Citizens stalls IPTV, stays the course on wireless, VoIP

As part of its second quarter earning report today, Citizens Communications said it would delay a planned rollout of an IP video service until 2006 because of several factors. At the same time, the company said it was on track to begin a pilot test of wireless services as well as enterprise voice over IP later this year.

For the quarter, the company reported revenues of $531.8 million and net income of $44.6 million. Those numbers are down 1 percent and up 87 percent from the same quarter last year when the company had a big one-time charge for management transition.

Similar to other rural incumbent carriers, Citizens is experiencing a slight decline in access lines and traditional voice revenue, but has so far been able to make up most of that with revenue from DSL and other enhanced services. In the second quarter, the company’s access line count fell by 23,000 and its ILEC revenue dropped $6.7 million. Citizens added 24,500 DSL subscribers, though, to end the quarter with 267,300 high speed data users.

The delay in the IPTV trial comes in part because the company has a philosophy of not being the first carrier to test any technology, according to Maggie Wilderotter, president and CEO of Citizens.

“We have a philosophy as a company of trying to be a fast follower,” she told analysts during a conference call this morning. “We had expectations that SBC and Verizon would be out of the gate now. We don’t see any need to be out front on an IPTV service offering.”

Part of the hesitation also comes from the unexpected success of the company’s Frontier Connections offering. Launched in April, the service blends Citizens local and local distance voice with a DSL offering and EchoStar’s DISH Network service. Since it’s launch, the company has sold more than 15,500 bundles, with 70% of those being new DISH customers.

Citizens also is moving forward with plans to launch a pilot wireless trial this year. Additionally, Wilderotter said the company would launch a commercial voice over IP product for its business users in the fourth quarter. Currently, Citizens has a commercial VoIP trial running in New York and expects to roll out a new set of business service bundles later this year.

“Our decision criteria [on new services] will always be about profitability, partnerships and spending wisely,” Wilderotter said.