Consolidated Communications says it's not afraid of Google Fiber

Company says there is 'no overlap' in customer footprint
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Consolidated Communications (Nasdaq: CNSL) knows Google Fiber (Nasdaq: GOOG) is its Kansas City neighbor, but right now the provider does not see the company as a major threat.

The 100-plus year old telco, which also serves Texas and Pennsylvania, entered the Kansas City market when it purchased fellow independent ILEC SureWest.

"Whenever Google announces anything in Kansas City, our phones ring off the hook about what it means to our business," said Steve Childers, CFO of Consolidated, during the Citi Global Internet, Media & Communications Conference in Las Vegas on Tuesday. "At this point it means absolutely nothing; there is no overlap today from a marketing or network perspective compared to where our footprint is in Kansas City."

Today, Consolidated operates mainly in the affluent Johnson County area of Kansas City, Kan.

Besides being in another part of the city, Google is still in the process of rolling out its service and network, Childers pointed out, while Consolidated already has a fiber network running with paying customers already.

"We understand they have a couple of customers up, but the next customer wave from an installation perspective will be in either late 2013 or 2014," he said. "There is no overlap and we don't see them as a competitive threat. Based on the quality of products that we have with the ability to deliver 50 Mbps to our Kansas City customers today, we think we have a product set there and our ability to compete against anybody."

Like Google, Consolidated is a Fiber to the Home (FTTH) advocate. By purchasing SureWest, the telco immediately gained a fiber-based last mile network in both Kansas City and in California.

Being traditional ILECs, however, Consolidated and SureWest also have a strong copper-based network from which they can deliver IPTV and higher speed broadband services.

"SureWest also had a strong copper IPTV play as well in their ILEC market," Childers said. "We think that one of the key differentiators based on the quality of our network is that we can deliver IPTV over our network and we don't have to rely on satellite resale product like some of our peers are doing."

Interestingly, Consolidated was an early advocate of delivering IPTV over copper. What drove them to deploy IPTV was the need to offset the threat of cable operators launching their own triple play bundles of voice, video and data.

"In all of our markets, the cable guys have been out there since at least 2008 with their voice product, which is why we were so focused even prior to 2008 on putting out video before the cable guys launched their voice products," Childers said. "I think that has served us well in terms of the residential triple play."

From an overall data broadband perspective, Consolidated can deliver up to 20 Mbps to at least 65 to 70 percent of the company's ILEC lines today. With the advent of pair bonding, the telco can expand speeds beyond 35 Mbps for specific applications.  

"Even in SureWest land or Consolidated, I am not sure of any areas where we are not getting the speeds we need over the copper network," Childers said. "We are really comfortable with the loop lengths and the quality of the copper network."

That's not to say the telco isn't a FTTH advocate.

Similar to AT&T (NYSE: T) and Frontier Communications (Nasdaq: FTR), Consolidated has focused on installing FTTH mainly in Greenfield areas in Texas. The service provider will target housing developers that can use FTTH as a potential amenity to new home owners.    

"Even in legacy Consolidated, we were doing Fiber to the Home, particularly in Texas in some of our more high growth, high income markets," Childers said. "If we had the opportunity to go in and build fiber in a network in a community neighborhood and be the preferred provider, we do have Fiber to the Home there."

Childers added that the company will take the same Greenfield buildout approach for FTTH in both SureWest's California and Kansas City markets to deliver 50 to 100 Mbps.

"In the California markets if it's a Greenfield application we'll build fiber where we need to, but unlike what Verizon does we're not going to go in and tear out a bunch of copper and pull that out," Childers said.  

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