Tucows' Noss: We expect 20% FTTH internet adoption among serviceable addresses

fiber (pixabay)

Ting, the wireline internet division of Tucows, is seeing more eligible households in its growing FTTH internet service footprint purchasing service.  

Elliot Noss, president and CEO of Tucows, told investors during its fourth-quarter earnings call that it forecasts adoption rates to rise between 2017 through 2022.

“We expect to see 20% adoption among serviceable addresses in a year and 50% in five years,” Noss said during the earnings call, according to a Seeking Alpha transcript. “At these take rates we'll be paying about $2,500 to $3,000 per customer in CapEx and those customers will be worth about a $1,000 a year in margin.”

RELATED: Ting says existing city networks accelerate FTTH builds

Noss added that these “first five towns should represent about 85,000 serviceable addresses at completion.”

Network builds ramp

The service provider reported that it continued to make progress with its network builds in Charlottesville, Virginia, and Westminster, Maryland – two of the latest towns it has slated for FTTH service.

In Charlottesville, Ting added a few thousand serviceable addresses during the fourth quarter, bringing its total to nearly 12,000 potential customers.

Noss said that it reached the 12,000 customer mark prior to launching a pre-order system that allows customers interested in the service to sign up for it in advance of it being installed in their neighborhood.

“It is worth noting that we started building the network in service and customers in Charlottesville even before we instituted our pre-order system,” Noss said. “Pre-orders now play a key role in guiding our network expansion there.”

Noss added that “pre-order is proving to be about as good as an order with over 90% conversion so far from one to the other.”

Ting is making progress in Westminster, where the city is building the fiber network. The city is nearly finished with its next wave of construction and Ting has begun lighting up the first customers in these new neighborhoods. Likewise, Centennial, Colorado, and Sandpoint, Idaho, are working on their municipal core fiber networks and Ting expects to be servicing the first customers in each of those markets later this year.

Finally, Ting connected the first FTTH customers in Holly Springs, North Carolina, beginning this year and it is rapidly converting all of the pre-orders it received into active customers.

While Noss would not reveal anything specific, he indicated that Ting is exploring other markets to launch service.

“We certainly look forward to expanding our footprint further and we have more in-bound interest that we have ever had before,” Noss said. “I expect to announce additional towns this year but I have no imminent announcements at this time.”

Blown fiber reduces disruption

As Ting looks to scale its FTTH build, the service provider has found that using blown fiber, a process that uses air to push the microfiber through a duct, is easing network installation pain.  

Noss said that Ting’s engineering staff stumbled upon blown fiber when they met with Asia Pacific service providers building out FTTH services.  

“It's something that our guys picked up on some of their travels in Asia,” Noss said. “We worked with our contractor in the Holly Springs to practice with that and the thing that probably was most positive to come out of that is that when we were on your street, getting your street ready for fiber you noticed much less than would have historically or traditionally been the case."

Noss added that “we had a very good response from the people of Holly Springs, just in terms of not upsetting them too much which often happens when people are laying conduit, laying infrastructure.”

From an overall financial perspective, Tucows reported fourth-quarter net revenue 2016 rose 9% year-over-year to $48.8 million from $44.7 million for the fourth quarter of 2015.

However, net income for the fourth quarter of 2016 decreased to $2.8 million, or 27 cents per share, from $3.1 million, or 29 cents per share, for the fourth quarter of 2015.

Net income for the fourth quarter of 2016 was negatively impacted during the quarter by one-time items totaling $1 million related to the Enom acquisition and the Ting Mobile business.