TDS's 1 Gbps buildout plan to 25% of network drives users to higher speeds

TDS Telecom may not be the largest telco, but its ongoing buildout of 1 Gbps fiber-to-the-home (FTTH) service in Tier 2 and Tier 3 markets is driving more existing and new users to purchase higher broadband speeds of 100 and 300 Mbps.

Earlier this year, the telco set an aggressive timeline to deploy FTTH services throughout is wireline territory, with plans to get to 25 percent of its access lines this year.

To date, the telco has rolled out 1 Gbps service in over a dozen markets, including a number of smaller towns in states such as New Hampshire and Wisconsin.

Matt Apps, senior manager of Internet product management and development at TDS Telecom, told FierceTelecom that rolling out 1 Gbps in these communities gives it credibility in markets where overall broadband options have been lacking.

"We have our 1 Gbps products out there and are taking that market leadership position," Apps said. "If you weren't on their radar before, especially that top tier of heavy data users who may have thought of TDS as that old phone provider, now you're saying you have a Gig product, it gives you that credibility that's difficult for other competitors to match."

In many of the markets where it offers 1 Gbps FTTH services, TDS typically is competing with a cable operator whose top speed may be 60 Mbps.

While not every user is purchasing 1 Gbps, new and existing customers see TDS as a viable broadband service provider.  

"What happens for us is they are getting interested in in TDS because we're now on their shopping list as a technology leader, but it does not mean they're actually buying that product, and that's the halo effect," Apps said. "The success of offering that 1 Gig service is not measured by how many people take the 1 Gig products, but by how many people are taking our 100 Mbps product or taking your service period."

In particular, it has seen an uptick in overall wireline sales in areas like Hollis, N.H., a mainly rural town where it has been offering 1 Gbps FTTH service since last March.  

Similar to Google Fiber's (NASDAQ: GOOG) "fiberhood" program, TDS Telecom has been attracting potential 1 Gbps subscribers through its pre-sale Fiberville program that encourages people to sign up for service.

"We have a nice pre-sales effort we do with Fiberville so we see a great pull with that, and the fact that we're fiber--our slowest speed in our TV markets is 100 Mbps," Apps said. "Putting all of that together becomes a nice portfolio and as long as the awareness is there that we're offering these services customers are taking to it."

Another element that's resonating with users is the price. Unlike initial rollouts of 1 Gbps that cost hundreds of dollars, TDS' 1 Gbps service is priced at $99 a month. Given the fact that it's offering this service in smaller markets where cable is offering much lower speeds, the $99 price is competitive. 

"It's not just Gig that's available, but Gig that's available not at a commercial price and is consumer friendly," Apps said. "I think with that we see consumers taking that speed because they're interested in or they're coming to TDS."

There is one potential drawback for bandwidth-hungry users. Customers that reside in markets where the 1 Gbps is available are still required to purchase the 1 Gbps service as part of a bundle that includes its IPTV service, TDS TV.

"We do require, you do have to take the TV service in order to get the 1 Gbps service," Apps said. "We find that most customers that take the TV are happy because it is a great experience to have at least those two services and if you add voice, those are quite valuable."

However, the telco is not ruling out offering a standalone service sometime in the future. Apps said that "we will consider offering a standalone service, but right now we're focusing offering it as a bundle with TV."

This so-called halo effect of 1 Gbps is not just relegated to TDS. CenturyLink (NYSE: CTL) has reported that in its initial 1 Gbps FTTH market of Omaha, Neb., it has been seeing take rates on its more traditional copper-based speeds of 20-40 Mbps rise in nearby areas where it has not rolled out the fiber-based service yet.

At the same time, other regional providers like cable overbuilder Grande, which has been rolling out a 1 Gbps service in San Antonio and other parts of Texas, also has been enhancing its traditional HFC DOCSIS services. It also offers five other speed tiers: 200 Mbps for $44.99; 300 Mbps for $54.99; 400 Mbps for $64.99; 15 Mbps for $29.99; and 50 Mbps at $34.99.

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