768 Kbps uplink speed. Moreover, they can also get a PC for a $150 coupon along with access to free digital literacy training schedule.

Internet Essentials Opportunity Cards program is a part of Comcast’s Internet Essentials program, which was initiated 16 months back targeting underprivileged families in the country.

At present, the company has already delivered 15,000 PCs costing $150 to nearly 150,000 eligible families with Chicago being the highly served city with 15,500 Internet Essentials customers at the end of last year. Moreover, the company has distributed nearly 25 million pieces of free collateral material, and attended to more than one million calls from its dedicated Internet Essentials call center.

Besides Internet Essentials program, Comcast is planning to roll out pre-paid Internet service plan across its footprints through Xfinity Internet Prepaid Service brand, well supported with dedicated website and more than 70 stores across the parts of Philadelphia, Del and N.J.

The customers residing near the Comcast-operated areas without an active company account will be able to access the pre-paid data service through a cable wire and Arris Group Inc. (ARRS) manufactured DOCSIS 3.0 modem.

At the end of 2012, Comcast tested the pre-paid business model with downloading speed of 3 Mbps in the state of Philadelphia. So we believe that if the company successfully deploys the new pre-paid business model, which is not followed by any cable companies till now, it will help Comcast to take an unprecedented lead over Time Warner Cable’s (TWC) internet customers.

Moreover, the new pre-paid plan will also offer strong resistance against pre-paid data plans offered by low cost carriers like  MetroPCS Communications, Inc. (PCS) and Leap Wireless International Inc.

Currently, Comcast Corporation carries a Zacks Rank #2 (Buy).

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