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Suddenlink unveils $230 million capital program to upgrade most of its cable systems for gigabit service by 2017.

Suddenlink Joins Gigabit Club

Alan Breznick
8/12/2014
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Suddenlink Communications has become the latest US broadband provider to come down with gigabit fever.

Suddenlink Communications , the seventh-largest US cable operator, revealed plans late last week to upgrade nearly all its cable systems for 1Gbit/s service over the next three years. Speaking on the company's second-quarter earnings call Friday, Suddenlink executives said they will spend an extra $230 million in capital expenditures, starting with $35 million in the second half of this year, to boost the capabilities of their systems and clear more bandwidth.

Specifically, the "Operation GigaSpeed" initiative calls for Suddenlink to upgrade its cable modem termination systems (CMTSs), replace its DOCSIS 2.0 cable modems with 3.0 modems and higher, and reclaim more analog video bandwidth by converting the rest of its cable systems to all-digital video delivery. With these measures, MSO officials aim to offer top download speeds of 1 Gbit/s to nearly 90% of their broadband customers by 2017, and maximum speeds of 200 Mbit/s to another 8% of their subscribers.

Suddenlink chairman and CEO Jerry Kent said he expects nearly half of the planned 1Gbit/s launches to be completed by the end of next year. Most of the remainder are expected to be completed in 2016.

In addition, Suddenlink is planning to boost its upstream speeds, although officials didn't say how much. Just a couple of months ago, the MSO began rolling out new high-speed tiers in two Texas markets featuring maximum download speeds of 300 Mbit/s and maximum upload speeds of 15 Mbit/s for $65 a month. (See Two US MSOs Boost Broadband Speeds.)

Sticking to their usual practice, Suddenlink executives didn't disclose exactly where and when they will launch gigabit service. But chances are, the initial launches will take place in the same Texas markets outside Austin where the MSO has hiked speeds first before.


For more of Light Reading's coverage of gigabit launches by broadband providers, visit our broadband FTTx content channel.


On the earnings call, Kent admitted to analysts that the company is taking this latest step partly as a defensive move to stave off further forays by telco and other broadband rivals. While less than 10% of Suddenlink's homes passed are overlapped by telco wireline "overbuilds," he said, both AT&T Inc. (NYSE: T) and Google Fiber Inc. are now starting to roll out their 1Gbit/s services in or near the MSO's prime Texas markets.

But mainly, Kent said, Suddenlink is seeking to go on the offensive so that it can pick up more broadband customers. "It's fair to say we might be a bit ahead of the curve," he said. "I think our competition will not be able to be very competitive against us unless they make significant investments."

Suddenlink has carried out this type of preemptive broadband speed hike before. More than four years ago, the company started offering maximum download speeds of 107 Mbit/s, at a time when most cable operators and telcos hadn't exceeded 50 Mbit/s yet.

The Operation GigaSpeed launch comes as Suddenlink and other US cable operators are clearly shifting their emphasis away from video to broadband. Just last week, for instance, Cablevision Systems Corp. (NYSE: CVC) CEO James Dolan indicated that new broadband services offered the most promise for his company. (See Cablevision Looks to Data as Great Savior.)

Kent sounded a similar theme on the earnings call. Calling it "a mature business with somewhat declining margins," he said, "Video is not going to be our main driver going forward." Instead, he said, the company will focus more on broadband, WiFi, telephony and commercial services.

Suddenlink's second-quarter performance reflected that shift. The MSO picked up 200 residential high-speed data subscribers in the typically weak spring quarter -- an improvement over its loss of 8,700 data customers a year ago. Over the past 12 months, the company has netted 77,700 data customers, boosting its broadband customer base to 1.1 million.

In contrast, Suddenlink lost 18,700 basic video subscribers during the second quarter, although that still represented an improvement over the 23,100 it lost a year earlier. Over the past 12 months, the MSO has shed 20,200 video customers, dropping its total below 1.2 million.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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KBode
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KBode,
User Rank: Light Sabre
8/13/2014 | 9:09:50 AM
90%?
"MSO officials aim to offer top download speeds of 1 Gbit/s to nearly 90% of their broadband customers by 2017..."

I find this highly unlikely, even if this mark is three years away. That's a promise definitely worth remembering. I'd also wonder what kind of upstream speeds we'll be talking about?
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