Report shows growth in commercial business at the town-owned cable system, but competition too.

MI-Connection Communications System’s $15.5 million budget for the coming year will have to wait another week for approval, until after Mooresville passes its town budget. Meanwhile, a board meeting Thursday morning also brought news that the company has expanded its commercial business in recent months.

The budget vote is on hold because MI-Connection, which is owned by Davidson and Mooresville, must have formal approval from the two towns that it will receive a $6.46 million subsidy in the fiscal year beginning July 1. State law requires the system to have a balanced budget. Mooresville’s budget includes $4.44 million for MI-Connection, while Davidson will contribute $2.02 million.

Mooresville had been expected to approve the subsidy as part of its town budget this past Monday night. But commissioners there delayed a final vote on the town spending plan until Monday, June 28.

MI-Connection’s board agreed to schedule a meeting next week – likely on Wednesday afternoon, June 30 – to vote on the budget. It must be approved by the end of that day.

Approval of Mooresville’s $82 million budget was delayed Monday night, June 21, when commissioners asked for a more detailed presentation from town staff on the spending plan, the Mooresville Tribune reported Wednesday.

The $6.4 million subsidy in 2010-11 comes on top of $576,000 that the system requested during this fiscal year, which ends June 30. System officials had hinted in recent weeks that they might not need the full amount. But General Manager Alan Hall said Thursday that MI-Connection has decided to draw all $576,000 from the towns.

“We are going to draw those funds, and end the year with a fund balance. We want to make sure we don’t go into July (the first month of the fiscal year) with a zero balance,” he said.

OPERATIONS REPORT

Also at Thursday morning’s meeting, Mr. Hall told the board that MI-Connection ended May 2010 with 15,257 customers – up 61 from a year earlier. The total showed slight decline (13 customer relationships) from April, when the system had 15,270 customers – 74 ahead of the year-earlier period.

The total number of “revenue generating units,” or RGUs – one service purchased by one customer – is up 2,286 from the end of May 2009, and up 48 from April 2010, to 24,632. The year-to-year growth slowed sightly from the April rate: April 2009 to April 2010 growth was 2,377.

All of the growth over past year came in telephone and internet accounts. Basic basic cable accounts fell 147 from last May, internet lines grew 901 and telephone accounts grew 1,532, Mr. Hall said.

He also showed the board a new report that he said underlines the growing importance of business customers to MI-Connection.

Partial results for the current 4th quarter of the fiscal year showed the addition of 83 new commercial “revenue generating units,” primarily new phone and data lines. Since revenue from those lines is greater, he said those equaled 301 residential RGUs.

Mr. Hall reported growth in all four main categories of commercial sales:

• Small business phone lines – up 38 business units, or the equivalent of 57 RGUs.
• Small business data – up 21 units, or the equivalent of 90 RGUs.
• Large business telephone – up 22 units, or the equivalent of 91 RGUs.
• Large business data – up 2 units, or the equivalent of 63 RGUs.

Altogether, new commercial phone and internet lines added about $11,000 a month in new revenues to MI-Connection.

Meanwhile, Mr. Hall is in the midst of hiring a second commercial sales representative, which would give the system two full-time salespeople targeting businesses. System officials and board members say commercial growth is important part of the company’s strategy to grow and boost revenues, especially at a time when profits in the cable TV business are declining.

Also during May, MI-Connection added 1.56 miles of new fiber-optic cable, which gives the company the ability to serve nine additional commercial customers.

TIME-WARNER TARGETS APARTMENT COMPLEXES

In a related issue, Mr. Hall cautioned the board that the system continues to face competition from Time Warner Cable. He said Time-Warner appears to be trying to peel off multi-unit residential developments from MI-Connection’s customer base. Mr. Hall told the board that the New York-based cable giant recently has won contracts with the owners of three apartment complexes in Mooresville, with more than 200 units total.

The company is working to keep access to some or all of its customers in those areas, Mr. Hall said, though whether it can do so will depend on the complexes’ owners being willing to allow their tenants a choice.

DOCUMENTS AND PREVIOUS COVERAGE

June 24, 2010, May 2010 operating statistics for MI-Connection, delivered at the board meeting (PDF), CLICK HERE>

See previous coverage of MI-Connection on DavidsonNews.net, CLICK HERE>