Grande Goes Gig, Busts Bundle
Even as it emulates larger ISPs by rolling out gigabit services, Grande Communications is bucking the bundling strategy on which companies such as AT&T and Comcast rely, instead building its business case on offering the best and fastest Internet service around.
The gigabit service is now available to five Texas markets -- Austin, San Marcos, Dallas, Midland and Odessa -- and will be available later this year to Grande Communications ' other Texas markets, including San Antonio, Waco, Temple and Corpus Christi, says Matt Rohre, senior vice president of operations and general manager for Grande. And while Grande does offer a service bundle, one key part of that offer is a TiVo box that lets customers stream Internet video more easily, alongside Grande's linear TV offering.
"Our business is all about being the best Internet provider around," Rohre says. "That includes quality of service and price -- all of that goes into the value we provide our customers."
Grande is owned by private equity firm TPG Capital, which acquired the ISP last year for $655 million, alongside a purchase of RCN Cable for $1.6 billion. The two sister companies are known for overbuilding and compete with both telecom and cable operators in their footprint. Grande is delivering its gigabit service over a combination of fiber and Docsis 3.1 technologies.
Rohre says Grande's competitive edge plays well into the current move away from pay-TV services -- which it also offers -- and toward the cord-cutters. The ISP offers Internet-only service options that start at $29.99 for 50-Mbit/s service, and also bundles a TiVo device with its Internet + TV offer that enables Netflix, Hulu and other streaming services to be easily accessed alongside linear TV. He calls providing easy access to content -- including what Grande doesn't own -- his company's second biggest differentiator.
"The TiVo platform is almost 70% of CPE we have deployed with our customers and it has the best search function out there, bar none," Rohre comments. "Plus, it integrates search of linear TV with search of our Video on Demand platform, with content on Netflix, Hulu and YouTube. It will go and find that content and present that content to you and with one button, you can watch that content."
A TiVo box will work with the Internet-only service, Rohre adds, for those who choose to deploy it that way. Or, combined with a basic cable package that provides local broadcast, news and sports programming -- which many people can't get off-air -- the combined services give many customers all the content they want for a more reasonable price, he adds. For $90 a month, Grande offers 200 cable channels, including the SEC sports programming many football-hungry Texans want, and 300 Mbit/s Internet service.
"The third best thing about us is we focus on providing the best customer service around," Rohre adds. "We focus on our Net Promoter Score and that drives our business and our decisions about services." (Grande doesn't release its NPS.)
Currently, more than 70% of Grande's customers subscribe to 200 Mbit/s Internet speeds or higher, and increasingly, they are opting for Internet only service. (Grande will throw in a landline with voicemail and other features for $10 extra on any service.)
The company competes against a range of other ISPs: AT&T Inc. (NYSE: T), Frontier Communications Corp. (NYSE: FTR) (on FiOS plant acquired from Verizon), Charter Communications Inc. and Suddenlink Communications , CableOne and Google Fiber Inc. (in Austin). AT&T has been most aggressive on the gigabit fiber front, Rohre says, while Charter is offering simplified bundles with 100 Mbit/s Internet.
"We are betting our customers want more than 100 Megs," he comments, adding that bandwidth demand is mostly driven by multiple video streams within a household and the growing number of connected devices as well.
One bump in the road for Grande may be a multimillion-dollar lawsuit from the Recording Industry Association of America, the trade group representing the recording industry, filed earlier this month. The RIAA is claiming Grande failed to take appropriate action against customers who repeatedly downloaded music illegally over BitTorrent, even after being notified of the infractions by the association. The suit is based on data from Rightscorp, the same company whose data was used in a successful lawsuit against Cox Communications by BMG, which won a $25 million award. Cox is appealing that verdict.
— Carol Wilson, Editor-at-Large, Light Reading