An Ignoble Experiment

eBook | Dissecting Telco Customer Data Analytics

Frontier has increased the price of its standalone DSL service by $5 a month from $29.99 to $34.99. Customers who subscribe to Frontier's basic 6 Mbps Simply Broadband service will still be able to pay the $29.99 a month price, while new customers will have to pay the higher $34.99 rate.

"On May 1st, we increased the price of our Simply Broadband product from $29.99 to $34.99, which better reflects the value of that offering, given the robust capability of our network and of the comparable pricing from our competitors," said Maggie Wilderotter, chairwoman and CEO, during the company's first-quarter earnings call.

Wilderotter added that it increased the price of its FiOS TV service due to "rising annual content fees."

Broadband service overall was a major factor in Frontier's first-quarter 2014 results. During the quarter, the service provider added 37,200 new subscribers, ending the period with a total of 1.9 million customers.

The service provider has been moving to increase the speeds of its broadband offerings. According to Frontier, 74 percent of its customers can get access to a 12 Mbps connection, while 61 percent can get 20 Mbps or higher and 83 percent can get 6 Mbps connection.

By comparison, its cable competitors like Time Warner Cable (NYSE: TWC) can deliver speeds of 50, 100 Mbps and above in various parts of its serving territory. They have also been having some success with their low-end 2 Mbps $15 a month broadband package.

Interestingly, Frontier says that speed isn't a top priority for the customers it serves, the majority of whom reside in rural areas. Dan McCarthy, president and COO of Frontier, said during the earnings call that less than 20 percent of its broadband customers use a 6 Mbps connection.

"Quite frankly we've had focus groups with our customers and potential customers [...] and what they say is that they don't really know what speed they have," McCarthy said. "They just need enough and that's really what it's about — providing a good quality product that's reliable and gives them the speed that they need. It's not necessarily a 60 Mbps connection that they're really never going to use."

For more:
- see earnings transcript (sub. req.)
- Stop the Cap! has this article

Read more about: Service Provider
back to top

This week's sponsors are Neustar and Spirent.

While the market for data-driven telecom analytics is expected to grow, service providers are still in the learning phase with data analytics. FierceTelecom explores the different tools and techniques that operators can use to analyze and mine their data. Download today.

2. Windstream's business services remain flat, but IP-based data grows 3 percent to $414M

By Sean Buckley

Comment |

Windstream reported that its business service segment revenues remained flat year-over-year at $748 million, but the company is confident that a new marketing program and pricing initiatives will drive improved business revenue trends.

During the quarter, the service provider implemented new initiatives to enhance business sales and productivity and launched an expanded advertising campaign to increase brand awareness and highlight its integrated value proposition and customized service.

"In the business channel, we augmented in our marketing programs to strengthen sales and are seeing positive trends supporting our efforts to move up-market including 3 percent growth in enterprise customer locations and 8 percent growth in average revenue per business customer," said Jeff Gardner, CEO of Windstream, during the earnings call.

Due to the sales of IP-based data and next-gen services, data and integrated services revenues grew 3 percent in the first quarter of 2014 to $414 million. Meanwhile, data center and managed services revenues, which total approximately $30 million, increased 23 percent from the same period a year ago.

The company's enterprise customer locations grew 3 percent from the same period a year ago, while average revenue per business customer increased 8 percent year-over-year.

Similar to its peers CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ), the near-term growing pains of its wireless operator customers migrating off of legacy copper-based circuits and related network transport grooming drove down carrier revenue 3 percent to $162 million. However, the overall decline was partially offset by fiber to the tower revenue growth. During the quarter, Windstream deployed fiber to 95 towers, bringing the total number of towers completed to almost 4,600, with another 300 under construction.

Wholesale revenues in the first quarter were $142 million, down 7 percent from the same period a year ago primarily due to a decline in switched access revenue from lower intrastate access rates and fewer minutes of use.

And while many industry watchers are anticipating a slowdown in the fiber to the tower opportunity, Windstream says it sees existing customers purchasing more bandwidth at existing sites.

"As we look beyond 2014, we're very optimistic about our fiber-to-the-tower investments," said Tony Thomas, CFO of Windstream. "We're seeing very good demand from our wireless partners" and probably two-thirds are buying a 100 meg service, with an opportunity for the fatter pipes "to go all the way to 300 meg, so lot of revenue growth opportunities left in that fiber-to-the-tower investment."

Besides carrier and business services, Windstream reported that consumer broadband service revenues rose 2 percent year-over-year to $120 million. However, broadband subscriber additions were essentially flat, representing what Windstream was the best performance in the last six quarters. Overall consumer service revenues in the first quarter were $313 million, a decrease of 4 percent from the same period a year ago.

Gardner said that consumer channel growth was "driven by an increased focused on marketing and sales, as well as network enhancements and expansion."

He added that the telco has also built a foundation for future broadband growth thanks to the broadband stimulus funding it received to bring service to harder-to-reach rural areas.

