Hawaiian Telcom uses 1 Gig services to battle Time Warner Cable for SMB dollars

Hawaiian Telcom continues to extend its 1 Gbps GPON-based fiber broadband service to more residential customers, but the service provider is also seeing an opportunity to battle Time Warner Cable (NYSE: TWC) for small business customers.

In 2015, the service provider enabled about 2,900 business addresses, enabling these sites to get a 1 Gbps connection.

Already, the service provider is seeing positive results from its business 1 Gbps drive, reporting a 14 percent take rate. The service provider plans to continue rolling out fiber to over 3,000 business addresses, while leveraging its existing fiber footprint to deliver higher speed broadband services to its SOHO SMB customers.

Scott Barber, CEO of Hawaiian Telcom, said targeting SMBs with fiber-based broadband is a logical evolution of its overall fiber expansion into businesses, which initially focused on large enterprise customers.

"If you think about a couple years ago, there were a number of large enterprise customers that had access to our fiber because we directly fed those buildings with fiber," Barber said during the fourth quarter earnings call, according to a Thompson Reuters transcript. "But the remaining amount of SMB customers, which, as you know is about 90 percent of our customer base on the biz side were basically served by copper-based DSL. Now we're leveraging that fiber network that we started with our residential next-generation network and now we're doing some speculative as well as extending fiber into these business parks."

Barber added that the telco is "finding more and more customers are moving off that copper DSL now over to our fiber."

Hawaiian Telcom's timing could not be better as Time Warner Cable has been using its existing HFC and DOCSIS infrastructure to lure DSL-based customers to higher speed broadband and business grade voice. Being able to provide a 1 Gbps product gives Hawaiian Telcom a near-term advantage over TWC until the cable MSO decides that it wants to offer 1 Gbps itself in the Hawaiian markets.

"Time Warner is trying to compete in the SMB space, leveraging their residential network as they pass these businesses and trying to extend the same type of services into SMBs," Barber said. "That's why it's good timing for us to continue to leverage our fiber and to compete with them head to head. Ours offers higher speeds up to 1 gig, where they actually top out at 300 meg."

From an enterprise perspective, Hawaiian Telcom also faces strong competition from Level 3, which gained a larger presence in Hawaii after purchasing tw telecom.

"On the biz and the enterprise space, we don't have a lot of competition, although Level 3 is certainly in the market," Barber said. "As you know, they purchased Time Warner Telecom and so they have network here, they have some customers here. So, we have that competition in the enterprise space."

For more:
- see the earnings transcript

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