Despite a generally disappointing earnings report, CenturyLink is still moving forward on the gigabit and IPTV fronts and is now developing a complementary OTT video service to go along with them.
CenturyLink Inc. (NYSE: CTL), the third-largest US telco by subscribers, revealed in its second-quarter earnings call late Wednesday that it will keep expanding its gigabit footprint as it continues to enjoy promising results in markets where it has deployed GPON over new fiber-to-the-premises (FTTP) networks. Plans call for the company, which now offers 1-Gig speeds to 600,000 homes and 475,000 businesses in 16 markets, to extend its reach to another 100,000 households and 25,000 businesses by year-end, with more sites on the roadmap for 2016.
"Specifically, in our GPON markets, the take rates continue to be strong and are exceeding our expectations," said CenturyLink President and CEO Glen Post. He noted that GPON "is such a great driver of demand and penetration" for the company.
In the 16 markets where it has already launched 1-Gig service, CenturyLink is competing against a variety of cable and other broadband providers, including Cox Communications Inc. in Omaha, Phoenix and Las Vegas, Comcast Corp. (Nasdaq: CMCSA, CMCSK) in Denver, Seattle and Portland, Ore. and Bright House Networks in Orlando. The 1-Gig launches have already fueled broadband speed wars in several of these markets, including Omaha; Phoenix; Las Vegas; Portland, Ore.; and Seattle. (See Seattle Warms Up for a Gig and Cox Goes Gaga Over Gigabit.)
Besides offering gigabit services over GPON, CenturyLink is now testing undisclosed technologies that can enable downstream speeds as high as 200 Mbit/s over its legacy copper networks. While the trial is still in the early stages, Post said, "It is showing good promise."
On the IPTV front, CenturyLink extended its Prism TV offering to 175,000 addressable homes in three major markets in the spring quarter, turning up service in Minneapolis, Portland and Salt Lake City. With Prism TV service now available to more than 2.6 million households, the telco intends to expand its reach by another 250,000 homes in the second half of the year. CenturyLink closed June with 258,000 IPTV subscribers, up 8,400 subs since the end of March.
In addition, Post said CenturyLink is developing an OTT service "that will provide a robust competitive video offering for customers both within and outside our Prism TV market footprint." The company, which has been talking up an OTT offering for months, did not disclose any further details.
CenturyLink revealed these moves in reporting lower earnings results than projected or expected for the second quarter. The company recorded earnings of $143 million, or 26 cents a share, on operating revenues of $4.42 billion. Both sets of numbers fell from the year-earlier period. CenturyLink also lowered its financial projections for the full year, primarily blaming sagging wholesale revenue and higher employee costs.
— Alan Breznick, Cable/Video Practice Leader, Light Reading