Comcast could deliver its new Xfinity X1 TV independent of its Internet service. But it won’t

Comcast Xfinity X1

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Comcast assembled its top brass in San Francisco Wednesday to demonstrate its new Xfinity X1 TV platform to a gaggle of tech reporters. Xfinity X1 is an entirely cloud-based system with the potential to eliminate the cable box, which Comcast Chairman and CEO Brian Roberts admitted becomes “obsolete as soon as we put it in your house.”

So if all you need is broadband Internet access to get TV service from Comcast, what’s to stop the company from offering its service through any broadband ISP? Nothing but greed.

Tuesday’s Xfinity X1 demo was dazzling. Comcast execs boasted that you'd eventually be able to record every single program it offered over a 30-day period, because you'd have a virtually limitless DVR in the cloud. There's also a new remote with an integrated microphone, so you can control the system and perform searches with voice commands.

And how about this: You can stream video from your phone to any other Xfinity X1 customer's TV, so grandma can see the kids' soccer game. You can also integrate your WeMo devices and create IFTTT recepies. And there's much, much more. 

But Roberts' post-demo dissembling over issues such as net neutrality, his company’s interest in acquiring Time Warner, and the hurdles the cable-TV industry has had to overcome over the past 60 years was even more entertaining.

Comcast Infinity X1

Comcast is promising all sorts of advanced features for its Xfinity X1 cable-TV service.

When asked about Comcast’s effort to acquire Time Warner, for instance, Roberts said “In this industry, back in the 1960s, late 50s, they gave out one franchise at a time to all 30,000 [municipalities in the United States]. No business before or since worked that way. It doesn’t really make a lot of sense.”

Well, monopolies don’t make a lot of sense, either, but those early cable companies wouldn’t serve a municipality without a guarantee that rooftop antennas and rabbit ears would be their only competition.

And if those municipalities had known back in the 60s that the new cables strung from their utility poles would also allow the cable companies to peddle telephone, Internet, and smart-home service to their citizens, you can bet those franchise fees would have been a lot higher. After all, consumers didn’t have a choice of TV service providers until, as Roberts pointed out, “You could put up one satellite and hit all 30,000 [municipalities]. Put up another satellite and a second company hit all 30,000.”

Continuing his story of how he had to walk 10 miles barefoot in the snow to get to school each day, Roberts pointed out how regional phone companies can service multi-state regions of the country, while cable companies are limited to operating on a city-by-city basis. (How’d we get regional phone companies? By breaking up the monopoly AT&T held since the invention of the telephone.)

“Wireless companies are all over the country,” Roberts said. “Then the cloud comes along, and Amazon, Google, Apple, Verizon—you name it. All ‘click’ and they get it [access to a nationwide market]. And we’re still chugging along with our 7 or 10 thousand franchises.”

Poor, Comcast. All those regulatory shackles limited its 2013 revenue to a measly $64.6 billion.

Roberts also insisted that acquiring Time Warner wouldn’t change the competitive landscape one iota. “The product you just saw demonstrated so wonderfully by our team is really hard and real expensive and different than plain-old cable. But it’s not available in New York and LA—any of the product you just saw [because those are Time Warner cable territories].”

In reality, Comcast doesn’t need franchises anywhere to offer their new TV platform. If Infinity X1 truly is a cloud service, Comcast could deliver it over any ISP’s pipes—just like Google, Amazon, Netflix, and countless other companies deliver their services over Comcast’s pipes.

But Comcast won’t do that because it would mean giving up the opportunity to also sell Internet, phone, smart-home services, and who knows what else down the road to those same customers. Comcast doesn’t really care about cable-TV franchises; it cares about controlling the Internet’s infrastructure.

“Competition has spurred innovation more than regulation has,” Roberts said.

True. But without regulation, there would be no competition.

Note: This story was updated to correctly report Comcast's 2013 revenue. The original story reflected only fourth-quarter revenue.

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