CenturyLink says GPON, CAF-II will reverse its broadband subscriber slump

CenturyLink (NYSE: CTL) may have seen their overall broadband subscriber base dip in the third quarter, but the service provider is confident that a mix of technologies and promotions can get it back on the growth path.

Speaking to investors during the UBS 43rd Annual Global Media and Communications Conference, Stewart Ewing, CFO of CenturyLink, said its ongoing GPON deployments and the upcoming rural builds from FCC's Connect America Fund (CAF-II) will enable it to reverse the subscriber decline.  

"I think we can get back to broadband growth because of some of the actions we're taking on the speed side so with some of the GPON and CAF II monies we're taking to make broadband available to new homes we can can get back to growth over time," Ewing said. "The actions we took to increase the credit requirement was to get at customers that are coming to us from other carrier in the area and haven't paid their bill there and come to us and don't pay their bill and switch back and forth like we used to have in the old wireless days."

While the credit efforts could help it in the long-term reduce churn, the initiative dealt a painful blow to the telco.

As a result of tightening the credit requirements on its broadband subscriber base which may eventually enable it to reduce churn, the telco lost about 37,000 customers. The service provider ended the third-quarter with nearly 6.1 million broadband customers.

Ewing said that the company got through most of the customer disconnects from that new credit policy in the third quarter, but there will be some lingering effects in the fourth quarter.

"I think we cycled through a good bit of that in the third quarter and there will be a bit more of that in the fourth quarter with disconnects related to that," Ewing said. "We're hopeful once we get through that in the fourth quarter we'll get to where we're really marketing more and more GPON areas and increasing speeds in other areas we'll have the opportunity to start taking market share."

GPON rollouts have continued to ramp. As of the end of the third quarter, CenturyLink enabled over 780,000 households and 16 markets with FTTH capabilities.

At the same time, it is also following the innovation curve in copper. It is currently trialing a 200 Mbps service over its existing copper network in a number of markets and based on the results of those trials it will consider rolling it out into a broader part of its wireline footprint.

Today, the service provider's speed range availability is divided up into three main groups: 70 percent of its overall homes passed can get 10 Mbps speeds or higher; nearly 60 percent can get 20 Mbps or higher; and about 30 percent can get 40 Mbps or higher.

"We think at these speed levels we can compete and again on the higher end we have been increasing GPON and to most of those homes we can offer a Gig service," Ewing said.

CenturyLink has its work cut out. In a number of its markets, particularly the ones it entered through its acquisition of Qwest, it still trails cable in terms of market share.

"We're definitely behind the cable companies in terms of market share, primarily related to the markets that we picked up with Qwest," Ewing said. "With Embarq I think our market share is probably a little higher and with the legacy CenturyTel markets it is higher still and we're closer to the cable companies there."

Ewing added that "we hope to show positive net broadband adds in 2016."

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

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