Broadband Communities

MAR-APR 2015

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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10 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | MARCH/APRIL 2015 PROVIDER PERSPECTIVE I travel very frequently for business. Although I generally run from airport to airport, I often drive to see clients within a short range of my ofce. Over the years, I have become somewhat of an expert at identifying where to stop for gas or other necessities during my trips. I use the same criteria each time. Which gas station ofers the best access to get back on the highway? Which one looks as if it has a large convenience center with food and cofee? Which one appears to be clean and efcient, with hundreds of snack options? Oh yes, I can discern all these attributes in three seconds as I pull up the exit ramp! Te convenience store business for gas station owners has grown over the past few decades. In fact, the industry's leading trade association recently said that "convenience stores have evolved from gas stations that happen to sell food, to food retailers that happen to sell gas." Te core product is fuel, but they have diversifed into selling many high-margin products: candy, gum, soft drinks, cigarettes, lottery tickets and more. Now, convenience stores are expanding their prepared-food oferings and adding more options for their time-starved consumers. Tey are strategically working to increase the value of convenient one- stop shopping. In-store purchases now represent 30 percent of a gas stop's revenue, on average. Te business sounds an awful lot like the private cable business (except that multiple-dwelling-unit property owners do not make broadband selections on the exit ramp in three seconds). For the past several years, private cable operators have been selling their own version of fuel: high-speed Internet access in regular unleaded, super unleaded and premium unleaded speeds. Many providers are looking hard for ways to expand their oferings to include more than just a commoditized access pipe. Tey want to bring customers "into the store" to sell them candy, gum and fountain drinks. Convenience store owners saw this trend developing more than 30 years ago. Tey began to build larger shops with big cofee stations, snack areas, beverage centers and entertainment spots with DVDs and CDs. Teir sales kept growing. Gasoline was still the purpose for the stop, but the value-add happened inside the store. I fnd the PCO business eerily similar. Interestingly, both industries target the same type of customer: a young male with a modest income level who seeks convenience, access and support. So how can PCOs build their product base beyond three versions of fuel? DIVERSIFYING THE PRODUCT LINE Te private cable business has grown to become much more than good, reliable access to the Internet. Property owners expect that, but when they exit the highway to make a choice, they are starting to look inside the convenience store. No, I don't think they want PCOs to sell cigarettes or lottery tickets. However, they are looking for unique products on the convenience store shelves – products such as geek squad services for residents, bolt-on digital voice oferings for international customers and home automation plans. Soon they will begin to look for many other features, which might include packaging Internet access with gateway devices such as Roku or Chromecast. Tey may want to see aisles lined with HBO GO, Showtime Anytime or CBS All Access to make their residents' Internet connections more meaningful. Tis could soon include DISH Network's Sling TV and DIRECTV's Yaveo, which ofer sports, cartoons and variety channels. Tough some customers and property owners may simply pay at the pump and be satisfed with simple, self-installed broadband access, I believe PCOs will fnd many new ways to get subscribers into their "convenience stores" to ofer more value-added products. Tis is how PCOs can increase their revenue and relevancy in the future. Convenience stores have known for years that once you have a captive audience, you should leverage this for a more proftable transaction. Over the next few years, PCOs will begin to separate into two categories: those that simply sell gasoline with old pumps in front of small candy stands and those that leverage their gas oferings into full-blown convenience centers with a diversifed mix of entertainment and communication options. Let's "fll up the tank" with this idea! v Bryan Rader is CEO of Bandwidth Consulting LLC, which assists providers in the multifamily market. You can reach Bryan at bryanjrader@yahoo.com or at 636-536-0011. Learn more at www.bandwidthconsultingllc.com. Fuel for Thought Highway convenience stores all sell the same gas, but they compete on the extras. Private cable operators can learn a lesson from this. By Bryan Rader / Bandwidth Consulting LLC

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