Stock Quotes in this Article: CMCSA, DTV, T, TWC

NEW YORK (Trefis) -- Comcast (CMCSA), which competes with companies like Time Warner Cable (TWC), (DTV) and AT&T (T), is getting more socially responsible with its Internet Essentials offering that provides eligible families with high-speed internet for just $9.95 per month. Additionally the company is also helping these families purchase low-cost computers.

The program should help improve the company's social image, but how will it impact the financials?

We estimate that the broadband business constitutes about 34% to Comcast's value. On average, we estimate that Comcast gets $45 per month per subscriber from its broadband subscribers. The proposed fee for Internet Essentials is less than a quarter of that. While there is bound to be some pressure on the average revenue per user and margin, the extent of the impact will depend on how many families subscribe to this service.


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    Comcast is not building extra infrastructure for this program as the offer will only be available to families in areas where the company already offers its service. This means that the incremental capital expenditures and network expenses will be minimal. So the question is – how many low-income families in Comcast's markets will subscribe to this offering? In order to be eligible, a family cannot have subscribed to Comcast service in the last 90 days and must have at least one child eligible to receive free school lunch under the National School Lunch Program. These restrictions significantly limit the number of families that can take advantage of this offer. Overall we believe that while this move provides social recognition, the financial impact will not be material.

    Our price estimate for Comcast stands at $27.50 implying a premium of more than 30% to the market price.

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