Monday, May 18, 2015

Get 20% in 7 Years

"Installing FTTP equipment costs about $600 per home passed and if the company also sells the customer its Prism video service, there is an additional cost of $500 to $600. The company’s business case is based on getting 20% of the video market within five to seven years," CenturyLink Executive Vice President and Chief Financial Officer Stewart Ewing said.

"He noted that cable companies have had a marketing advantage because they already have “eyeballs” watching their video offerings, where they can run ads and where in some cases, the cablecos have denied CenturyLink the ability to run ads, Ewing said."

CenturyLink and Frontier do not have the volume / size to get competitive rates from content providers. AT&T neither, which prompted the deal for DirecTV (which should be going through soon). If you believe Charter, they think they have to get bigger to make TV more profitable for them. Cord cutting has prompted some MSOs to cater to the never-had-cable crowd of millennials and the cord-cutters. [I wonder if they just haven't considered that there isn't enough spending money left in the consumer paycheck.]

Will CenturyLink ever make a profit on its video service? Ewing said, “We believe we can make a return long term.”

On broadband: "Speeds most commonly selected are in the 20 Mbps to 80 Mbps range, said Ewing. Bonding and vectoring would be needed in some cases to achieve those speeds over copper, however, and customers “will have a better experience on fiber and much less likelihood of trouble." [source] Fiber is Better for Customer Experience is what he is saying -- and probably more profitable long term factoring in customer retention, support costs and customer satisfaction.

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