Don Detampel has one word for what he sees as a key driver for Charter Communications’ future success in the commercial-services arena — MUSH.
That’s MUSH as in Municipalities, Universities, Schools and Hospitals, a customer base with 200 employees or more that has gone largely untapped by Charter in its 25-state footprint.
For Detampel, executive vice president of technology and president of commercial services at Charter, larger businesses are just one of the keys to unlocking what he estimates is an $8.5 commercial-telecom market in the MSO’s footprint.
Charter was late to the business-services game — although it has been selling services to businesses for more than a decade, it didn’t really begin to ramp up commercial efforts until last year. But the company is making up for lost time — commercial-services revenue was up 22% in the second quarter to $161 million, and sales to small, medium and large businesses topped $544 million in 2011, about 21% above the previous year.
Most of that revenue has been gleaned through small-business customers, but Charter is beginning to move upmarket with medium-sized business with select products like SIP (session initiation protocol) trunking, which allows business to provide streaming media applications like Web conferencing and desktop sharing over an Internet-protocol network and Ethernet services.
For larger customers, Charter has been successful at gaining inroads by building custom fiber networks that connect their locations, supplemented with Ethernet and voice trunking products.
In an interview, Detampel said while Charter currently captures a high-single-digit portion of the commercial market there is ample room for growth, especially as its data speeds continue to increase and its pricing remains competitive. Charter’s slowest residential speed now is 30 Megabits per second, and with DOCSIS 3.0 deployed across the footprint, the service tops out at speeds of about 100 Mbps.
“We think that with DOCSIS 3.0 being essentially fully deployed across our footprint that the same type of speed superiority we have on the residential side translates really nicely to the commercial side,” Detampel said.
That will put Charter at a distinct advantage with some of its competition. Although AT&T is its biggest competitor and continues to dominate the commercial-services market, smaller incumbent phone companies have relied on digital subscriber line service for many business customers. Digital subscriber line, which is transported over copper wires, tops out at speeds of 3 Mbps.
“The fundamental advantage we have is speed on data,” Detampel said. “We’re competing largely on copper. The superiority of the coax plant is a real advantage. Coupled with a nice price point, I think it is huge.”
Pivotal Research Group principal and media and communications analyst Jeff Wlodarczak agreed, adding that CEO Tom Rutledge’s track record in the commercial market with former employer Cablevision Systems, and Charter’s low penetration in the market, should lead to further success.
“Being more exposed to more challenged, smaller telco operators probably helps, but even against big telcos Charter should be able to take significant share,” Wlodarczak said.
Detampel also sees huge opportunity in cellular backhaul service — basically providing connections between cell towers across a wireless carrier’s network. Charter started addressing that side of the business about three years ago, and Detampel said he believes cell backhaul represents about $3 billion of the $8.5 billion in telecom spending within Charter’s footprint.
Already, the MSO has about 3,100 cell towers either in service or under contract. “(CEO) Tom (Rutledge) doesn’t want me to slow down,” Detampel said.