Now that Consolidated has completed its purchase of FairPoint Communications, one of the telco’s immediate goals is to enhance the consumer speed profiles in FairPoint’s existing network territories.
Bob Udell, CEO of Consolidated, told investors during its third-quarter call that the service provider plans to implement VDSL2+ to immediately deliver speeds of 50-100 Mbps using FairPoint’s existing copper facilities.
“If you look at the legacy CCI, we have had a 65% increase in the 30 meg and higher customers over copper quarter-over-quarter using VDSL2 plus type technology and we're 100 days into operating this deal and really are just starting to promote the areas in the FairPoint area -- in the FairPoint markets that already have 50 meg or higher available,” Udell said during the earnings call, according to a transcript. “Our focus is in getting to 100 meg and is running places as we can, as fast as possible.”
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Udell added that the speed ramp will be conducted over the next few quarters.
“It's going to be a progressive quarter-over-quarter increase in some cases first of the 50 meg product then an 80 meg product based on where speeds are available and eventually getting to 100 meg,” Udell said.
Adapting the Consolidated broadband playbook
Consolidated did not have to look too far in developing its broadband plans for the former FairPoint territories.
Today, 96% of broadband-capable homes in the legacy Consolidated markets can get access to a 20 Mbps speed or higher plan, while 42% can get 100 Mbps or higher. By contrast, only 38% of broadband consumers in the FairPoint markets can get 20 Mbps or higher and only 1% are eligible to get 100 Mbps.
The service provider has various near-term projects to extend Consolidated's speed availability into FairPoint’s northern New England territory.
“We are implementing technology similar to what we used in the legacy CCI markets to grow this percentage, and we are also redefining the go-to-market strategy in the areas with greater speed availability to increase the average connection speed for the FairPoint legacy customers,” Udell said. “Increasing broadband speeds will continue to be a priority.”
Udell added that “faster broadband over quality network is key to layering on additional value-added services such as over-the-top video offerings.”
FairPoint rebrand coming
As Consolidated progresses with its FairPoint integration process, the service provider is crafting its marketing and promotion strategy for broadband.
During this process, Consolidated is marketing its higher speed offerings in the parts of FairPoint’s areas that have not been marketed to today.
“The first step is that the areas that can get 15 meg and higher today in the FairPoint footprint haven't been aggressively marketed to,” Udell said. “There's been continual work on expanding the availability of a 25-meg product.”
Additionally, Consolidated’s application of its VDSL2+ strategy leveraging the fiber that exists to deliver 50-100 Mbps speeds will be timed with the service provider’s rebranding that will begin in the first quarter.
“In advance of the marketing strategy, we feel like that we’ll have the broadband capacity needed prior to the brand launch,” Udell said. “We're going to continue some very specific targeted marketing. But we're really in early stages right now.”
Here’s a breakdown of Consolidated’s key metrics:
Consumer: After adjusting for the sale of the Iowa properties, consumer revenue declined $5.4 million during the quarter. Voice services were down $6.3 million or 10% with 75% of that coming from FairPoint. In the aggregate, consumer broadband increased $1 million due to higher ARPU associated with customers moving to higher bandwidth services.
However, Consolidated noted consumer broadband increases are being partially offset by managed churn in low-margin digital video services, primarily on a consolidating side as it focuses on its over-the-top video broadband strategy.
Commercial: Commercial and carrier revenue decreased $3.6 million to $153.3 million. Like earlier quarters, services revenue was down $5.1 million, while data and transport were flat. Other commercial revenue increased $1.5 million.
Consolidated said its wholesale carrier channel remains impacted by price compression, while commercial revenues remained flat.
Financials: Consolidated reported total revenues of $363.3 million, compared to adjusted revenue of $380.0 million for the third quarter of 2016, after excluding $18.7 million attributed to the equipment sales and service business and Iowa ILEC which the company divested in 2016. The third-quarter results also reflect the scheduled August step down of Connect America Fund (CAF) subsidies of $2 million.