Broadband Communities

JAN-FEB 2013

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 A Virgin Market for PCOs Too many private cable operators have written of low-income housing. By Bryan Rader ■ Bandwidth Consulting LLC R ecently, the FCC and other agencies have pushed to drive broadband adoption rates in low- and moderate-income housing. Some experts believe that more than 35 million households in the United States do not have true high-speed broadband and that many of those households qualify as low income. Te same is true for cable TV: About 23 percent of households with annual incomes lower than $35,000 do not subscribe to cable, compared with 6 percent for those with more than $75,000. Isn't it a shame that so many families who want services can't aford them? Some cable companies, such as Comcast and Time Warner, have launched eforts to ofer products to underprivileged customers. In most cases, these products include low-speed broadband or a small number of cable channels for around $10 a month. To qualify, a family must have a kid in a free school lunch program, not have been a customer in the past 90 days, not have an overdue account, not have a kid named Joe, not be a Yankees fan and so forth. A startlingly small number of people who qualify actually participate in these programs. Everybody wants to target high-end customers. It's a love fest for the $150-amonth, triple-play, buy-all-you-ofer type of subscriber. Of course, competition at that level is ferce. Private cable operators (PCOs) aren't any diferent. Tey salivate over half-million-dollar condo high-rises on ritzy streets but skip right over lowincome communities. To be fair, many operators spent hundreds of thousands of dollars on new cable systems in low-income areas only to sufer from theft and vandalism. Others didn't feel comfortable sending techs after dark and called those systems 26 Learn about new opportunities for private cable operators at the BroadBand Communities Summit, April 16–18. "daylight properties." When the numbers didn't add up, many PCOs went back to A- and B-grade communities. I believe there are ways to target the low-income housing market today in a proftable, meaningful and respectful way. Technology innovation and a strong focus on broadband may make this easier now than in the past. Te market is huge! Tere are more than 1.3 million public housing units and more than 4.3 million subsidized units (Section 8 or other HUD-subsidized units), and another 3 to 5 million units are just one notch above this level. Tat's almost 10 million units in total. Doesn't anyone want to serve them? Consider how the wireless phone companies analyzed this opportunity. AT&T and Verizon didn't think giving a $500 phone to a low-income customer made sense, so they skipped right over this segment of the market. Virgin Mobile, a reseller of Sprint wireless service, saw an opportunity. It created a hip brand with a hip ad campaign and sold prepaid wireless services using a low-cost phone. It signed up Best Buy, Radio Shack, Wal-Mart and others to reach this audience. Today, Virgin Mobile has more than 6 million customers. Too bad for AT&T. Cricket Wireless also ofered a pre- paid plan on a pay-as-you-go basis and signed up 7 million customers. Richard Branson, founder of Virgin, explained his success by saying, "I think the key is that our consumers need fexibility, something we were able to provide them." Well, PCOs can be fexible, too. Te "afordable market" is very prevalent in the MDU sector. Increasingly, these properties are managed by professional organizations that control theft, vandalism and crime. Tey also care about their residents, and they are looking for TV and Internet solutions that ft these customers' needs. PCOs should revisit these markets. Consider developing afordable products with good broadband speeds and basic broadcast and light cable programming. To minimize risk, look for ways to ofer prepaid plans or pay-as-you-go features with very little or no equipment required. Look at new delivery options, such as wireless, that require little hardware. In addition, consider afordable bulkrate plans that property owners might need to be competitive in these markets. Tese can be implemented without expensive set-top boxes or expensive modems at customer premises. Tis is "virgin" territory for PCOs, and we can all learn a thing or two from such companies as Virgin Mobile. v 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 636536-0011. Learn more at www.bandwidthconsultingllc.com. | BROADBAND COMMUNITIES | www.broadbandcommunities.com | January/February 2013

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