Unfortunately all those investors who waited out massive capital spending cycles in the hopes of reaping the benefits of massive cash-flows may in the end be very disappointed. Technology may have rained on the party, as it often does.
The Baby Bells have brought Fiber to the Home [FTTH], and with it comes a world of headaches for Comcast. With Comcast already sitting on strapped networks (ask anyone in a metro area using a cable internet connection during peak hours), new devices and bandwidth-eating applications are cropping up everywhere. From YouTube to iTunes, bandwidth usage is growing, and it makes near perfect sense this will only continue exponentially. Just think back to old PCs in the early nineties, as software apps continually demanded greater and greater processing speeds.
Little has changed, and just as it was then, many never envisioned a need for such bandwidth, its necessity becoming most apparent when it may be too late. Most notably, Apple’s recent introduction of iTV and downloadable Movies and TV shows demonstrates the growing thirst for bandwidth from consumers and developers alike.
A convergence of the Internet and TV is a question of when, not if. When this happens, Comcast will be in the unenviable position of needing a network upgrade. Outside of a few billion dollars for a network upgrade, it could be a boon for Comcast, but not until the spending cycle is completed ...again.
I'd steer clear of this Cableco giant as the risks are mounting. With the stock coming of a fresh run at recent highs, it remains a risky proposition to bet against the evolution of technology.
Disclosure: Author is short CMCSA