By DAVID BORAKS
DavidsonNews.net

What will it take for the town-owned MI-Connection Communications System to the turn the corner on the road to profits? New technology? Marketing? Customer growth? After several months of silence, the communications network owned by the towns of Davidson and Mooresville reported progress in all three areas during a board meeting at Davidson Town Hall.

The meeting was the first since the board decided this summer to switch to quarterly gatherings – in part to shift the spotlight away from the company’s turnaround efforts after several years of losses.

With new technologies and a new marketing campaign, MI-Connection hopes to reverse several years of sluggish growth, and to improve the company’s brand in the community.

“The time is right to go from playing defense to playing offiense, and this is just a positive message for our community,” MI-Connection board chair John Venzon told the board Thursday.

Thursday’s meeting brought several major announcements:

• A wave of new technologies coming in the next several months, from expanded Video on Demand, including high-definition movies, to a new “TV Everywhere” service that lets customers watch TV on mobile devices anywhere. The company also is introducing faster internet speeds – including a new “Warp Speed Broadband” offering that will be the fastest available in the Lake Norman area. And in keeping with another home technology trend, MI-Connection also now offers free wireless routers to home internet users who buy multiple services.
  
• Customer growth in all three of the company’s main business lines – video, voice and data. MI-Connection added 224 individual customers during the quarter, and 665 RGUs, or revenue generating units – defined as one cable TV line, one telephone line or one internet line. At the same time, the company reported that revenues grew 6.5 percent during the quarter, to $4.11 million, and its net loss fell by more than a half-million dollars to $1.13 million.
  
• A big customer win: Langtree at the Lake. CEO David Auger announced at the meeting that MI-Connection had won a contract to provide video, telephone and internet service at the first phase of Langtree at the Lake, a massive residential, office and retail project under construction off I-77 Exit 31 in Mooresville.
• A new marketing campaign to begin Friday, Oct. 26, that will run 13 weeks. Through TV, print, direct mail and online advertising, MI-Connection will to drive home the benefits of a locally owned communications service, with slogans like: “If you owned a grocery store, wouldn’t you shop there?” “Does your cable company really need your business?” “Can you create local jobs just by watching TV?” and “When your boss is everyone in town, your customer service had better be good.”

Mr. Auger said the new technology would keep the company ahead of its competitors, including other cable and telephone companies. And it gives MI-Connection fodder for a new marketing push as it tries to boost penetration in its Lake Norman area territory, including Mooresville, Davidson and Cornelius.

“It insulates us from competition, and it allows us to strengthen our marketing message, and be able to accelerate our growth rate,” Mr. Auger said.

He said MI-Connection recently completed an upgrade to its internet equipment that will allow it to offer faster speeds across its footprint. Beginning Dec. 10, all current internet customers will have their speeds increased at no extra charge. And unlike some competitors, MI-Connection will continue to offer the first internet modem free.

The new equipment allows MI-Connection to boost its top download speed (for watching video or surfing the internet) to 60 megabits per second. The new top upload speed (for posting photos or video, for example) is now 10 megabits per second. Both are faster than anything competitors now offer, Mr. Auger said.

The faster speeds could be a competitive advantage, and also are a response to changes in the way consumers use the internet, Mr. Auger said. In particular, it helps MI-Connection keep up usage of data-intensive services, from online gaming to streaming video services such as Netflix.

Now, Mr. Auger said, “We’re a heavy Netflix user’s dream product.”

The company on Dec. 10 will begin selling a new top speed internet service tentatively called “Warp Speed Broadband,” though the name could change. It will offer 60 mbps downloads and 10 mbps uploads. Customers can get it for $80 to $100, depending on whether they bundle it with TV and telephone.

Existing customers also will get faster speeds Dec. 10, at no extra charge (Download speed x upload speed): 8×4 becomes 10×5, 12×4 becomes 15×5, 16×4 becomes 20×5 and 20×4 becomes 30×10.

AUDIT ‘CLEAN,’ FINANCIAL REPORT SHOWS GROWTH

Thursday’s meeting included a year-end report from MI-Connection’s outside auditor, Dixon Hughes, which gave the company an “unqualified” rating, meaning no major irregularities were found.

The audit report confirmed the year-end financial results, which were first reported in July. (See that report for the numbers.)

The financial report for the quarter that ended Sept. 30 showed that the company grew revenues in all three of its businesses – cable TV, telephone and internet. Altogether, revenues were up 6.5 percent from the first quarter a year ago, to $4,114,992. Expenses fell 8.7 percent, in part because of savings on what the company pays its high-speed internet providers.

The company’s earnings from day-to-day operations continued to grow. Known as EBIDA, for earnings before interest, depreciation and amortization, that’s the money left over after day to day expenses are deducted from revenues. EBIDA doesn’t include the cost of debt and other non-operating expenses, but it is considered a measure of the health of the business. EBIDA grew 148 percent – nearly 1 1/2 times – from a year earlier, to $929,369.

NEW ADVERTISING AND MARKETING

Beginning Friday, Oct. 26, MI-Connection is rolling out a series of new advertisements in print, video and online that focus on the company’s local ownership. Developed by Mooresville-based consultants Dave and Kelly Sopp, the campaign includes a series of 13 ads, to run over 13 weeks, that push the local theme.

Slogans include: “If you owned a grocery store, wouldn’t you shop there?” “Does your cable company really need your business?” “Can you create local jobs just by watching TV?” and “When your boss is everyone in town, your customer service had better be good.”

“You needed something simple – plainspoken,” Dave Sopp told the board, answering the question, “What is MI-Connection and why is it good to have a community owned cable company?”

Along with the ads, consumers throughout the area will get a direct-mailed letter signed by Mr. Auger outlining the company’s local ownership and benefits. Those letters should begin arriving in the coming days.

RELATED DOCUMENTS

Oct. 25, 2012, CEO David Auger’s presentation to the MI-Connection board on financial results, new technologies. (PDF)