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Comcast (CMCSA) Eyes Annapolis for its Ethernet Business

T VZ CMCSA FTR

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Comcast Corp. (CMCSA - Free Report) – the largest cable MSO in the U.S. – is forging ahead with the expansion of its fibre network business. The company is set to launch 100 Gigabit Ethernet (GigE) services in the city of Annapolis, the capital of Maryland.

The 100 GigE is a technology standard which allows the transfer of Ethernet frames at a speed of 100 gigabits per second (Gbps). The 100 GigE standard is mainly used for switching, routing, aggregation in data centers, Internet exchange points, service provider peering points and high bandwidth applications like video-on-demand and high performance computing (HPC). This business has emerged as a booming one, courtesy of the multiple merger and acquisition deals being executed in the industry. 

Annapolis: Prospects

The launch of 100 GigE services, which is an entire pack of multi-Gigabit Ethernet options, is expected to provide a new business option to almost 900 local businesses, schools, hospitals and other local organizations in Annapolis. Comcast intends to initially target the bigger business districts in the area which stretch from City Dock through Parole and beyond. Comcast further states that the completed network – a combination of Ethernet, Internet, advanced voice solutions along with TV and cloud-based services – will help businesses, government organizations, the Annapolis Mall, Annapolis Towne Centre in Parole, Festival at Riva and the Riva Road County Government campus drive growth. Meanwhile, Comcast’s multi-Gigabit Ethernet services will make Annapolis an attractive market, luring more businesses and new entrants. This multi GigE package should also help meet the growing demand for increased bandwidth, interconnection between offices, sites and branches, and connection between offices and third-party data centers in the area.

Competition

Comcast will face tough competition from Verizon Communications Inc. (VZ - Free Report) , especially post its acquisition of XO Communications. After the buyout, Verizon has strengthened its fiber and Ethernet footprint in the northeast markets of Virginia. XO allows Verizon’s entry in 40 major U.S. metro markets, including nearly 4,000 on-net buildings and 1.2 million fiber miles.

Fibre Networks Expansion

In Aug 2016, Comcast progressed with its plans to widen its fiber network business in Tallahassee, FL, with the aim to attract local businesses with Ethernet services speed of up to 100 Gbps. This helped Comcast pose serious competition to incumbents such as AT&T Inc. (T - Free Report) and Frontier Communications Corporation (FTR - Free Report) .

Similarly, in Jun 2016, Comcast announced investment plans of $9 million over the next 12 months to expand its fiber network in Virginia, aiming to reach its Ethernet services of up to 100 Gbps of speed to 3,000 businesses.

The Bottom Line

Inspite of intense competition, Comcast continues to grow and rake in more profits, as is evident from its second-quarter 2016 earnings results. Revenues rose 2.8% year over year to $19,269 million.

Comcast currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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