Hawaiian Telcom sees its emerging IPTV service as a key revenue driver and it has set an ambitious goal of passing 160,000 homes on the island of Oahu by the end of this year with the service.
Speaking to investors during the Drexel Hamilton Telecom, Media and Technology Conference, Eric Yeaman, CEO of Hawaiian Telcom, said the company is confident in its ability to take on the island's main video provider Oceanic Time Warner Cable.
"We continue to invest in our broadband network and have expanded our fiber footprint by over 50 percent in the last three years and we continue to invest," Yeaman said. "This investment gives us a unique set of assets in Hawaii and best positions us to address the growth opportunities in our market."
In the second quarter, the telco passed an additional 12,000 customers with IPTV, increasing the total number of households enabled to 142,000 with over 50 percent of those households capable of connecting directly to the company's fiber-based broadband technology.
Yeaman said the company is "on track to reach our goal of passing 160,000 households by the end of this year."
Overall, Oahu has over 300,000 addressable homes for IPTV. The service provider said it hopes to reach 80 percent of those households. By comparison, Oceanic Time Warner has 90 percent of the video market.
What's making Yeaman confident about the telco's chances with video is the density of the Oahu market.
"Oahu is a very dense market with 520 households per square mile, which is driven by the high penetration of multi-dwelling units," he said. "Forty-three percent of the households on Oahu reside in multi-dwelling units and that compares to 22 percent in the U.S."
One of the levers that Hawaiian Telcom hopes to leverage to drive more existing and customers that may use Oceanic Time Warner to its TV product is its growing portfolio of high-speed broadband services.
In February, the service provider debuted a new 500/50 Mbps tier that leverages its growing fiber-to-the-curb (FTTC) network architecture. In addition to the 500 Mbps tier, it also offers a 100 and 300 Mbps tier.
"Hawaii had little competition in the video market until we launched Hawaiian Telcom TV a little over three years ago," Yeaman said. "Now, we can bundle Hawaii's fastest Internet product with a superior video product offering."
Video continues to be major revenue driver for Hawaiian Telcom.
During the second quarter, video service revenue grew 2.9 percent year-over-year to $5.5 million, driven by the addition of approximately 9,500 subscribers for a total of approximately 23,100 subscribers at the end of the second quarter. Hawaiian Telcom TV average revenue per user (ARPU) was up nearly 11.4 percent year-over-year and 2.6 percent when compared to the first quarter of 2014.
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