While Comcast (NASDAQ: CMCSA) has been taking a lot of heat for its trials of usage-based broadband pricing, medium-sized operator Suddenlink Communications has been quietly and efficiently generating revenue off its data caps.
"Overage charges have become a significant revenue stream for us," conceded Jerry Kent, outgoing chairman and CEO of St. Louis-based Suddenlink, which is in the process of being acquired by Europe's Altice.
Kent was making what he believes will be his last quarterly earnings address to investors; Altice is expected to close its $9.1 billion acquisition of Suddenlink in the fourth quarter. For the third quarter, Suddenlink posted a 3.6 percent year-over-year increase in revenue to $605.1 million, a benchmark Kent said was achieved largely on the back of residential Internet services growth.
It's unclear how much the operator's overage charges contributed to that performance, but Kent described them as here to stay. "I think allowance billing is a little bit of a hedge," he said. "But frankly, we don't want overage charges to become too big of an allowance for us. I think that could lead to some churn."
Churn was not a problem for Suddenlink in the third quarter.
The MSO became the latest cable company to report solid third-quarter subscriber performance, with the MSO losing only 8,500 basic video customers during the period. The performance left Suddenlink with 1.094 million video users.
Suddenlink also added 21,600 high-speed Internet customers in the quarter, compared to an addition of 13,600 in the year-ago period. The MSO now has more than 1.2 million broadband customers.
Suddenlink said it has increased its Internet access speeds in 92 percent of its broadband footprint, and is now providing a baseline speed of 50 Mbps. The company said about a third of its broadband customers now have access to 1 Gbps speeds.
Comcast recently expanded tests of its billing based on usage caps to include four new markets, despite continued controversy over the effort. These additional areas join a host of previously announced trial regions, including markets in Arizona, Florida and Georgia, that were already part of the trials.
- visit this Suddenlink investor relations site
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