Windstream Communications third quarter results, like those at Charter Communications, do not yet support the theory that economic stress is changing basic consumer habits in the video entertainment and communications areas.
Also, Windstream might finally be approaching a time when its voice lines stop shrinking. So there might be something to the argument that if executives think "lines will keep shrinking," they will. Conversely, a belief that line losses are not inevitable might lead to efforts that in fact produce that result.
Keep in mind that both Charter and Windstream operate in more-rural areas, so it may be that "big city" and "rural" patterns are diverging.
Beyond that, neither company seems to be seeing any real slowdown in growth for broadband or video products, as some might expect in the face of the economic slowdown.
Windstream added 28,000 new high-speed internet customers in the quarter, bringing its total broadband customer base to roughly 963,000, an increase of almost 16 percent year-over-year, and Windstream executives believe there still is room for additional growth.
Windstream also added nearly 21,000 digital TV customers in the quarter. Long distance service revenue also increased five percent year-over-year.
To be sure, traditional voice lines declined by approximately 38,000, but that was an improvement in absolute lines lost of more than 8,000 units year-over-year. In total, Windstream access lines declined by 4.8 percent year-over-year. But note: Windstream thinks it might finally have turned the corner on landline losses.
Though competition has increased, Brent Whittington, EVP, thinks the company might have "turned the corner" in the third quarter, in terms of landline losses. That would be a significant development indeed.
Though some probably reflexively think telcos will keep losing voice lines forever, logic suggests the losses will stabilize at some point. Keep in mind the example of broadband access. Aggressive cable operator marketing of high-speed access went virtually unchallenged by telcos for some time. Then telcos decided they simply could not ignore getting into the business, despite some qualms about cannibalization of existing special access services.
As it turns out, the cannibalization fear was overblown. T1 lines in service increased even as cable modem and digital subscriber lines proliferated. Something along those same lines will happen once telcos decide it is time to market VoIP and IP telephony aggressively. As a byproduct, the shrinkage of voice lines will slow, then halt.
Maybe Windstream is getting close to that point, even in advance of a major technology shift to IP-based voice.
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