|
Contrary to its Last Frontier image, Alaska is not just a frozen wilderness populated just by the oil business and hardscrabble gold miners. It is also a new frontier for a savvy telecommunications company making some good coin these days feeding a relatively young, fast-growing, broadband-hungry population.
Anchorage-based General Communications Inc. has adapted to its frontier environment with a mix of cable, telephone, satellite and wireless platforms to reach 180,000 customers from arctic Barrow to coastal Juneau.
GCI President and cofounder Ron Duncan says fielding service in a climate of extremes is challenging. But the resulting patchwork of isolated communities creates a fertile business market in "a communications starved state."
"Alaska certainly helps," Duncan says. "Alaska has the best PC penetration in the United States and it has a younger population that is technologically proficient."
GCI started out as a competitive long-distance carrier in 1979. After gobbling up three major Alaskan cable system operators in 1996, it began work on a $125 million undersea fiber optic link to the U.S. mainland. The link was completed in 1999, boosting GCI's broadband backbone capacity five-fold to support a statewide cable modem service rollout - including service to the North Pole. Today, four out of five homes GCI passes with its cable plant can get broadband Internet access.
While primarily focused on cable, that isn't GCI's only platform. An echo of its phone carrier roots can be found in its Anchorage-based competitive phone business. With permission granted recently to start service in Juneau and Fairbanks, the CLEC offers voice and digital subscriber line service primarily to business clients. It also offers some residential DSL, although Duncan says the high-speed Internet focus is squarely on cable modems.
"We use it primarily for business customers needing a mix of voice and data," he says of DSL. "But we will also use it in areas where the cable plant doesn't reach."
GCI also holds a statewide personal communications serviceslicense, though it has yet to fully develop its fixed wireless offerings, Duncan says. At present, it resells AT&T Wireless' cellular phone service in selected areas.
To reach its 40,000 rural customers, GCI shelled out more than $50 million to buy transponders aboard the PanAmSat Galaxy XR bird launched in January. The resulting boost in Ku- and C-band capacity allowed the company to offer voice and high-speed data service to remote areas of the state.
"You learn to depend on the satellite network," Duncan says. "Most of the world is not dependent on satellite anymore, and people give you a blank look when you start talking abut applications to manage delay on a satellite system. Then they say, 'Why use satellite?' And we say, 'Because it is a long way to Barrow.'"
While these alternate platforms are necessary Klondike adaptation, Duncan leaves no doubt the cable plant is the real gold mine. "We firmly believe cable access is the right access to own - the cable modem is the right device for broadband access," he says.
On the video side, the telecom has fired up digital video service in Fairbanks and Anchorage, with upgrades under way in Juneau. And it recently cut a deal with video-on-demand provider SeaChange International to provide interactive TV service in 1,000 hotel rooms in Anchorage.
But by far the hottest market for GCI is its high-speed cable modem service, with more than 15,000 customers racked up so far. GCI has promoted the service to its own dialup base - more than 90 percent of cable modem subscribers are former narrowband customers. Overall, cable modems are in 10 percent of all homes passed by GCI's two-way cable plant.
And this is a company that believes in the power of the bundle. The company began by packaging local and long distance voice with free dialup Internet service, and that proved popular. With that hook set, Duncan says it has been easy to upsell to other services including cable modem - all at a discount, of course.
"For us the trick has been to make the bundle work, we had to provide a compelling value to the customer in the initial bundle," Duncan says. "That first hook has to be a strong hook. When they see free Internet service, they say, 'Oh, gosh yes.'"
GCI has logged a 75 percent lower churn rate for bundled customers compared to single-service customers. About 60 percent of GCI customers have some kind of bundled service plan, and that generates about 65 percent more revenue than lone service subscribers.
With its business reaping strong results, GCI may also headed south in the coming years - geographically, that is. Duncan says the company is looking to extend its service territory outside Alaska, perhaps to tier two or tier three cities in the Western United States.
"You won't find us in San Francisco or Seattle, but you might find us in smaller cities in the West," he says.
|
