Windstream's Thomas: Wi-Fi, lower cost STBs simplify IPTV installation costs

Windstream may have come to the IPTV game later than its ILEC compatriots AT&T (NYSE: T) and CenturyLink (NYSE: CTL), but the advent of lower cost home network gear is helping them make a business case for the service. 

Speaking to investors during the Goldman Sachs 24th annual Communicopia Conference, Tony Thomas, CEO of Windstream, said that lower cost set-top boxes and Wi-Fi-enabled equipment is reducing service installation process.

"A lot of investors have asked us what's changed our view and we recently began to launch IPTV in Lincoln, Neb. earlier in the year to 50,000 households," Thomas said. "The set-top box prices for an all-digital are so much dramatically lower and the ability to use wireless from an installation perspective has vastly simplified the cost of the installation."

Subscribers that sign up for Windstream's IPTV service get an Ericsson (NASDAQ: ERIC) wireless set-top box that can be moved anywhere in the house.

Using a Wi-Fi connection and lower set-top boxes in the home means that Windstream does not have to run Category 5 cable throughout a home to distribute content to various TV sets. Ultimately, this will mean that it can more rapidly conduct IPTV in homes as it looks to scale its subscriber base in additional markets.

A key element in the Wi-Fi home networking trend will be residential gateway vendors incorporating 802.11ac standard interfaces into their products. According to Infonetics, 69 percent of vendors that participated in a recent survey said that they "plan to include it in their residential gateways by next year."

Already, Windstream is seeing the fruits of its IPTV service play off. A good portion of the IPTV sales it made in Lincoln, Neb., were from new customers.   

"Of our first thousand sales in Lincoln, Neb., 500 were new to Windstream and 500 were existing customers," Thomas said. "It's a chance to change that messaging and the dialoguee with customers that never really looked at Windstream that now there's a fresh reason to look at Windstream and these new capabilities."

Thomas added that "from that perspective, I am very optimistic about what the Kinetic product can do not only in terms of churn, but also the ability to draw in new customer relationships."

These trends will bode well as Windstream looks to bring IPTV into additional markets throughout the rest of 2015 and into 2016.  

One of its potential new markets where it is considering offering IPTV is Lexington, Ky., a market that's currently served by cable MSO Time Warner Cable. The service provider, according to a Lexington Herald-Leader article is currently waiting for the city's Urban County Council to make vote in coming weeks on a request for bids for a cable franchise agreement.

While Time Warner Cable secured a 10-year franchise agreement with Lexington in late 2014, Windstream asked that the city reopen the process.

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