WindstreamWindstream’s heavily rural local service territory gives the company an advantage over other major local exchange carriers, said Windstream CEO Tony Thomas yesterday. In combination with Windstream broadband, which has seen substantial investment, the company’s rural focus has enabled it to see stable revenue in its consumer business at a time when other telcos are seeing that business decline, Thomas told attendees at an investor conference today.

One of the advantages of operating in highly rural areas relates to cable competition. Thomas noted that Windstream faces competition from a major cable company in only 55% of its local territory. In the remainder, the company either has no cable competition or its cable competitor is a smaller operator.

Those numbers “go to the nature of the footprint in which we compete,” Thomas said.

Now that its acquisition of Earthlink has been completed, Windstream is heavily focused on mid-market business opportunities involving growth areas such as SD-WAN and unified communications as a service, but the company’s consumer business remains “complementary” according to Thomas.

Windstream Broadband
On the consumer broadband side, Windstream has been increasing speeds through Project Excel, an initiative launched several years ago that Thomas said is now about 70% completed. The company expects to finish those upgrades within a month or two, he noted.

Completion of Project Excel won’t mean an end to Windstream broadband infrastructure investment, however. Thomas pointed to G.fast as an example of a broadband speed boosting technology in which the company will continue to invest.

Windstream Residential Network Map

Windstream Consumer Footprint

“The key to [the broadband] business is continuous capital investment,” Thomas said. Companies that make such investment can “reap the benefits in terms of higher margins,” he said.

Thomas was less enthusiastic about opportunities on the video side. The company currently has a linear TV offering in four markets, which has helped the company gain share in those markets, Thomas noted, but he sees the market shifting toward more toward over-the-top video – and as that occurs, he doesn’t anticipate Windstream launching its own OTT offering.

“We’re not well equipped to differentiate,” he said. Unique content offerings are becoming increasingly important for OTT video and that approach would be a difficult one for Windstream, he noted. Like other video providers, he also noted that content costs for traditional cable programming have risen to the point where margins on video offerings are slim, which means that by downplaying video, the company can maintain relatively high margins in its consumer business. Those margins currently are in the range of 50%, Thomas said.

Thomas sees Windstream’s OTT video opportunities relating primarily to broadband speeds. Providing enough speed to support a quality video viewing experience will be Windstream’s best strategy, he said.

Thomas made his comments in a question and answer session at the Deutsche Bank Media & Telecom Conference, which was also webcast.