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Cincinnati Bell Stakes Future on Gigabit Access

September 16, 2014

Cincinnati Bell Stakes Future on Gigabit Access

By Gary Kim
Contributing Editor

Telcos often have to make hard decisions. If asked what product line drives consumer segment revenue and revenue growth for a service provider in North America, what would you offer as a response?

Mobility? Likely.

But Internet access and video services would likely contend for the spur of the moment answer.

If asked what products drive revenue growth in the business customer segment, the answers might be more varied, but likely would include Internet access or data center services.

But independent, smaller and rural telcos often do not have easy choices, even when they agree on where revenue growth lies.

The reason is that mobility has become a scale business, hard to operate at a purely local level, even in hard-to-reach rural areas where bigger carriers will pay for roaming rights. Most small telcos will tell you they lose money offering video services, as well, even when they already have upgraded access facilities.

Consider Cincinnati Bell (News - Alert). The company sold its mobile business, and much of its data hosting business, to reinvest in its core fixed network facilities.

CEO Ted Torbeck said Cincinnati Bell already has about 38 percent of the city covered by fiber-to-home facilities and expects to reach 70 percent to 80 percent over a couple of years.

And Cincinnati Bell is building a gigabit access network

So the strategy, though tough, appears to be, “exit mobile and much of data hosting to redeploy capital into the core fixed access network.”

Cincinnati Bell therefore is betting its future on revenues driven by the fiber-to-home network, not mobility, and likely not by cloud computing centered services.

At least so far, Fioptics adoption has been about 20 percent in newly-built areas, and the company hopes to achieve penetration of 45 percent after about 12 months of marketing.

That would be a reasonable expectation based on Verizon (News - Alert) Communications experience with its own fiber-to-home sales.

In a real sense, by selling its mobile assets and most of its data hosting business, Cincinnati Bell is staking its entire future on the value and revenue to be driven by its gigabit access network.

In a perfect world perhaps that choice would not be necessary. It isn’t a perfect world.

Edited by Stefania Viscusi
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