Altice USA CFO Michael Grau argued the company’s fiber network is superior to Verizon’s Fios infrastructure and its service initially cheaper, factors he said will give it a competitive advantage as it expands its footprint and aims to take share.
Discussing Altice USA’s go-to-market strategy at a Credit Suisse investor conference, Grau claimed “it is a better network versus the Fios network in terms of the number of splits and how early in the network the splits take place and where the ONT is located – you know Fios has the ONT [optical network terminal] outside the house, we have it in the CPE. So it’s truly fiber straight to the set top box, to the modem, to the gateway.”
He noted Altice USA’s service also tends “to be a little cheaper than Fios” in the first year thanks to its promotions, with the cost rising in the second year to be on par with the competition. Taken together, he asserted these network and price advantages mean “when we have that ubiquitous fiber network in our Eastern footprint we will have the network of choice even versus competing fiber networks, i.e. Fios.”
Grau said that work is “heavily concentrated right now in the Texas area.” He added that Altice USA has a presence in three of the top five markets for new household formation, and activity will also be focused in those areas. Additionally, it is pursuing opportunities to expand the North Carolina footprint it acquired when it bought Morris Broadband earlier this year, he said.
In terms of deployment costs, Grau said Altice USA believes it can leverage its past experience and existing conduits and pole infrastructure to complete its fiber projects in a “very cost-efficient manner.” Beyond the potential to generate new revenue, Grau said fiber will allow Altice USA to reap substantial opex savings from a reduction in customer service costs, noting it currently spends “millions” each year on customer interactions.
“The fiber plant is what we would call a passive plant, there’s a lot less moving parts than you’re going to see in a coax plant, a lot less power, just a lot less instances of failure,” he explained. “So to the extent we can put a fiber plant in place, we’re going to see opex savings on plant maintenance, we’re going to see lower churn due to customer satisfaction, and then the really big opportunity that we’ve talked about a lot which is customer interactions…so there’s a lot of reasons to be excited about a fiber plant.”