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SureWest to Make Its Mark With Mediaroom

Carol Wilson
LR Cable News Analysis
Carol Wilson, Editor-at-large
11/3/2009

SureWest Communications (Nasdaq: SURW), the California independent telco that boldly offered IPTV via fiber to the home as a competitive carrier in Sacramento back in 2005, is now marketing a new IPTV service over both its fiber network and its copper network, using the Microsoft Mediaroom IPTV platform. (See SureWest Deploying Microsoft Mediaroom.) And the carrier is promising to be as aggressive selling this new service as it has been pushing fiber.

The change of IPTV provider and SureWest's continued investment in its copper network is enabling SureWest to reach an additional 25,000 new homes in its local telephone footprint with a video product, in addition to marketing what SureWest believes is a substantially better video product to 21,500 of its local telephone customers now served by fiber and more than 135,000 homes that its fiber network passes in the greater Sacramento area.(See SureWest Bonds DSL.)

"The key is we are seeking growth on our network without having to sink too much capital into it," said Pete Drozdoff, vice president of marketing. "It's going to cost us 10 percent of what it would normally cost to pass a fiber home to do this Mediaroom build over the copper network." SureWest is spending $3 million to bring video to the additional 25,000 homes, half of which will get the new service starting next month. The other half will get IPTV in the second quarter of 2010, the company announced last week, in its third-quarter earnings report. (See SureWest Has 'Solid Quarter'.) SureWest has already stepped up its marketing efforts this year, increasing broadband revenues by 11 percent in the third quarter, in part to combat the weak Northern California economy by capturing more of its competitors' broadband customers, SureWest president and CEO Steve Oldham said in the third-quarter earnings call.

By just as importantly, Drozdoff said, SureWest is now in position to better protect its legacy customers.

"Right now there are copper customers who have Internet and voice from us, but can't get video -- which makes them more subject to video churn," Drozdoff said. "By being able to sell them a video service, we not only don't lose them but gain additional revenues."

SureWest will be pulling out the stops in its traditional ways of selling service -- billing inserts, billboards, direct mail, and radio advertising -- and stressing the whole-home DVR function, picture-in-picture, customizable electronic program guide, and fast channel change of Microsoft Mediaroom, Drozdoff said.

"The guns are loaded, and all guns will be firing," Drozdoff said. "We have to make a splash -- we have to get out there and let people know that this is sufficiently different, for them to take a look at it."

That's particularly true in areas where SureWest has already been selling its original video over fiber service, using Minerva middleware. "We will have a marketing message that highlights the differences in the service," he said.

SureWest is focused initially on new customers but will switch existing video customers over to the new platform, if they call in and request the new service, Drozdoff says. The company doesn't have the resources to do a flash-cut of existing customers while also adding new one, he said.

Realizing that most customers won't be familiar with Microsoft Mediaroom, SureWest is setting up a microsite that customers can visit to get better acquainted with its advantages, said Haavard Sterri, executive director of marketing.

— Carol Wilson, Chief Editor, Events, Light Reading

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