Marianas CableVision has an agreement to acquire EC Communications by the end of the month — a new relationship that actively began Aug. 1 with MCV’s CableNet service being offered to its new customers in a joint-marketing alliance.
In a collision of launch dates GTA introduced low-priced Internet products in newspaper ads causing competitors to rush rate changes. While it appeared to be more than a coincidence that the marketing alliance occurred on the same day as GTA’s launch Marianas CableVision said it had been working on the deal for a long time.
Customer representatives for EC Communications which is an Internet service provider and long-distance carrier are calling their own customers and recommending that they upgrade from dial-up service to MCV’s broadband Internet product CableNet for $49.95 a month with free installation of cable modems. EC Comm has an estimated 4 000 dial-up Internet customers and an estimated 700 to 1 000 DSL or digital subscriber line customers. Billing stuffers were sent out Aug. 1 to explain the advantages of CableNet.
The alliance was described by a customer-service representative as a “partnering agreement” to offer “high-speed cable that is several times faster than regular DSL.” Service representatives began test calls to customers in late July to see how they would react to the broadband offer. GTA’s actual DSL download speed is up to 1 megabyte per second while CableNet ranges from 2.2 mbps to 4 mbps.
The alliance is a prelude to MCV’s acquisition of EC Comm said industry insiders who confirmed that an agreement to sell had been reached but that details were being worked out over EC Comm’s shared ownership of three telecommunications cables and capacity at the island’s three cable stations. Under the agreement EC Comm customers will become customers of Kuentos which is MCV’s Internet provider on Guam. The plan is to conclude the sale by the end of August an industry source said.
With the new ownership at hand it is paramount to move as many as possible of EC Comm’s customers to MCV’s CableNet broadband system rather than continue to pay as much as $31 000 a month the wholesale cost for about 1 000 DSL customers to GTA. “Once the provider of those services drops his retail prices without adjusting his wholesale price to the reseller he’s saying ‘I don’t want to use resellers to distribute this product ’” the source said.
With the capacity for DSL maxxed out to resellers GTA rolled out its Spyder DSL broadband — “only available to those customers who have pre-existing DSL service with other providers ” according to an Aug. 1 media release. GTA said additional DSL capacity will be added in the fall.
John Paul Calvo spokesman for EC Comm said in a press release “After considering the competitive nature of the high-speed Internet market we felt it best to team up with the company that is clearly the leader in high-speed Internet services on Guam.” The press release did not mention the planned acquisition. Steve Coleman business development director of MCV said the cross promotion was designed to expand MCV’s high-speed cable network and improve service to EC Comm’s customer base.
“We had the battle for wireless now we’ve officially started the battle for broadband ” said Robert Kelley principal consultant for Management Communications Services. “And the future battle will be for video services. One of the things people will see is more bundling of services for reduced prices which is what GTA is doing here.”
IT&E Inc. which has the most to lose immediately squeezed its margins by matching GTA’s pricing in an e-mailed bulletin to its 1 500 DSL customers in the evening of Aug. 1. The reduced price is automatic for IT&E customers.
Marianas CableVision Saipan’s original ISP acquired Saipan Datacom in 1996 and turned the e-mail provider into a full-fledged provider; and acquired Kuentos the first ISP on Guam in 2000. Later that same year MCV introduced high-speed Internet to the Mariana Islands. DSL was first offered in 2000 by the Guam Telephone Authority which was a government-owned utility at the time resulting in a lawsuit from a triumvirate of telecommunications competitors who convinced a Superior Court judge to rule that GTA could only offer DSL on the wholesale level. GTA became a private company on Jan. 1 and since has launched a series of competitive land-line cellular and Internet services.
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Sources: Internet service providers and industry experts |
GTA on May 1 introduced flat-rate wireless service which resulted in competitors similarly reducing their rates immediately.
While GTA continues to offer DSL to its competitors for the regulated reseller’s rate of $31 a month per customer that price is preciously close to GTA’s QuickStart DSL which was introduced Aug. 1 at a residential rate of $39.95. For customers who also have GTA Wireless and long-distance plans that price comes down by another $4. GTA’s competitors were selling broadband for $50 to $70 depending on terms and conditions.
Sources said MCV’s planned acquisition of EC Comm is important because MCV will be adding long-distance phone services that they can bundle with reduced-rate packages.
TeleGuam Holdings LLC in partnership with Shamrock Holdings and General Electric purchased the assets of Guam Telephone Authority on Jan. 2 2005. TeleGuam Holdings does business as GTA. MBJ
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