One of the state’s fastest-growing cities isn’t immune to the scourge of cord cutters but has learned to adapt to shifting customer desires.
Conway, one of two cities in Arkansas that operate a cable-providing system for its residents, has lost more than 5 percent of its cable subscribers in the past year as today’s entertainment seekers rely more and more on streaming services rather than bulk cable programming. These entertainment consumers, known as “cord cutters,” have chipped away at cable providers’ subscriber bases while the customer base the internet services continues to inch upward.
Paragould, meanwhile, has seen a similar shift. In nine months from the end of 2016, more than 5 percent of its cable subscriptions had been canceled while internet subscriptions increased by about 3 percent.
The research company eMarketer of New York City recently predicted that the number of cord cutters would reach more than 22 million by the end of 2017 and more than 40 million in 2021.
“It definitely has an effect,” said Conway Corp. CEO Bret Carroll. “Just like every other cable company in the country, we’re seeing erosion of our subscribers, but not dramatically so.”
Carroll said Conway Corp. has more than 15,000 cable subscribers and 19,000 broadband subscribers in a town whose population is fast approaching 65,000. Carroll said the exodus of cable subscribers is countered, successfully so far, by the addition of broadband users.
Carroll said Conway Corp. has also expanded its services with the addition of commercial fiber leases and home security systems.
“There are a number of things we’re doing to diversify our revenue stream,” said Carroll, who took over as CEO earlier this year. “We realize if all you’re thinking about is video, then you’re missing the boat. You have to make sure you find ways to offer other products that meet your customers’ needs.”
Paragould Light Water & Cable, which serves a city of approximately 28,000 in northeast Arkansas, has better market penetration than Conway with nearly 80 percent of city homes using PLWC’s cable or internet services.
“We continue to lose cable subscribers just like the national trend,” said PLWC General Manager and CEO Darrell Phillips. “We continue to add broadband subscribers, maybe broadband only. Again, the national trends are the same as in Paragould. I’d say it balances out. You lose on the cable side but you can break even when you combine the two.”
At the end of 2016, Paragould Light Water & Cable reported it had 8,928 cable subscribers and 7,731 internet subscribers. Just nine months later, those numbers had changed to 8,459 cable subscribers, a 5.3 percent drop, and 7,976 internet subscribers, an increase of more than 3 percent.
PLWC is undergoing an estimated $14 million upgrade to its broadband system from coaxial to fiber for residential services. Phillips and PLWC Cable Manager Farron Toler said the city hopes to spread the costs out over a four-year period using cash reserves and revenue to pay for the project.
“We’re going to get away from the traditional cable model and be fiber to the home,” Toler said.
Besides, with some of the coaxial hardware being 30 years old, Phillips said, Paragould knew it “had to do something.” Phillips hopes the fiber upgrade will serve as an economic development tool.
For many of today’s and all of tomorrow’s consumers, broadband is the vital component of services. Carroll said many of Conway’s customers want traditional cable but the future isn’t so optimistic.
eMarketer said the combination of cord cutters and “cord nevers” — the industry term for people, mainly young adults, who have never subscribed to pay cable TV — would total more than 56 million people in 2017, compared with 196 million subscribers. While cable subscribers are expected to drop by 1-2 percent a year for the next few years, cord cutters and cord nevers will increase by 7 to 15 percent a year.
“The acceleration of cord cutting is the result of several factors,” eMarketer analyst Paul Verna said. “First, traditional pay TV operators are increasingly developing streaming platforms, such as Dish Network’s Sling TV. Second, networks such as HBO and ESPN have launched standalone subscription services that allow users to tap those channels without a cable subscription. And third, digital players like Hulu and YouTube are now delivering live TV channels over the internet at reasonable prices — including sports properties that were previously available only through traditional distribution.”
Although this sounds ominous, Conway and Paragould officials seem optimistic about their cities’ abilities to weather the storm. Carroll said Conway Corp. is in a competitive environment and relies on its local ownership and customer service to continue being the citizens’ first choice for TV, broadband and whatever else they want.
Carroll said Conway Corp. has begun offering 1-gigabyte internet connections in the city. Carroll said that was a recognition that Conway Corp.’s customers wanted reliable internet that was also fast and — at $95 a month — competitively priced.
“We have seen some really strong growth as a result of that,” Carroll said. “One thing we do really well is we have a reliable broadband service. We don’t have any data caps.
“It’s not the cheapest in the land but it is pretty competitive. When we roll those services out, it is because the nature of our business and the nature of our structure [means that] we do it across the city.”
Carroll said the city ownership of Conway Corp. is a big selling point. When a new service is offered, it is offered to any and all residents of the city at the same time; by state law Conway Corp. can only serve customers up to 2 miles outside the city limits.
“We actually contemplated selling the cable business probably 15-16 years ago, and boy, we got a lot of negative feedback from the community,” Carroll said. “They like this local, homegrown control. The local control and the people being able to go, if they are unhappy with the situation, down to Conway Corp. and talk to them and let them know what they don’t like.
“We are able to do some things, as far as provide internet service, at a really cheap price to the public schools and the private schools in Conway.”
Phillips said Paragould hasn’t met as much competition for services as had Conway because, while Conway is a growing city close to the capital city, Paragould is off the beaten path. Satellite dishes are the main competition for Paragould Water Light & Cable, and Phillips and Toler said that’s where local ownership wins the day.
“Every decision that we make is based on Paragould by Paragould people,” Toler said. “Our channel lineup is controlled by a committee set up by the mayor. No one person makes channel selection or viewing selection [decisions]. Since we are a wholly owned utility, everything comes out on one bill. Our phones are answered 24/7 by a live person and services are run seven days a week.”
Carroll said expanding services and improving broadband capabilities are just standard reactions to a competitive market.
“We’re not in the business to earn a profit for our shareholders,” Carroll said. “Obviously, we have to make enough money to pay our bills and invest in our infrastructure and do all those things, but there are not shareholders expecting a rate of return on their investments. We like to think the dividends that we pay is when the customer gets the bill with all their services on it, they get it at a good, fair price.
“It is competitive business. They can take our competitor’s product if they wanted to if we weren’t providing the right kind of value.”