Question-and-Answer Session
(Operator Instructions). Our first question will come from the line of Michael Pace - J.P. Morgan.
Michael Pace - J.P. Morgan
I guess, these are mostly for John; John, I apologize; it was tough keeping up with you there and writing everything down. As far as the DBS competition in the quarter goes, you may have said this, but was it really a pick up in churn that you saw, all those guys taking away customers, or was it certain of your market segments that you weren’t getting on the gross sets, such as college students, or such, and then I have a followup to that.
John G. Pascarelli
We actually saw the both sides, but then the college students did not come in the historical levels. So, we did see a decrease in connect levels in the quarter over prior periods, but we also saw an acceleration of voluntary disconnects, which we believe, was associated with the satellite complication.
Michael Pace - J.P. Morgan
The next question; another MSO recently raised CapEx to do some investments in bandwidth, and I guess, you went through HD channels and DOCSIS 3.0, but can you remind us where you are; you’re offering HD to the majority of or 90% plus of your customers base, and if and when you ultimately decide to increase the offering to 75 or 100 channels, is that going to require more capital spending; and then on DOCSIS 3.0, can you get that 75% plus, and what I am really getting at is, is there any reason why CapEx would need to go back to 2008 levels in order to get you where you want to get?
John G. Pascarelli
Mike, 85% of our net customer base right now is served off what we call One Network, and what we’ve done is we’ve consolidated all of the head-ends into two different facilities, but really they could be served out of one; the second one is actually there for redundancy, but that has allowed us to go in to add HD channels very cost effectively to these markets. That’s where most of the cost is, it is really at the head end, and we’re in pretty good spot to be able to cost effectively continue to increase it. We’ve made a decision right now and that is to stay focused on providing customers with HD channels that people are watching. Right now with 40 to 50 channels, it’s 90% of the viewership; that’s a significant percentage of the total. Now, that doesn’t mean we don’t want to go beyond there and we want to have it, but we want to manage that flow so that we don’t go putting our networks that in the long run, once we get them there, we can’t get them off. So, we’re just trying to be disciplined in our approach and adding channels. As far as DOCSIS 3.0, we’ve got head-end capabilities right now for 50% of the footprint; we’re not on the same competitive pressure as some of the big guys. Right now, we’re going to be going on with this products, and we really decide a couple of small pieces in the footprint, and we don’t have any competitors out there with anything close to it. For us right now, waiting a little hopefully will provide us benefits and savings on capital costs as these costs continue; we’ll be able to learn more from the experience, we’re watching it from the industry; so we’re not rushing. If we had competitive pressure, we could do it very quickly. Even the DOCSIS 3.0, we don’t see it as a huge capital hit as we expand. For us, we like the position we’re in right now.
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