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Tuesday, October 31, 2006

Comcast 1, Verizon 0 (CMCSA)(T)(VZ)(BLS)

Wall St. liked Verizon’s cell phone numbers, but the broadband part of their earnings sent a shudder through investors.

While the company put on 1.9 million new cell customers, broadband subscribers only rose by 448,000.

With Verizon and it rival Cingular (owned by AT&T and BellSouth) continuing a history of strong wireless sales, the good news is already baked into the stock prices.

But, the shadow of Comcast’s huge cable broadband network must disturb the sleep of Verizon management. Their lack of progress with adding their own broadband customers is a sign that the cable companies are not just holding their own. With cable’s ability to offer voice-over-internet, TV and broadband, the phone companies have to play catch-up.

Verizon is betting the ranch on improving its broadband to the home system by upgrading it to fiber. Old news. But, the initiative has only brought in 118,000 customers, although it service is in its early stages.

Comcast flanked the phone companies by adding a large number of broadband subscribers and voice over IP users. VoIP customers rose 483,000 in the last quarter compared with the same period a year ago.

Verizon may be a wireless powerhouse, but its foray into consumer broadband is still lagging, and, with its huge investment in fiber, that cannot continue.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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