Box shows operating results from the quarter ending March 31, 2010. Click image to download a PDF.

The MI-Connection cable system lost more money in the first three months of 2010 than the same period a year ago, but strong sales of its telephone and high-speed internet services helped boost revenues 9.4 percent from a year earlier. The company’s chief told Davidson Town Board members at their monthly work session Tuesday that the company is seeing results from recent marketing campaigns, including a referral rewards program and its “Operation Outreach,” a promotion tied to donations to local nonprofits.

The system, which is owned by the towns of Mooresville and Davidson, lost $1.7 million over the past three months, up 23.5 percent from a year earlier. But operating profits, excluding debt payments and other non-operating expenses, were up 58 percent over a year earlier, to $310,000.

Revenues grew 9.4 percent from a year earlier, to $3.77 million, as the company sold add-on services to existing customers.

General Manager Alan Hall told DavidsonNews.net after Tuesday’s meeting the company has seen progress over the past year since it introduced its digital telephone service and new price packages for bundles of cable TV, telephone and internet service. “And we’ve had a couple of pretty successful telemarketing campaigns to let people know about our bundled packages,” Mr. Hall said.

And some of the growth is coming in sales to business and institutional customers, he said.

MI-Connection has 15,235 customers in Davidson, Mooresville, Cornelius and surrounding areas.

TOTAL UNITS UP 10%

The company continued to lose cable TV subscribers. At the end of March, MI-Connection had 13,486 cable accounts, down 233 from a year earlier. MI-Connection’s competitors include satellite TV providers offering big discounts and local telephone companies that offer packages that include satellite or digital video services. The company also has been hit by the weak economy, which has caused some subscribers to drop their TV subscriptions.

But strong sales of additional products – phone and internet – to existing customers spurred a 10 percent gain in the overall number of services, which system officials refers to as “revenue generating units,” or RGUs. At March 31, MI-Connection had 24,466 RGUs, up 2,216 from a year ago.

That number – RGUs – is one system and town officials are watching closely. In recent meetings with citizens organized in part to discuss MI-Connection’s performance, those officials have said the system needs to add 13,500 RGUs in the coming years to reach the break-even point. That’s the equivalent of 4,500 new customers buying a “triple play” of video, phone and internet.

The system is currently losing money, mainly because of payments on $92.5 million in debt incurred to buy and upgrade the network. (Service on the debt is averaging roughly $400,000 a month.) This fiscal year, which ends June 30, the towns are contributing about $576,000 to balance MI-Connection’s budget. (That’s split $180,000 from Davidson and $396,000 from Mooresville.)

Hitting its goal for RGUs would not only end losses at the system, but wipe out the towns’ need to subsidize it.

Mr. Hall said Tuesday that “we have over 20,000 potential customers – non-subscriber homes passed.” Those are homes, condos or apartments that are within reach of MI-Connection’s network lines, but which aren’t currently subscribing. “If 25 percent of the people who could get our service – but don’t – sign up, that’s 5,000. And if they get the triple pay, that’s a game changer,” Mr. Hall said.

That would generate an extra $5 million in revenue, and help turn the towns’ current subsidies into profits, Mr. Hall said.

Mr. Hall’s report said that MI-Connection added a total of 4.5 miles of cable lines in February and March, increasing the number of homes passed by its network by 161.

CUSTOMER SERVICE

Among the other statistics Mr. Hall shared Tuesday was current telephone response times. Poor customer service was a frequent complaint under the system’s former owners, and one of the reasons town officials cited for deciding to buy the system in 2007.

In March, MI-Connection’s technical support staff answered calls on average within 1 minute 19 seconds. Customers calling with sales or billing questions were connected, on average, in 54 seconds. The company says its goal is to keep response times under 1 minute.

OPERATION OUTREACH

Among MI-Connection’s public relations efforts this winter was a program called “Operation Outreach.” The effort has included a series of TV programs focusing on the work of local nonprofit organizations. And MI-Connection’s marketing materials promised the system would donate $10 for each service purchased to a nonprofit in the towns it serves.

The program’s public spokesman was retired Carolina Panthers’ football star Mike Minter, who hosted the TV show. MI-Connection recently gave $1,400 checks to Davidson Cornelius Day Care in Davidson, North Mecklenburg Senior Center in Cornelius and Mooresville Soup Kitchen.

MEETING THURSDAY

MI-Connection’s board, which consists of citizens appointed by the two towns, will hold its monthly regular meeting on Thursday, April 29. The meeting begins at 7:30 a.m. at MI-Connection headquarters, 420 S. Academy St. Mooresville. The meeting is open to the public. The agenda will include a budget and operations update, as well as planning for the 2010-11 budget.

DOCUMENTS

April 27, 2010, MI-Connection March 2010 summary report from General Manager Alan Hall, delivered to Davidson Town Board (PDF), CLICK HERE>