Consolidated beats back cable foes

As the nation’s largest cable company reports taking broadband market share away from incumbent telecom providers, one telco says it is stemming the tide of cable defections through a mix of pair-bonded DSL, VoIP and IPTV.

In the third quarter, Consolidated Communications’ (NASDAQ:CNSL) access line loss dropped to its lowest level since the first quarter of 2008. Total connections were down 1.7% in the third quarter – the lowest number the company has seen since cable companies launched competing offerings in its territories five quarters ago. And Consolidated executives expect that number to shrink further in the months ahead.

“Improvement should continue,” said Bob Currey, Consolidated’s CEO, on a conference call today. “We do not expect to experience a sustained spike again.”

“I don’t think the competitive market has abated,” he added. “It’s a war out there. I’m not ready to declare victory. That said, we think we’ve got the right product set; IPTV really pulls through broadband [orders]. The numbers are not big enough yet to have a party with, but we’re starting to see port-ins come back the other way from our cable competitors.”

One way Consolidated is fighting back against the cable guys is by aggressively calling customers who subscribe to its standalone DSL service and offering to add voice to the bundle. The company -- which serves parts of Illinois, Texas and Pennsylvania -- added nearly 700 VoIP lines in the third quarter, giving it a total of 8600.

Consolidated is also boosting broadband speeds and offering IPTV through a rollout of pair-bonded DSL it began in the second quarter. Having passed 5,000 homes with bonded DSL in the second quarter, it passed another 18,000 homes in the third quarter and expects to pass another 18,000 by the end of the year. It added 2100 DSL customers in the third quarter.

Consolidated reported a record high number of new IPTV subscribers in the quarter (1800, a 9% increase), thanks in part to both bonded DSL and to the quick installation enabled by WiFi-powered home networking gear from Ruckus Wireless. That system, which Consolidated was one of the first telcos to deploy, saves installation costs by reducing the need for in home wiring. And it makes upselling easier because it avoids the need for truck rolls to install additional services.

Consolidated’s overall financial results for the quarter surpassed analysts’ expectations. Revenue was down 2% from a year earlier, and net income was up 42% to $7.1 million.