CMA Communications is like every other cable operator that's watching subscribers scamper away like wabbits chased by Elmer Fudd. Unlike many other cable operators, however, CMA has a unique way of combating the losses: Let the subs run--for now--because they'll come back.
To do this, the Dallas-based company is concentrating on a new set of lucrative commercial services that it's rolling out to a new base of customers throughout its rural systems.
"Our video business has struggled and continues to struggle, with programming costs as they are and the competitiveness of the satellite providers," said Steve Sizemore, director of advanced services.
While CMA, with the bulk of its subscribers in rural-based clusters, has more satellite competition than wireline, it has seen some incursions from AT&T and well. All told, Sizemore said, subscribers are chasing the best video deal and that's not always cable so commercial services have to make up the difference. CMA's play now, he said, is to emphasize its broadband prowess, especially as it rolls out DOCSIS 3.0 for residential and commercial customers.
"I don't think the video product is dead for us; I just think it's a rough time and we need to work through it and build these networks and be ready for that next video opportunity that comes along," he said.
CMA had previously dabbled in commercial services but never really put forth a concerted effort. Even when it played in the commercial space, it took a different tack than its cable brethren by providing a "more enterprise-like service where we're already providing fiber directly to large businesses or for small schools," he said.
The traditional small office-home office (SOHO) and small-medium business (SMB) customers, while lucrative and potentially low hanging fruit throughout CMA's footprint, weren't targeted because the MSO lacked the tools weren't to make it happen. Now, a combination of new voice and data tools combined with cheaper fiber is letting CMA push out a potent broadband play for commercial customers.
Sizemore said he likes his prospects because the telcos have either ignored the more rural SMBs or charged an arm, leg and two fingers from the other hand to get their services.
"We can go in and offer a much lower cost circuit and show we have the capacity to manage that circuit and monitor that circuit not reactively but proactively," Sizemore said.
To that end, the company has expanded its relationship with Integrated Broadband Services (IBBS) using its suite of service activation and service assurance services for back-office support.
CMA is adopting a dual-pronged approach: fiber-to-the-enterprise when possible and high-speed broadband via HFC and DOCSIS 3.0 when not. For the SMBs the play is HFC and DOCSIS 3.0 using newly upgraded networks and WDM. The focus begins in the back office and spreads to the end business customer; and it's all commercial.
"Right now we don't even have them separated; they're all in one database so it's very difficult to go through and say how many customers are actually enterprise or commercial today," he said.
Suffice it to say, not many--although those that are on board belie the MSO's size and stature.
"We have a major university that we provide switched base service to all of the students in the student housing. It's just a one-off account," he said. "We have casinos in Laughlin, Nev. (and) we've recently extended our fiber down there to be able to extend point-to-point Ethernet all the way back to Las Vegas for their parent companies."
Those, of course, are enterprise customers. Now, he said, "we believe we have a lot of potential opportunity to show the value of these new services" to SMBs and SOHOs.
If money must be spent--and in today's competitive space it must be--then it should be spent in a place where the rewards will be highest, Sizemore said.
"Several years ago we looked at the migration to digital and really believed this is going to be an IP world," he said.
Rather than digitize random headends located around four rural states, CMA opted to "let the video bleeding continue and concentrate on what we know is hot right now--Internet and phone--and build out our networks, start working with other cable operators to tie in with them and have some synergies ... and compete collectively against the incumbent telcos," he said.
It's not as if CMA is conceding its video subscribers to the competition or over-the-top services; quite the contrary. "These video products will come of age for us," he predicted. "We'll be able to take advantage of some new technologies at the right prices and hopefully this programming (cost) issue will somehow get resolved."
In the meantime, look out telcos, here comes CMA, either as a primary full service broadband supplier or as the redundant source that "someday will become the primary," Sizemore said.
Whatever the case, it beats chasing video subscribers in a cost-conscious economy.