"Broadband is now available to roughly 27,000 new homes as part of the broadband stimulus project," Gardner said. "We expect to substantially complete the stimulus buildout this year, reaching a total of 75,000 homes, which should provide additional opportunities for unit and revenue growth."

Overall first-quarter revenues were $1.5 billion in the first quarter, down 2 percent from the same period a year ago.

Shares of Windstream closed on Thursday at $9.03, down 7 cents or .77 percent, on the Nasdaq stock exchange.

For more:
- see the earnings release
- and the earnings transcript

Special report: Wireline telecom earnings in the first quarter of 2014

3. Alcatel-Lucent core revenues jump 6.9 percent to $1.8B on strong IP routing, transport sales

By Sean Buckley

Comment |

Alcatel-Lucent (NYSE: ALU) reported that its first-quarter core networking revenue rose 6.9 percent to $1.8 billion due to strong IP routing and transport equipment results.

IP routing revenues were $756 million, up 16.4 percent year-over-year from the first quarter of 2013. All regions, particularly Asia-Pacific, showed double-digit growth, as sales benefitted from the continued movement to all-IP networks.

One of the key engines of the IP routing revenue growth was its 7950 XRS IP Core router, which registered four new wins in the first quarter, including Elisa in Finland and customers in the cable sector, bringing it to a total of 24 wins to date.

In addition to the routing platform, Alcatel-Lucent's Nuage Networks software subsidiary won two contracts, including one with French cloud provider Numergy. To date, Nuage has sold its solution to five customers and it has over 30 trials, including one with NTT Communications.

Meanwhile, IP Transport reached $454 million in the first quarter of 2014, up 8.6 percent year-on-year. Within IP Transport, terrestrial optics recorded its first quarter of year-over-year growth since 2011.

Driven by 26 new customer wins, the vendor also saw gains in the WDM segment with the 1830 Photonic Service Switch (PSS), which represented 44 percent of terrestrial optical product revenues in the quarter, up 810 basis points year-on-year.

The vendor also continued to see momentum with 100G and 400G. Its 100G shipments represented 30 percent of total WDM line cards shipments in the first quarter of 2014 compared to 19 percent in the first quarter of 2013, while it is conducting 400G trials with large telcos like Telekom Austria.

Despite these gains, it reported losses in its IP Platforms and Access division. IP platform revenues decreased 6.9 percent year-on-year to $481 million in Q1 2014. Growth in key platforms, namely IMS (VoLTE), SDM (Subscriber Data Management) and Customer Experience, was more than offset by declines in legacy platforms and by the impact from the portfolio rationalization done in 2013.

Sales at the Access division were down 4.2 percent to $2.16 billion, mainly due to a 51 percent decline in managed services revenue after the company decided to exit some unprofitable contracts.

From an overall financial perspective, revenues from continuing operations were up 0.3 percent year-on-year at constant exchange rates to $4.08 billion. This excludes the Enterprise division up for sale.

Shares of Alcatel-Lucent were listed at $3.75, up 3 cents or 0.81 percent, in Friday morning trading on the New York Stock Exchange.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the first quarter of 2014

Read more about: first quarter earnings 2014
back to top

4. FCC's E-Rate program dedicates $450M to support broadband in schools, libraries

By Sean Buckley

Comment |

The FCC's E-rate program has committed $450 million to support funding for libraries and schools, which it says is six times the amount approved at this time last year by program administrator Universal Service Administrative Company (USAC).

In addition to other communications services, the USAC has allocated a total of $607 million in this first round of funding for 2014.

Among some of the projects that have been funded thus far include a statewide consortium in Maine that will provide gigabit fiber connections to 28 library sites, and in Indiana, E-rate will help support 2.5 gigabit Internet access for 21 sites near Indianapolis in the Warren Township Metropolitan School District.

E-Rate has become one of the key issues at the FCC. The regulator is in the process of reviewing how to modernize the E-rate program with a particular focus on increasing access to broadband.

Although the 18-year-old E-Rate program has connected 97 percent of U.S. libraries and schools to the Internet, many of those connections have not kept up with the times.

According to a American Library Association survey, one-quarter of libraries still have broadband speeds of 1.5 Mbps or less, and only 9 percent of libraries have speeds of 100 Mbps or greater.

FCC Commissioner Jessica Rosenworcel echoed the need for higher speed broadband connections at schools and libraries during the Chief Officers of State Libraries meeting earlier this week.

"Our records suggest that 80 percent of schools and libraries believe their broadband connections do not meet their current needs. Eighty percent," Rosenworcel said. "So let's be honest. Those needs are only going to grow. Nationwide, in nearly two-thirds of communities, libraries are the only place people can access the Internet for free. Libraries have reported to the FCC that every year they see more and more requests to use public access computers and get online."

For more:
- see the release

Read more about: Broadband, E-Rate
back to top

5. Cincinnati Bell Fioptics revenue rises 43 percent to $31 million, drives up wireline segment results

By Sean Buckley

Comment |