CenturyLink says FTTH is helping it beat cable, raise overall broadband speed awareness

CenturyLink (NYSE: CTL) may not have 1 Gbps FTTH available in every market it serves, but where it is available it is helping it take market share away from cable operators and drive awareness about other speed tiers.

Speaking to investors during the Citi 2016 Global Internet, Media & Telecommunications Conference, Stewart Ewing, CFO of CenturyLink, said the company saw this phenomenon in Omaha, Neb., one of its first markets where it launched 1 Gbps-capable FTTH service in May 2013.

Leveraging an existing FTTH network that predecessor company Qwest built in the 1990s, the service provider upgraded it with next-gen GPON technology to serve 45,000 homes.

"Omaha was a really good success story where we built fiber to about 45,000 homes," Ewing said. "When customers called and weren't in the fiber footprint and realized they could get 20 Mbps or get 40 Mbps and when they did they were willing to switch. I think it was the fact that it was unknown to them that they could get speeds they could get from us."

Ewing added that it is finding a similar phenomenon of customers calling up to ask for other higher speed copper-based service in the markets where it currently offers 1 Gbps service.

This speaks to the overriding reality that most consumers aren't going to immediately purchase a 1 Gbps service even if it's available in their neighborhood, he said.

"The philosophy we have used when we have rolled out fiber to 16 markets is to be able to get the excitement in the markets, to have a gig available in certain parts of markets and generate the phone calls from customers, so we can sell them the speeds that are available to them," Ewing said.

But what about markets where it has not rolled out FTTH yet? What's helping CenturyLink keep the cable threat at bay is being able offer speeds of up to 10 Mbps and beyond via its traditional copper-based network.

"If you look at our customer base where we're gaining customers is in the markets where we can offer 10 Mbps or better, and we're losing customers where we offer 10 Mbps or less," Ewing said. "There is a difference there of in terms of where we're losing customers and where we are growing customers, so our goal is to look at the lower end customers."

In its more rural areas, CenturyLink is going to leverage funds from the second phase of the FCC's Connect America Fund (CAF-II). In August the provider accepted $500 million in CAF-II funds, enabling it to deliver broadband services of up to 10 Mbps to about 1.2 million rural households and businesses in 33 states over the next six years.

"Our goal is to look at the lower end customers and with the CAF-II monies, other technologies we're looking at like bonding, vectoring, and G.fast to improve the speeds to those customers to enable us to be more competitive to where we think we can retain them," Ewing said.

Given the size of its copper network, CenturyLink is also looking at deploying next-generation technologies like vectoring and G.fast to deliver higher speeds over its copper network. The service provider began a 100 Mbps over copper trial last August for consumer and business customers in Salt Lake City, for example.

Despite its emerging efforts, CenturyLink has struggled in recent quarters with broadband growth.

During the third quarter, the service provider reported that it lost 37,000 broadband customers as it implemented its new credit policies for broadband. However, it maintains that as it works through that process, it will see broadband subscribers grow throughout 2016.

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