Comcast Is Now an Internet Company

We’ve been watching this one for a while, and now we are juuust about there: Comcast, the biggest cable company in the U.S., is about to become a broadband company — meaning it has more high-speed Internet subscribers than pay-TV subscribers.

In fact, maybe we’re already there. Comcast announced this morning that it ended the first quarter of the year with 22,375,000 cable TV customers, and 22,369,000 broadband customers. That’s a gap of a mere 6,000 subscribers.

But those numbers were as of March 31, so perhaps Comcast has already tipped over. (UPDATE: Indeed it has. During Comcast’s earnings call this morning, the company said it had passed the milestone in Q2, which is still underway.)

In any case, it’s safe to assume that we’ll keep seeing numbers like the ones Comcast recorded today — last quarter it added 407,000 Internet customers and lost 8,000 video customers — so when Comcast comes out with its new report in three months, it will be a done deal.

For now, video creates much more revenue than Internet does for Comcast — the segments generated $5.3 billion and $3 billion, respectively, last quarter. But Internet is a much higher margin business than video, since you don’t have to pay anyone to program the Internet. Last year, Comcast spent $9.8 billion on programming, or nearly half of the $20.8 billion it generated from pay-TV subscriptions. (Then again, Comcast creates some of those license fees itself via its NBCUniversal* unit, which generated another $6.6 billion last quarter.)

Comcast’s current focus is to get and keep “triple play” customers who will pay for bundles of TV, Internet and phone service, but you can see where this is headed.

The good news for Comcast is that it doesn’t really matter if it’s selling video or Internet, because it controls the pipe either way — and in most cities it faces little to no competition for that pipe. The bad news for Comcast is that control of the pipe was the reason regulators killed its Time Warner Cable bid.

* NBCUniversal is a minority investor in Revere Digital, Re/code’s parent company.

This article originally appeared on Recode.net.

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