C Spire will make 1 Gbps broadband more profitable through service bundling

C Spire's plans to deliver 1 Gbps fiber to the premises (FTTP)-based services throughout Mississippi may seem risky to some industry watchers, but it intends to make it profitable by offering service bundles.

Other services it will bundle with the FTTP connection include HDTV, wireless and its latest home automation product, which is being added into a suite of services it calls C Spire Home.

"We do have plans for it to be profitable," said Suzy Hays, vice president of consumer marketing for C-Spire, during the Adtran Connect event in Huntsville, Ala. "It does help that we have all of this fiber in the ground, but it's very expensive even then to get all the way to the home so that's why you see us doing things like adding additional other services."

Hays added that the ongoing rollout of the 1 Gbps service will "increase our share in wireless, which is really our bread and butter."

Having its own middle mile network and more than 60 years of experience in building out cable networks are two other advantages. Unlike Google Fiber (NASDAQ: GOOG), which is building out its entire network in its target communities from scratch, C Spire can leverage and extend its existing middle mile fiber network that it has used to backhaul its own wireless traffic.

"One thing that's a little bit different about us is that we have an extensive fiber backhaul network throughout Mississippi," Hays said. "We have been providing cable services via our sister companies already so that makes us a bit unique."

Besides the network facilities, the service provider has taken Google Fiber's approach to inspiring local communities to opt in and embrace the idea of using a 1 Gigabit FTTP service.

Similar to Google, communities that are interested in getting the service have had to commit $10 up front to C Spire.

In the markets where it has been rolling out fiber, including Ridgeland, Quitman and Starkville, Miss., the service provider has been seeing a good uptick in potential customers signing up for service.

"As we have made the commitment to build, we have had a very high success rate," Hays said. "One of the fears is it's a little bit of a gamble in that what if we build all this and they don't come? We have seen very good take rates and expect it to get better."

In the first round of its "get fiber first" contest, 33 cities responded to a request for information (RFI) in less than 30 days. After completing that process, C Spire selected nine city targets. These nine cities include 81 fiberhoods and 83,000 homes.

The service provider said that in order for each community to "go green" or be qualified to get service, they had to have 35-45 percent penetration.

Hays said what helped drive the effort was the involvement of the city leadership, including the mayors of Quitman, Ridgeland, and Starkville.

"We found out very quickly that if we led the effort we would not get the results we wanted," Hays said. "We really needed the cities to step up and the cities where the mayors got involved were the cities that went green first."

Quitman, a town of only 2,300 people, plans to leverage the fiber network to power a television studio at a local school, for example.   

Although they initially focused on targeting nine cities, C Spire plans on extending the service to additional cities in the coming weeks.

However compelling the service may be, one of the key questions about C Spire's 1 Gbps service is the price. While $80 for a standalone 1 Gbps broadband data service can far surpass what traditional cable operators that today don't offer anywhere near the same speed, it would be out of reach for financially strapped families.

"We are keeping it simple at this point so we don't have a different option at this point," Hays said. "In order to get the return that we need to get the $80 is the minimum, but we're also working with Mississippi State and the people that are interested in the digital divide and looking for ways to get to those people that need a more affordable option."

Related articles:
C Spire adjusts requirements for Mississippi residents to its 1 Gbps FTTH service
C Spire adds 1 Gbps FTTH to its service roster
Google Fiber, AT&T, CenturyLink drive the 1 Gbps game
C Spire, Cellcom to offer new iPhone 5s, 5c- U.S. Cellular, Leap still mum

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