Cincinnati Bell's (NYSE: CBB) Fioptics fiber to the home network has become the regional telco's savior in its wireline business, passing over 258,000 homes and businesses at the end of Q3 2013.
Fox (Source: Cincinnati Bell)
Speaking at the Wells Fargo Technology, Media & Telecom Conference, Leigh Fox, chief financial officer for Cincinnati Bell, said the higher broadband speeds Fioptics can provide continues to resonate with customers that are looking for another option besides are cable operator Time Warner Cable (NYSE: TWC).
"Our customers see the need for an alternative and our products offer them that," said Fox. "That's really our focus on the entertainment side and having a very compelling product vs. the alternative and on the Internet side having best in class speeds."
And while the Fioptics FTTH network could deliver up to 1 Gbps if customers wanted that speed, Fox said the "20 Mbps range is the most popular for the non-techie in the city."
While Time Warner Cable can also offer up to 100 Mbps speeds and beyond over its HFC-based network, Fox said that Cincinnati Bell is not responding with a counter offer to Fioptics yet.
For 2013, the company's overall goal is to build out Fioptics to 35 percent of the Cincinnati area.
The telco expanded the Fioptics footprint by passing 53,000 addresses with fiber during the first three quarters of this year while maintaining a 29 percent customer penetration rate.
Having offered the service for over three years, Fox said they continually monitor FTTH penetration rates in new and existing neighborhoods.
"I am pretty confident on returns and we do have to hit a certain metric," he said. "As an example, we just built out my neighborhood over the summer where in the first two weeks we had 23 percent penetration and after a month we had 43 percent penetration."
The telco has set the overall goal of 50-70 percent penetration of Fioptics in Cincinnati.
Fox said that to extend the service beyond this penetration goal, "it would take some kind of a technology shift and be convinced we could keep the level of services necessary for our customers for us to go any farther."
Interestingly as it builds out Fioptics, the telco is improving the speeds it can deliver over its copper-based DSL service. Today, Cincinnati Bell passes over 400,000 homes that can get speeds of 10 Mbps or higher.
"If you look at the impact of the node that's been upgraded we're seeing close to 100 basis points improvement in churn in that area," Fox said.
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