Most customers that CenturyLink has gained through its gigabit fiber-to-the-premises service actually sign up for speeds they could get over copper infrastructure, said CenturyLink Executive Vice President and Chief Financial Officer Stewart Ewing at a financial conference today. Ewing made his remarks in a question-and-answer session at the J.P. Morgan Global Technology, Media and Telecom Conference in Boston, which was also webcast.
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,” Ewing said.
CenturyLink Gigabit Expansion
Ewing’s comments came the same day that CenturyLink said it would expand gigabit service to more than 115,000 U.S. business locations. The company is launching symmetrical gigabit service based on FTTP to small- and medium-size business customers in parts of Iowa, Idaho, North Carolina, Ohio and Wisconsin and expanding the availability of these services in nine of the 12 states where the company initially deployed gigabit fiber for business customers in August 2014. Those nine states are Arizona, Colorado, Florida, Minnesota, Nevada, New Mexico, Oregon, Utah and Washington.
In the same announcement CenturyLink said nearly 500,000 small and medium size businesses would gain access to the carrier’s enterprise-class IP networking as well VoIP and cloud capabilities
Prism TV Profit Picture
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, Ewing said.
“We expect to use it to generate excitement and to recapture some of the market share lost to cable companies over time,” said Ewing.
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.
Tier two companies such as CenturyLink and Frontier have struggled to deliver their own video service at a profit because they do not have the volume of business to get the most competitive rates from content providers. When asked a question about whether CenturyLink would ever be able to make a profit on its video service, Ewing said, “We believe we can make a return long term.”
He added, though, that “we are also looking at over-the-top and maybe a lower-priced, lower-number-of-channels offering, with the ability to buy premium channels.”
CenturyLink is planning a trial of that type of offering for the fourth quarter of this year, Ewing said.
