There was a lot of discussion yesterday on our first quarter 2009 earnings call about Comcast’s “All-Digital” project. We generally refer to this program as “Project Cavalry.” You might be wondering exactly what it is. Project Cavalry is our plan to give customers tons more HD choices, a faster Internet and more On Demand. How do we get there?
The cable industry has provided analog television service from the inception of cable TV. Analog delivery enables a cable-ready TV to receive 60-70 channels without any equipment. Over time, the industry has migrated to digital delivery. Similarly, the government is requiring digital delivery for broadcast channels on June 12 in the Digital Transition, although that only relates to ABC, CBS, NBC, Fox, PBS and Univision. Project Cavalry involves cable channels, including ESPN, TBS, A&E, etc. Regardless, it is clear that the video world is going digital. Doing so offers much improved picture quality and, with a Comcast set-top box, compelling two-way services such as Video On Demand and an interactive guide.
The real catch, however, is that analog delivery takes up more space on our network than digital delivery. For every analog channel, we can deliver 10-15 standard definition Digital channels or 2-3 HD channels. Today, approximately 2/3 of our network capacity is dedicated to delivering analog video. However, 72% of customers have digital service. By moving about half the analog channels to digital, we open up an incredible amount of capacity to bring dramatic product enhancements to customers. Half the channels remain in analog, meaning that 20-30 channels including all the broadcasters can still be viewed without any equipment on their cable-ready TVs.
Our solution is to provide a free digital service upgrade to move our “Expanded Basic” tier of analog customers to Digital. With no change to their monthly bill, we provide 8-10 additional channels, 40-50 music channels, all-digital picture quality and sound, an interactive guide and access to thousands of choices of Video On Demand. That offer includes digital equipment for three TVs at no charge. We chose that because the average U.S. home which has 2.7 TVs. Digital customers also get some free equipment and more channels including over 100 HD channels if you subscribe to HD service. Internet customers get doubled speeds. Remaining bandwidth can be used for increased international channels, even more HD, even faster Internet, etc. As mentioned, everything described happens at no additional charge.
Key to this offer is a new device we developed called a Digital Transport Adapter, or DTA (one is pictured at the top of the post). DTAs are small devices designed to replicate one-way analog service in digital. Unlike a set-top box, you can’t use On Demand or an interactive guide on a DTA, but digital channels look crystal clear in digital quality. If you want to receive more than the 20-30 analog channels mentioned above, we will provide you with a DTA on your TV when we go “all-digital” in your neighborhood. These devices are very small and were designed to be easily hidden behind your TV if you don’t want to see it. The free equipment Project Cavalry provides Expanded Basic customers includes one full-featured set-top box and two of these smaller DTAs.
The program is called Project Cavalry, since executing it requires us to touch nearly every home we provide video service to. The Comcast Cavalry sweeps into your neighborhood and works closely with you to provide great service and get you through it. In fact, it’s not very intrusive and to date approximately 75% of customers have self-installed their new, free equipment without needing anyone from Comcast to visit their home. The good news is that once you do, you’ll start seeing substantial product improvements almost immediately.
Since launching Cavalry late last year, we have deployed over a million of these DTAs in our footprint. In fact we deployed a million faster than Google sold a million of their G1 phones. It’s a fast moving program, driven by customer demand for great product improvements at no charge. Right now, Cavalry is underway in Portland, Seattle, the Bay Area, Chattanooga, Augusta, Philadelphia, the DC/Beltway area and Atlanta. Expect it to roll through your neighborhood sometime before the end of 2010.