Cable giant Comcast Corp (NASDAQ:CMCSA) is establishing itself as the preeminent triple-play provider in the United States. Changes in the way content is delivered is transforming cable, Internet, and phone providers' relative standings -- and Comcast could come out on top. Although industry changes will require significant capital expenditures, Comcast is pressing ahead with its multibillion-dollar share repurchase plan that accompanies its dividend. With all of the changes that the industry is undergoing, is now the time to return capital to shareholders? Let's dig deeper into Comcast's capital allocation strategy to see if shareholders' capital is being used wisely.

Chronic share repurchaser
Comcast is a regular purchaser of its own stock. It spent $19.4 billion repurchasing stock from 2004 through 2013, reducing its share count by 47% over the period. This helped it nearly quadruple earnings per share over the 10-year period.

Given the boost repurchases give to earnings per share, it comes as no surprise that management wants to continue its pace of share repurchases. In January, the Board of Directors authorized up to $7.5 billion in share repurchases, expecting to use $3 billion of the authorization in 2014. Comcast repurchased $2.25 billion worth of shares in the first three quarters of 2014, putting it on pace for exactly $3 billion for the year.

Competitive shifts require capital expenditures
Although Comcast has had success repurchasing shares in the past, industry changes may require more capital expenditures than had previously been necessary. Content distribution is rapidly moving from cable TV to the Internet, as exemplified by HBO's and CBS's (NYSE:CBS) foray into online offerings. Although fellow Fool Jamal Carnette argues that those networks' online offerings are not yet attractive enough to encourage cord-cutting, the Internet is likely the distribution channel of the future -- leading to a long-term secular ratings decline for cable television.

Fortunately, Comcast has a strong and growing Internet service provider business and may even have an advantage in capital spending. The company added 315,000 new Internet customers in the third quarter -- 6% more than it added in the same quarter in 2013. It now has 21.6 million high-speed Internet customers, more than AT&T (NYSE:T) (11.5 million Internet subscribers) and Verizon (NYSE:VZ) (6.3 million Internet subscribers) combined. Meanwhile, the company struggles to retain cable customers, losing 81,000 cable customers in the quarter.

Comcast's advantage in Internet positions it for long-term success in content delivery, but it needs to spend money to exploit its advantage. The company's lead gives its superior economies of scale. Since Comcast's Internet business is larger than its rivals', the business generates more cash flow that can be used to maintain and improve its network infrastructure. This means that Comcast should be able to increase the quality of its Internet package at a faster rate than AT&T and Verizon while being more profitable than its rivals. As a result, spending in this area should build tremendous value for shareholders in the long run.

Are repurchases the best option?
Given Comcast's need to exploit its size advantage in the Internet space, shareholders may question management's decision to stick with its share repurchase plan. However, there is no need to worry about the current repurchase authorization. Capital spending in its Cable Communications segment increased 9.8% in 2013, mostly as a result of investments in Internet infrastructure. Even after this increase, Comcast had $7.5 billion left over in free cash flow. This gives it plenty of leeway to repurchase $3 billion in stock and pay $2 billion dividend in dividends.

Shareholders are well-served by Comcast's capital allocation policy. Continued investment in its leading Internet business, along with regular share repurchases and continued dividend increases, looks like a winning formula for Comcast shareholders.

Ted Cooper has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.