Mobile Edition
Print
Get the Mag
Weekly UpdatesASSESSABLE IN-STATE REVENUE FOR the largest telecoms in Arkansas slumped an average of 3.5 percent in 2008, according to annual reports filed with the Arkansas Public Service Commission, and the number of wireline customers continued to dwindle.
It's an old trend blamed primarily on consumers' conversion to wireless phone service, often in place of rather than to supplement old-fashioned home phones. (Wireless phone companies are regulated by the federal government and do not have to file annual reports with the PSC.)
However, not every telecom in the state followed the same path.
Two local exchange carriers reported huge increases in both lines served and revenue collected last year because they are, in truth, cable television companies: Cox Arkansas Telcom LLC of Johnson (Washington County) and Comcast Phone of Arkansas LLC of Philadelphia.
And Pinnacle Communications of Lavaca--with only 1,400 service lines--has stopped its bleeding by making a risky investment in fiberoptic.
Cox Arkansas Telcom launched in the last half of 2006 and didn't report enough in-state revenue to show up on Arkansas Business' annual list of local exchange carriers until last year, when it reported $5.2 million in assessable revenue for 2007.
A year later, that number had more than doubled to $10.8 million, moving it from No. 10 on last year's list to a distant No. 4 behind AT&T, CenturyLink and Little Rock's own Windstream. Cox's total number of lines served--mostly residential--was bumping up on 40,000 at the end of 2008.
Cox offers its local phone service--actually a "voice over Internet protocol" service--to virtually all of the areas of northwest Arkansas served by Cox cable TV, The company is not required to, and wouldn't, reveal exactly how many cable TV customers it has, so it's impossible to say how deeply the relatively new service has penetrated among Cox subscribers. (The company said it does have room for additional growth in its digital telephone business.)
Those who have signed up for Cox phone service enjoy a cost savings compared with the prices of their incumbent local phone companies--mainly AT&T with a smattering of CenturyLink and Windstream, Cox spokeswoman Kelly Zega said.
"The advantage, really what it comes down to, is when people bundle their services together, we're able to give some pretty substantial price breaks," Zega said.
And Cox's "triple play"--the industry term for bundling of television, Internet and phone services--is about to be stretched to a home run. Cox will begin offering cell phone service in Arkansas "in the near future," Zega said.
"I don't know the date, but they have begun to roll out cell service in some Cox markets around the country."
Comcast Phone of Arkansas, which provides the VoIP phone portion of Comcast's bundle of services, also reported a significant increase in assessable Arkansas revenue last year, up more than 60 percent to just under $4 million. And that moved it from No. 21 on last year's list to No. 15 this year.
How many Arkansans use Comcast Phone is unknown. The company does not claim any end-user access lines; instead, it describes itself as a provider of wholesale and carrier services.
(Since 2000, Comcast has also offered a business long-distance service in Arkansas, but its in-state revenue has never been much more than $20,000 and was only about $16,500 last year.)
Pinnacle
M.Keith Gibson, whose family has owned the phone company in Lavaca since 1958, said Pinnacle Communications' two-year turnaround was the result of a $6.5 million upgrade to the company's equipment and fiberoptic cable.
Pinnacle, which includes Lavaca Telephone Co. Inc. and Pinnacle Telecom LLC, increased assessable revenue from $1.5 million in 2006 to $2.7 million in 2008, despite a slow decline in end-users. Gibson explained that federal subsidy programs help rural telephone companies recoup their investments, so that additional revenue will pay off loans rather than dropping to the bottom line.
And he expects other small carriers to make similar investments.
"We're kind of at the forefront of investment to upgrade rural services," he said.
And it is paying off, he said.
"We are beginning to turn around both in landline and Internet access customers," he said.
Calling All Telecoms
Some 300 telephone companies filed 2008 annual reports with the PSC, but Arkansas Business limits its annual lists of long-distance companies and local exchange carriers to those with at least $1 million in assessable instate revenue.
The long-distance company list is led, as usual, by SBC Long Distance of San Antonio, which does business as AT&T Long Distance. Its 2008 Arkansas revenue of $38.7 million is still nearly four times that of its nearest competitor, Verizon Communications. But both of those companies experienced double-digit declines last year as nationwide cell service and unlimited long-distance plans continue to encroach on the traditional toll business.
The long-distance company list includes another vanishing breed: payphone companies. The only bright spot there is Global Tel-Link Corp., the contract provider of pay phone service to state prison inmates, which reported more than $6 million in Arkansas revenue last year.
AT&T also dominates the state among local exchange carriers, with assessable revenue of $485.8 million last year. That's down a modest 2.3 percent from the previous year, but the total number of lines served fell almost 9 percent to 670,524 at the end of 2008. Of the 65,000 lines lost during 2008, 53,500 were residential lines.
The companies that merged this month to form CenturyLink--CenturyTel of Monroe, La., and Embarq Corp. of Overland Park, Kan.--had a combined $105.4 million in Arkansas revenue last year, down more than 7 percent. Embarq, a minuscule player in Arkansas' long-distance market, had not been included in CenturyTel's total in past years.
Windstream, the wireline spin-off of Alltel, has a firm hold on the No. 3 spot with $77.2 million, but it too had a drop-off in revenue (11.1 percent) and total lines (2.5 percent) last year.
By Gwen Moritz
gmoritz@abpg.com
FEED