CenturyLink hints that OTT will become bigger part of video expansion effort

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A CenturyLink executive hinted that the provider's evolving over the top (OTT) video offering could be the main method it will use to it expand its video service presence in markets where it currently does not offer IPTV.

Stewart Ewing, CFO of CenturyLink, told investors during the Bank of America 2016 Media, Communications & Entertainment Conference that the OTT offering could readily address more customers with video services.  

“We would potentially have an offering that will roll out much broader than the roll out of Prism today,” Ewing said. “Prism helps in the stickiness of the customer and brings broadband along with them in 95 percent of the cases and we think the over the top product can help as well in terms of helping us expand the footprint we have outside of the agreement we have with DirecTV.”

In March the service provider said it began trial the OTT service outside of its Prism footprint in four markets.

On the OTT video front, CenturyLink is looking at a number of options, including entering a wholesale agreement with another provider and building its own product.

Ewing said if that the telco goes forward with its OTT video offering on a larger scale across its service footprint, it does not want to release a "me-too" product. “We hope to differentiate our product a little from some of the others with the expectation of having local channels,” Ewing said.

Ewing said CenturyLink could use the OTT video product to address other areas where it offers IPTV service today. In particular, CenturyLink wants to attract users who can only get, or only want, 10 Mbps broadband service. Today, customers have to order a 25 Mbps minimum connection speed to get the Prism service.

“We have Prism in 16 markets today and we don’t expect at this point to expand to any other markets,” Ewing said. “We expect to basically use the over the top service, with one being a Prism replacement product that works with an app on the TV so you don’t need a set top box and you reduce the need to do a truck roll and be sold to customers with less bandwidth than the Prism requires today.”

Bundling IPTV and the emerging OTT video offering with broadband has been a new focus for CenturyLink. The telco noted that 50 percent of Prism IPTV customers are new to the company, while 98 percent take a broadband service.

However, in the near-term the focus on bundling took its toll on broadband subscriber counts, particularly as CenturyLink saw 65,000 broadband-only customers disconnect services in the second quarter. While it lost a large amount of broadband customers, the telco added nearly 17,000 new Prism IPTV customers.

Ewing said that by bundling higher speed broadband with OTT video along with other products including a consumer VoIP offering and broadband, the provider could reverse a downward subscriber trend.

“We do have a fairly large percentage of our base that’s standalone high speed internet only and those customers are the most vulnerable because they’re not bundled with another product,” Ewing said. “We’re bundling our Prism product, we’re bundling DirecTV, we bundle our over the top product, consumer VoIP so that coupled with the fact that we’ll be improving the speeds we can deliver to our customers will help us get traction on the consumer side with high speed internet additions.”

For more:
- listen to the webcast (reg. req.)

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CenturyLink starts OTT video trial in four markets, focuses on millennials
CenturyLink's Ewing: OTT video could reduce truck roll costs, expand service availability