Windstream has high hopes that upgrading its last mile network with VDSL2 and fiber will help turn around its broadband subscribership, but in the near-term the telco continues to battle ongoing subscriber losses.
Thomas (Source: Windstream)
Speaking to investors during the Morgan Stanley Technology, Media and Telecom Conference, CEO Tony Thomas said that turning on more customers to its higher-speed 50 and 100 Mbps offerings will put Windstream on a broadband growth path this year.
Windstream expects that most consumers will pick speeds between 10-25 Mbps, but the telco will have various options that scale to 50 and 100 Mbps for customers who want higher speeds.
"In terms of units, we did turn on premium speeds on Nov. 1 to 1 million locations so it was a little early to see benefits of that in the fourth quarter, but we're confident that in 2016 we're going to cut our broadband losses in half," Thomas said. "We're seeing positive momentum for the first two months of 2016 and as the incremental speed benefits flow into the system of Windstream we're seeing customer take those higher speeds at increasingly high rates when we present it to them."
Thomas added that the provider may even reach the higher speed premium services subscription goals it set earlier than it thought this year.
"When you look at buying a premium speed when it's an option, we're not quite yet to our goal of 30 percent, but we're very close," Thomas said. "We expect that we'll meet that goal in the mid-point of 2016, but I think we're going to achieve it earlier."
But ramping up the amount of subscribers is only one part of the broadband service equation Windstream is focused on increasing subscriber ARPU.
The telco will get increase ARPU in two ways: bring higher speeds in rural markets where broadband options are limited to either regional cable providers and satellite, and rolling out IPTV.
"Units are half the equation in the consumer SMB business and the other half is ARPU," Thomas said. "That's about selling those higher speeds and getting more revenue per customer."
What's interesting about Windstream's footprint is the diversity of competition and the markets the telco serves. The service provider's competition includes a mix of national cable operators like Comcast and Time Warner Cable as well as a set of regional cable operators, satellite and wireless players. Windstream also serves markets that are far more rural on an access line per mile basis than its nearest ILEC counterpart Consolidated Communications.
"Competition varies and it's a different kind of completion where one half is national cable operators and the other half is typically smaller cable providers in terms of the broadband provider," Thomas said. "We see that as an opportunity to invest in those markets where the competition isn't as strong, bring these premium speeds and a better product to the market than what the competitors can offer and drive higher revenue for customer."
By rolling out IPTV, the service provider has the option to offer a true triple play bundle. Windstream currently offers IPTV in three markets -- Lincoln, Neb., Lexington, Ky. and Sugarland, Texas -- and plans to launch other markets this year.
"The triple play is attractive to us because we had a market share that was relevant to us from a market share perspective for terrestrial TV, which was zero," Thomas said. "We're going from zero percent market share and we think we can work our way up to 20-25 percent and bring more broadband customers into Windstream by being able to offer that triple play."
While Windstream is focusing its attention on developing an IPTV platform, the service provider is not ignoring the growing appetite for over the top video.
Thomas said that Windstream will work "with over the top providers to make sure our customers can get a great experience by having them placing their servers closer to customers and central offices so they get an optimal streaming service."
These developments may be positive long-term goals, but the telco has some work to do before it will really see the fruits of its higher speed labors take shape as the service provider continues to bleed broadband subscribers, a trend that continued into the fourth quarter of 2015.
Windstream lost a total of 14,500 subscribers, ending the period with a total of 1.1 million customers, down from the 1.13 million broadband subscribers it had in the same period a year ago.
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