Comcast Cuts Raise Fears on Price Front

Though price competition could be an issue next year, David Joyce, an analyst with Guzman & Co., says the one-year offer isn't a sign that price is an issue now. Limited, localized promotions like this one "tend to get ballooned out of proportion," Joyce says. "There are all sorts of trial balloons always being floated," Joyce says. "It's nothing that should impact [Comcast's] operating cash flow to any great degree at this point."

Guzman, whose firm has done recent banking for Comcast, has an outperform rating on the stock and a $40 price target.

Meanwhile, another industry has another interpretation of Comcast's promotion, which targets discounted DSL service with less than 10% penetration of Comcast's market. By limiting the discount to this degree, says Dave Burstein, editor of the industry newsletter DSL Prime, Comcast is signaling to telcos, "If you drop prices, we will" -- an encouragement, says Burstein, not to be dropping prices.

Burstein says he doesn't know if such a strategy will work. "The telcos are desperate not to lose voice subscribers," he says, "which will happen with greater cable modem penetration."