Telcos Mount a Broadband Comeback
For the largest US telcos, the second quarter of 2018 marked a quietly positive broadband story, albeit for different reasons.
Two of those companies -- AT&T Inc. (NYSE: T) and Windstream Communications Inc. (Nasdaq: WIN) -- actually posted net gains in broadband customers, reversing the trend of net losses -- while the other two, CenturyLink Inc. (NYSE: CTL) and Verizon Communications Inc. (NYSE: VZ), at least had a better story to tell. (See Verizon Views 5G as Broadband Bonanza , AT&T Fiber Fuels More Broadband Gains CenturyLink: Faster Integration Driving Brighter Future and Windstream Claims US SD-WAN Leadership.)
AT&T, the largest telco broadband provider and third in the country behind Comcast and Charter, is using fiber to bulk up its broadband numbers. The company netted 76,000 IP broadband subscribers, but more importantly can now market fiber-to-the-home to more than 9 million households with 14 million coming online by mid-2019. That's an indication that the net positives in customer count aren't necessarily a one-quarter phenomenon.
In Windstream's case, the company added a modest 2,300 broadband customers, based on both increasing sales (14%) and decreasing churn. The number is more impressive than it looks, however, because the second quarter is traditionally a very slow period. Windstream is also now projecting a net add for all of 2018.
CEO Tony Thomas stressed the investments Windstream is making with its Kinetic Internet product to enhance speeds, targeting 50 Mbit/s services for a customer base that may not have those options from cable competitors.
"We upgraded our target to 40% of our broadband subscriber base moving to faster [50-Meg] speeds," Thomas told industry analysts on the earnings call, where he also promised more news on the higher-speed Internet services later in the year. "In fact on Monday we had the largest sales day in the history of Windstream."
CenturyLink posted a net loss of about 80,000 broadband subscribers in the quarter, according to CFO Sunit Patel, but that number included 134,000 subscribers getting service at less than 20 Mbit/s. The company adding 54,000 customers at higher speeds, including 22,000 customers at speeds of 100 Mbit/s.
What was perhaps of more interest to industry analysts, however, is CenturyLink's claim that its "Price for Life" offering is not only producing a higher average revenue per user but also improving the customer experience -- as measured by a decrease in calls to the service center -- for those customers. That plus planned investments to increase speeds to more customers could turn the tide of broadband losses.
Verizon also posted net broadband losses, adding 43,000 FiOS internet subscribers but losing 53,000 DSL customers in the quarter. The company now has 32,000 fewer broadband subscribers than it had a year ago.
With 5G looming, however, Verizon is continuing to invest in FiOS buildouts and will use both that fiber platform and 5G services themselves to bulk up its broadband business.
So for what is usually a sleepy quarter in the broadband world, it wasn't at all bad for the largest US telcos, but whether their network investments and pricing strategies continue to pay off is yet to be seen.
— Carol Wilson, Editor-at-Large, Light Reading
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