Fibrant subscriber numbers down due to holidays, disconnections

Published 12:00 am Thursday, January 17, 2013

SALISBURY — Fibrant had a net gain of just nine subscribers last month, but city officials say they are not worried.
The low number was due in part to dropping customers who weren’t paying their bill. The city’s new high-speed broadband service added 66 subscribers in December but disconnected 57 accounts for nonpayment, according to Assistant City Manager John Sofley.
That represents a nonpayment rate of less than 3 percent, Sofley said. 
Fibrant’s Internet and phone services had a net loss of customers in December. Internet service went down by nine customers from 1,847 subscribers in November to 1,838 in December. Phone service went down by three from 1,275 in November to 1,272 last month.
Video service had an overall gain of 11 customers.
“I’m not concerned,” Mayor Pro Tem Maggie Blackwell said. “Industry-wide, December is a very slow month for sign-ups.”
City staff presented a Fibrant update at Tuesday’s City Council meeting. The small gain in overall customers and unusual drop in Internet and phone subscribers were not pointed out or discussed.
Some council members on Wednesday said they weren’t aware of the slowdown but it made sense, considering the holidays and disconnections.
“The goal is to have it increase every time we look at the numbers,” Councilman Brian Miller said Wednesday. “But I know in business, sometimes it doesn’t always execute that well.”
While Fibrant may experience “two steps forward, one step back,” the new utility is moving in the right direction overall, Miller said.
Mayor Paul Woodson said although sign-ups slowed over the holidays, about 40 people have subscribed during the first two weeks of January.
“We are much more aggressive this month with billboards and advertising,” Woodson said.
City Manager Doug Paris said Fibrant should achieve a 19-percent market share sometime in February. The utility currently has 2,218 customers and needs 2,230 to capture 19 percent of the market, Paris said.
Fibrant competes with private companies like Time Warner Cable and AT&T to sell Internet, cable TV and phone services inside the Salisbury city limits.
Woodson said he believes Fibrant can break even by the end of 2014 and turn a profit beginning in 2016.
While Fibrant has fallen behind original revenue and subscriber projections, the city has switched gears from quickly signing up large numbers of subscribers to a new strategy of cutting costs.
New General Manager Mike Jury said he has identified nearly $2 million in cuts over two years.
Because of the savings, Woodson said, Fibrant can break even with fewer customers than once thought required. Originally, Fibrant aimed to have 4,400 customers by 2014, four years after launch.
The city has been using internal loans from other funds to cover Fibrant’s operating costs. Sofley said Tuesday he was happy to report that halfway through the fiscal year, Fibrant has used 19 percent of the internal loan approved for 2012-2013.
Fibrant continues to generate enough money to cover the city’s $3 million annual debt service payment, but until the utility brings in enough to cover operating costs, the fiber-to-the-home network will borrow an estimated $7.5 million from other city funds.
Fibrant’s reliability improved in December, Sofley said, reaching 99.9 percent. The network had three major outages earlier in 2012, and Jury put the network on “lockdown” for the holidays, meaning no equipment changes to avoid more outages.
Fibrant continues to test new equipment and could replace existing equipment the city considers unreliable, Woodson said.
After completing the tests, Paris said, Jury plans to recommend to City Council whether to change vendors. The city currently uses Zhone equipment but is testing Calix equipment.
Fibrant billed $311,962 in December, up from $306,888 in November and $305,105 in October. The November billing was less then normal because the city issued a credit for the system-wide outage in October, Sofley said.
Sofley also reported on Tuesday that Fibrant customers typically buy more services than customers of Time Warner Cable and Verizon. Blackwell pointed out that Fibrant is not charging customers more, but customers are investing in more services from Fibrant than from competitors.
Most Fibrant customers take at least two services, Sofley said.

Contact reporter Emily Ford at 704-797-4264.