Cincinnati Bell's Fox: Metered broadband pricing will happen over time

Cincinnati Bell has plenty of gas in the broadband tank with a growing FTTH network, but it envisions a time when metering broadband usage will be the industry norm.

Leigh Fox

Fox

Speaking to investors during the Wells Fargo 2015 Technology, Media & Telecom Conference, Leigh Fox, CFO of Cincinnati Bell said it will happen over time.

However, the company has not revealed any specific details or timeline to implement metered pricing on its own broadband products.

"I do not think that it will happen anytime soon," Fox said. "I do think that is ultimately where things go or different tiers like smaller tiers of pricing so maybe not a pure utility but close."

At the same time, Cincinnati Bell said metered billing could provide them with a revenue opportunity, particularly as customers opt for more over-the-top video content. Like other insurgent telco video players, Cincinnati Bell is also trying to deal with the rising costs of linear video content.

"I think utilization-based pricing is absolutely an opportunity," Fox said.

Despite being a controversial practice, a number of service providers have been increasingly adopting a broadband metering scheme. Comcast (NASDAQ: CMCSA), for one, has expanded tests of its usage cap billing to include four new markets.

Beginning on Dec. 1, Dec. 1, the trials will also include Little Rock, Ark.; Houma, LaPlace and Shreveport, La.; Chattanooga, Greenville and Johnson City, Tenn.; and Galax, Va. For every 50 GB they go over, customers will be charged an additional $10. Users also have the option of paying a flat fee -- $30 - $35, depending on the area -- to avoid the caps. 

Cincinnati Bell won't reveal how much bandwidth residential customers consume at the home, but the service provider has gone from using only 10 Mbps to 30 Mbps.

Today, the service provider's most popular speed offering inside its dual and triple play bundle packages has been 30 Mbps.

Fioptics overall has been a hot seller for the company. During the third quarter, it added 11,200 new Fioptics Internet subscribers to reach a total of 281,300 subs, up 10,800 subscribers from a year ago.

"The 30 Mbps option the most popular because it's in the bundle," Fox said. "I can tell you that the trend is you're giving more bandwidth inside the bundle over time -- two years ago it was 10 Mbps, real briefly 20 Mbps and now it is 30 Mbps -- but I am not sure that's necessarily a usage-based trend."

Following the same path as fellow larger telcos AT&T (NYSE: T) and CenturyLink (NYSE: CTL), Cincinnati Bell now offers a 1 Gbps FTTH service via its Fioptics line.

Similar to these other providers, it admits that only a very small amount of its customers have opted for the 1 Gbps tier.

Fox said he expects that bandwidth demands in the near-term will probably rise to between 30-50 Mbps.

"We offer 1 Gbps to some of the homes in our territory and we have a small percentage of homes that take that product, but I can't imagine where we get to a usage standpoint where a Gig is needed," Fox said. "I don't see 10 Mbps is relevant anymore, but I could see maybe in two years where we're talking 30-50 Mbps range is pretty normal."

For more:
- hear the webcast (reg. req.)

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