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Analyst: CenturyLink Needs Fiber Upgrades to Seriously Compete

Wall Street analysts appear to have finally started realizing that second tier telcos like Frontier, CenturyLink and Windstream aren't going to be particularly competitive if they aren't willing to upgrade their aging infrastructure to fiber. According to a new research note by Wells Fargo analyst Jennifer Fritzsche, CenturyLink needs to either begin upgrading its last mile network to fiber more seriously, or be prepared to make a hard push into the backhaul and special access market to fees those ISPs that actually are.

"With the changing competitive landscape, CTL is somewhat caught between a rock and a hard place," Fritzsche said. "It either needs to act ahead of this competition with its own fiber push, or be forced to enable it in some ways if special access economics do change and it decides that its copper network is good enough in the areas where it does not yet have fiber."

While CenturyLink says the company currently offers speeds of 40 Mbps or higher to 30% of its footprint, the vast majority of the company's customers currently don't even meet the FCC's standard definition of broadband (25 Mbps). That problem is only going to accelerate as cable companies deploy gigabit-capable DOCSIS 3.1 upgrades, and companies like CenturyLink are still offering 2002-era DSL speeds and pricing.

As such, "we would expect CenturyLink to take the offensive here and be proactive in pushing out fiber deeper into its network in an attempt to offer its customers faster speeds," noted the Wells Fargo analyst.

The problem is that while that would make sense in a healthy market, CenturyLink, like Frontier and Windstream, operates in a lot of markets where there's limited competition, and therefore no serious incentive to upgrade many of these older DSL customers.

Most recommended from 32 comments


joshhoyle
join:2016-05-05
Vancouver, WA

9 recommendations

joshhoyle

Member

They are the absolute worst.

I have the 20/1 and have Netflix always buffers. Webex presentations and video calls for work are crap despite being the only one on my network, connections drop constantly.

To top that off, if you need anything besides buying something from them, you better call between business hours M-F and even then you get some jackass that doesn't know how or doesn't care to do their job. They recently started charging fees to pay be credit/debit card online, if something is wrong (my error or theirs) they happily charge a $50 NSF fee, and when your service gets suspended they also tack on a $25 reconnect fee to flip the switch. Even though they changed their fees they won't let me out of my contract. Luckily I have a month and half left on my contract and a complaint out to the state AG.

Never thought I'd be excited to go back to Comcast.
Dsltechphx
join:2016-04-18

6 recommendations

Dsltechphx

Member

Centurylink

Centutylink has no plans to get fiber rolling. They keep telling us about lashing fiber to existing aerial runs but nothing has happened. Not sure what Centurylink's plans are but it's not to stay competitive in the market. If they plan on driving the company into the ground, they are doing it at record speed.

telcodad
MVM
join:2011-09-16
Lincroft, NJ

5 recommendations

telcodad

MVM

They're dead last on Netflix's U.S. large ISP Speed Index

From: »Netflix: CenturyLink Streaming Performance Bad and Getting Worse [40] comments
quote:
This month [March 2016] Netflix also took some extra time to single out CenturyLink as a notably awful performer in its index.

"In the US, CenturyLink, whose performance has steadily slid since last November, now ranks last in the index with an average monthly speed of 1.53 Mbps," the company said in a blog post. "By comparison, the slowest country we currently track -- Costa Rica -- posted average monthly performance of 1.87 Mbps in March."

Ouch.

battleop
join:2005-09-28
00000

5 recommendations

battleop

Member

They actually pay these "Analysts"

Well no shit. Some jackass Analyst gets paid to state the obvious. I bet you had to read a 1000 page report to get to this conclusion.
me1212
join:2008-11-20
Lees Summit, MO
·Google Fiber

5 recommendations

me1212

Member

even competition doesnt always help with them.

At my house (.75mi from the dlsam) they offer 1.5m down and .5m up, the local fixed wireless isp offers, for the same price AND no caps, 2m down and .75m up. Neither are great but its what I can get for now and the wireless one is in the middle of network upgrades. Granted I'll be 20 minutes away and with google fiber in 3 or less months.

sraz
join:2013-10-28
Tucson, AZ

5 recommendations

sraz

Member

CenturyLink comfortable to bleed customers and selective upgrades only

CL has been upgrading, but only in markets where they have a weak competitor or think they can get a really high return on investment because they are unwilling to increase their CAPEX budget at all since they need to maintain cash flow to pay their ridiculous dividend. Why a telecommunications company needs to pay a 7% dividend is beyond me, especially when most everyone will agree the majority of CenturyLink's network is rather outdated, that money should go into improving the business. I guess the executives at the company are purely concerned with the day to day stock price and not the long term viability of the company, probably cause the CEO owns over a million shares and loves getting that dividend. They should decrease their dividend and accelerate their GPON deployments as well as invest in customer service to win back some of those cable defectors.

Another thing they could do is leverage existing assets. I could get 200mbps with pair bonding and vectoring, but since they don't feel the need to try to improve speeds they just leave me at a mediocre 50mbps, for which I give them a mediocre $30/mo. I would rather a customer pay $90 for 200mbps service utilizing the existing infrastructure than letting them get off on $30/mo.