CenturyLink CFO: OTT-TV Offering Might Replace Prism TV Product

Telco might also explore a deal to resell DirecTV Now
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CenturyLink may eventually replace its managed IPTV service, Prism TV, with an over-the-top product, if it’s able to secure the rights necessary to pull together a pay TV package with the channels that are critical to consumers, company CFO Stewart Ewing said this week at the UBS Global Media and Communications conference in New York.

CenturyLink is currently trialing a skinny-bundle OTT video service ahead of an expected commercial debut of a product in early 2017 that will include the local broadcast TV networks and support platforms such as Roku.

RELATED: CenturyLink Eyes Skinny Bundles for OTT Tilt

Ewing said CenturyLink has no plans to expand Prism TV beyond its current market reach.  CenturyLink ended Q3 with 318,000 Prism TV subscribers, up 7,000 from the prior quarter and up 49,000 from the year-ago period.  It offers Prism TV in several markets, including Minneapolis/St. Paul; Seattle; La Crosse and Platteville, Wis.; Columbia and Jefferson City, Mo.; Tallahassee and central and  southwest Florida;  Las Vegas; central N.C.; Phoenix; Omaha, Neb.; Denver and Colorado Springs, Colo.; Portland;  and Salt Lake City. 

Prism TV runs on the Ericsson (formerly Microsoft) Mediaroom platform. AT&T has also been distancing itself from U-verse, which also relies on Mediaroom, as it shifts more customers to DirecTV and looks for the technology platform underpinning DirecTV Now to serve as the foundation of its video future

RELATED: AT&T Stops Making U-verse TV Boxes: Report

“Frankly, we believe that, over time, the over-the-top product might replace the Prism product,” Ewing said.

He stressed that CenturyLink will continue to sell that product, but said the company believes it can eventually offer an OTT product at a good price point with the channels that are critical to consumers.

“The Prism TV service could go away over time,” Ewing added, noting that CenturyLink is hopeful to generate “some margin” out of its coming OTT offering.

Ewing said that CenturyLink expects to be able to offer an app-powered OTT product on a broader basis while also getting a bandwidth benefit. He estimates that the OTT product will need a 10 Mbps-or-better broadband connection, versus the 25 Mbps that must be allocated for the Prism TV service.

Ewing also opened the door to a potential, future partnership with DirecTV Now, the OTT-TV service that debuted on Nov. 30.  CenturyLink already resells the traditional satellite-based DirecTV service.

CenturyLink “didn’t know that AT&T was developing [an OTT product], too,” he said. “Otherwise we would just talk to them about potentially reselling theirs, and we may very well do that.”

As for what’s behind CenturyLink’s ongoing interest in video, “what we’re really interested in driving broadband growth,” he said.

Also in that area, he said CenturyLink hopes to gain some share with CAF II funding, enabling it to pass 1.2 million homes in markets where there’s not much in the way of broadband competition.

Elsewhere, CenturyLink is working on network enhancements that will enable it to offer 40 Mbps to 90% of its homes passed, and 100 Mbps to 70% of its footprint in the coming years. 

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