Cincinnati Bell's Fox: Fiber will give us an upside in the SMB market

Cincinnati Bell has set an aggressive target with its fiber-to-the-premises (FTTP) build with hopes to penetrate 80 percent of the city with fiber, but the fiber investment is going to also give it a weapon to battle cable for small to medium business (SMB) customers.

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Speaking at the Deutsche Bank Leveraged Finance Conference, Leigh Fox, CFO of Cincinnati Bell, said that its growing Fioptics network is giving it the weapon it needs to stay on pace with its main cable competitor Time Warner Cable (NYSE: TWC).

"I think for the business space, we have more upside than downside," Fox said. "Time Warner has done a fantastic job in the city winning in the small business space, and it really had more to do with us not having the product to compete. Now with fiber we have the product to compete for small business and we're beginning to take share."

Being able to compete with a fiber-based product will be important for Cincinnati Bell, particularly if Time Warner's merger with Comcast is successful. That deal will create a combined company with a broader IP and Ethernet footprint to target mid-sized and even large businesses.

Given its broad set of established products and consulting capabilities, Fox said the telco will be able to stay ahead of cable's eventual move into larger business accounts.

"As you creep into the mid-market, you have to provide more than data speeds and VoIP," Fox said. "We have a very diverse product portfolio that allows us to effectively to be a one-stop for businesses."

While Cincinnati Bell is aware of cable being aggressive with pricing, Fox says that the real value lies in being able to bundle other add-on services that enhance the value of the business customer's data connection.  

"Where we increase ARPU is when we start tacking on other services," Fox said. "I think that's really the opportunity, as any competition comes in the market our ability to bundle in managed services, hardware sales and professional services, gives us a longer-term competitive advantage."

Fox added that as the company moves up into the mid-market, it sees "increased APRU because of the incremental products we offer."

Cincinnati Bell's bets on fiber-based business services continue pay off.

Second-quarter Fioptics revenue totaled $34 million, up 44 percent year-over-year. Likewise, strategic business services revenue rose 16 percent.

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