MCV Broadband CEO and president Craig Thompson probably had the easiest business case for his new Metaswitch Networks softswitch of any service provider you ever heard of. In fact, Thompson says his decision to buy a softswitch was “the easiest decision I’ve made in 30 years.” Eight month payback.
MCV Broadband, located on Guam, is a cable company that has managed to grab about 25 percent market share in 2.5 years, and was leasing switch services from another provider.
With that kind of volume, MCV Broadband was able to pay for the purchase “in eight months,” says Thompson. “That was a no-brainer.”
But MCV Broadband’s decision was not limited solely to the basic economics of buying its own switch, instead of leasing switch services. Guam is a long ways from technical support staffs.
“We are out in the middle of nowhere,” says Thompson. When the company looked at technical support capabilities, “lots of competitors fell away,” he says. “We can’t afford to rely on support on the mainland,” he says. As Guam lies on the other side of the international dateline, even contacting support staff is an issue.
Because of the time differential, support during times of day when most MCV Broadband people might need to contact somebody proved to be crucial. In most cases, in-region support “was weak,” he says.
“In-region support took it down to Metaswitch Networks and Alcatel,” he says. But “a major deciding point for us was that Alcatel doesn’t have a switch sized for us; it is too large for our needs.”
That essentially only left one company left standing, he says, as Metaswitch has support in Australia, which is in the same time zone. “I get their full crew whenever I need them,” Thompson says. “That’s a a big deal for us.”
The big upside is the business market, Thompson says. MCV Broadband plans to fire up business markets sales effort about mid-year in 2010. Right now the company is “number three in business segment,” in a highly-competitive market with four wireless carriers, an incumbent telco and one competitive local exchange carrier.
On Guam, the company will face a business services market that is bifurcated. As you would expect, there are many small business requiring five to 20 phone lines, including doctors, attorneys and small business.
On the other end are hotel and resort customers, many of which are larger enterprise type customers, as well as substantial military customers. Guam now has a population of 155,000, but will see a military buildup that will boost residents to 200,000 over the next five years as U.S. marines now based on Okinawa move to Guam.
In the hospitality segment, MCV Broadband believes it can build on the relationships it already has to supply video and Internet access services.
As is the case in many other markets, a company’s perspective on growth potential from voice services depends on where it sits in the market. Though fixed-line telcos basically find themselves facing market share losses, most cable operators see gains. For that reason, Thompson thinks his firm will see “high growth” in telephony services.
One reason for the optimism is that the company was able to grab 25 percent consumer voice share in just two and a half years.