Broadband Communities

JUL 2012

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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Provider Perspective More Than 'Marginal' Improvement PCOs can no longer boost their profit margins by cutting back service or raising prices. Instead, they must become more efficient. By Bryan Rader ■ Bandwidth Consulting LLC O perators that are trying to grow profit margins are having diffi- culty using traditional methods to do so. "We used to raise our rates to drive margins," explained one private cable operator (PCO) leader recently. "I can't do that anymore because of the price war my competitor started." Another operator told me his strategy for improving margins used to include reducing site visits and keeping tech sup- port costs low. "We would switch from an everyday site visit approach to a Tuesday- and-Tursday schedule. Te expense re- duction would help us grow margins." Others reduced marketing, slashed account management staff or charged higher fees. One provider told me, "We would charge fees for everything – an upgrade fee, a service call fee, a late fee, a change fee, a cancellation fee." In today's competitive environment, in which a PCO may not be the only provider on a property, these tactics will backfire. Casually raising rates can drive customers to a competitor. Charging ex- orbitant fees can make customers angry and lead to a revolt in the leasing office. (Remember Southwest Airlines' success with its one-price strategy.) Still, maintaining solid operating margins is a key objective for every cable company. It is often the difference be- tween success and struggle, a measure- ment in which just a few percentage points can make a real difference. So what should PCOs do in today's battle- field to keep margins up? In 2011, Comcast reduced truck rolls by 2 million. How'd they do that? With better maintenance systems. Te same solution can work today for PCOs. Several companies have developed new products to better manage their headends without having to roll trucks after hours to check on digital receivers or replace modulators. For as little as $1,500 to $2,500, these new solutions monitor everything in the headend and allow operators to remotely diagnose and fix problems without sending ex- pensive overtime techs on trouble calls. Chris Hunt, vice president of mar- keting for Headend Products Corpora- tion, explains his company's new solu- tion. "We developed a product called Remote Kontrol that uses infrared tech- nology to monitor and authorize digital receivers in many headends across the country. PCOs love the ability to re- motely manage and communicate with their headend receivers." Hunt reports that some of his clients save around $4,500 a year per property in reduced truck rolls because of this new device. "It pays for itself within the first six months." Other manufacturers, in- cluding EchoStar and Blonder Tongue, have developed similar solutions. Several large cable companies found ways to reduce customer care costs with- out impacting service quality. An opera- tor told me, "We added more ways for our customers to interact with us on a real-time basis. Tey can manage their accounts online now. Tey can ask ques- About the Author 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. 8 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | JULY 2012 tions, pay bills and handle upgrades without talking to a live person. Reduced call volume has given us added savings." PCOs can experience similar results. Several call center companies, such as NorthStar and American Support, have great subscriber management solutions that allow for more interaction online. Te savings are measurable in reduced labor, and today's MDU residents often prefer managing their accounts online rather than talking to a live person. Finally, PCOs can improve operat- ing margins by clustering systems. "Tis allows an operator to gain better pricing for wholesale bandwidth, which is one of the most expensive operating costs we have," reports Sebastian Pereira of Broadband Enterprise. He explains that having cable systems in close proximity to one another can allow a PCO to get better rates from bandwidth providers. In a recent experience, Pereira's firm was able to reduce bandwidth costs for a PCO by more than 20 percent. "Much of this was due to smart clustering by the operator," he explains. Te pressure on PCOs to keep prices in check and service levels strong in- spires creative ways to improve margins. Looking at new ways to manage sys- tems, customers and clustering can re- ally help with this effort. Try it, and I bet you will see more than "marginal" improvement! Y

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