Month: March 2009

Next steps in growth

On our new FlexLink & Fusion product platform, we have completed build out of 19 COs in this LATA, and number twenty, Sacramento, is still pending some backhaul to this LATA.

Sales are going well, both in enterprise and residential. This is particularly interesting considering that a key product for both is voice. We are unable to make quite a number of business sales because they want an integrated voice and data product, and we are unable to make a lot of residential sales because they want POTS voice.

Notable also is that batch hot cut (where the existing AT&T voice pair is moved from them to us, meaning the household/office wiring doesn’t have to be re-done) and LNP (local number port) have the potential to really ease installation of residential products, bringing us true self-install for residential. We’re doing our first attempt at BHC now for a customer in Berkeley.

In total, we are serving over 200 total accounts on the platform today, and that’s growing quickly, even absent significant promotion for residential (which we can really get into once we have BHC/LNP as noted above.)

We’ve been paused on building new COs for a couple months now, and it’s time to get that pipeline moving again. Because it takes in total almost six months from order to turn-up, making those decisions now is key.

In the ideal, if we can continue to prove the business model, I’d like to see us turning up an average of two new COs per month.

So based upon this goal, we have been studying next CO opportunities. The decisions are based upon a number of data points. These include current coverage (filling in holes and creating continuous overlays), brand awareness, existing current DSL user counts, density and distances, RT vs. CO served footprint, estimation of the size of the symmetric & voice business market, drive time for installation, and plain guesswork.

This list of six CO choices allows us to get the ball rolling, and with the one per two week goal, it buys us three months before we must decide on what’s next after these.

So, first up:

Cotati, which has long loops and not a ton of residential opportunity, but it completes our Sonoma County 101 corridor coverage, and provides some great opportunity for T1 and other long reach products in the Northern business parks of Petaluma.

Sonoma and Napa. Both have reasonable residential loop lengths, are close to home, and we have decent brand recognition (in Sonoma at least.) Both have some great opportunities for T1 and voice for wineries, and I believe that this along with the residential opportunity will make them cash flow.

These three will be built first, and there is some synergy with the driving for build-out and for installations. Stop at Sonoma on the way to Napa, etc.

Next up are San Rafael and Oakland. San Rafael has two COs, but the main downtown one is the one we can more clearly justify build-out in. It’s got good residential and business penetration, and it’s on the 101, so there’s some benefits for installers and build-out.

Oakland has four COs, but we’ll be building the Northern two of them. These serve far more existing residential users, and the downtown business district. These two also directly connect to Berkeley and that to Albany, so it creates a large single coverage block for us. That’s
good for installations and sales, keeping drive time down.

These six COs will be kicked off this week, and we will begin planning for the hardware and build-out.

After these, the choices become a bit more difficult. For example, Mountain View is the next logical one based upon our current DSL users, but it’s a long drive and we don’t have a lot of brand awareness. San Jose is a good business customer opportunity, but there are four COs
meaning high build-out costs, and it’s got a lot of competitive options we’d have to face. We’ll cross these bridges when we come to them, in a couple months, with more information about the profitability of our current COs to inform us.

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