Windstream’s strategy for competing against cable companies will be based on a combination of Windstream broadband and other companies’ over-the-top (OTT) video offerings, said Windstream CEO Tony Thomas at an investor conference today.
Asked about Windstream’s value proposition in the 50% of its local service territory where it has a cable competitor, Thomas said, “It’s what I call relevant speeds. We typically provide at least 25 Mbps and we can also provide an over-the-top offering. We do that through DIRECTV NOW today. Come to Windstream and get 100 meg, get DIRECTV NOW and cut your bill by half or three quarters.”
In recent years, cable companies have provided strong competition for telecom carriers, particularly where the telcos have not extensively deployed fiber-to-the-home and therefore have struggled to offer speeds comparable with what cable companies can provide using DOCSIS technology. Increasingly, however, cable companies are facing strong competition on a different front as some customers cancel or scale back traditional linear video in favor of lower-cost OTT video offerings such as DIRECTV NOW, Hulu, Netflix and Amazon Prime.
It was just a week or two ago that Thomas said the bundled offering of Windstream broadband and DIRECTV NOW was not yet “significant” to Windstream, although he did say OTT is helping drive broadband adoption trends. His remarks today are not necessarily contradictory, however, as today’s comments simply indicate that he sees the OTT-plus-broadband bundle as a competitive differentiator even if it hasn’t had a major impact yet.
Windstream’s deal with AT&T on DIRECTV NOW dates back to February of this year.
Spurring Windstream Broadband Revenue
There were several other notable takeaways from Thomas’ comments about OTT video today.
One is that the company now leads with DIRECTV NOW rather than its own Kinetic linear video offering when presenting offerings to customers.
“We’re not big believers that linear TV has a lifespan,” said Thomas. If a customer wants a linear offering, however, Windstream will provide it, he said.
One thing that was clear from Thomas’ comments is that he doesn’t see Windstream developing its own OTT video offering, arguing that “there is no money” in it.
“We are more than willing to be a distribution arm for OTT video and let it drive consumption of our broadband infrastructure, which enables customers to get faster speeds from us,” he said.
He said it’s clear that a company like Windstream “should be focused on how we enable customers to get to the OTT offering they want, whether it’s Netflix, Hulu, Amazon or DIRECTV NOW” – a statement that suggests Windstream sees AT&T’s DIRECTV NOW offering as just one of multiple OTT offerings Windstream could distribute.
Thomas made his comments at the J.P. Morgan Global Technology, Media and Communications conference, which was also webcast.
