Tue 17 Jun 2008
After several rounds of laying off the rank-and-file, it looks like executives are among those now leaving the company. Mstar CEO Ben Gould and Chief Marketing Officer Kirk Tanner are no longer with the company, reportedly having departed voluntarily. The word on the street, according to the Daily Herald, is that Gould got an offer to go elsewhere whereas Tanner's status is unknown. John Hansen of Chicago Venture Partners LP, Mstar's owner, has taken over in the interim and there aren't plans in the near future to hire a new chief marketing officer.
Given their performance problems on iProvo and the decimated customer base from the sale of iProvo, it's not surprising to hear that Mstar went through some more slashing. Their plan is to re-focus on building a customer base on UTOPIA, secure additional financing and pursue opportunities on other fiber optic networks around the country. Also of note is that Broadweave offered a settlement to Mstar to get them to drop their objections to the sale of iProvo.
The question now remains: can Mstar survive? Post your thoughts in the comments.
June 17th, 2008 at 10:41 am
News about Kirk Tanner was that he told me that he had a couple of job offers, he didn’t care to elaborate, but one of the opportunities before him was buying a silk screen printing company. I don’t remember the company name, but hopefully things work out for him. As for Mstar, if they cut down any more they would be whittling away their own legs. I don’t think they could take any more of a cut with seeing some kind of mob from the customers demanding better serviceability. They do have a new owner though, Canopy Ventures. I believe they are pounding out some things still, but that does explain why Ben and Kirk left.
June 17th, 2008 at 10:59 am
Mstar needs to be run like a small (triple-play) cable company or independent phone company. That’s exactly what they are.
They need a good well rounded “General Manager” and don’t need an executive management tier.
They over hired in the past expecting UTOPIA to deliver the marketable homes passed, which never happened. In some part UTOPIA’s failure to deliver homes thru construction is responsible for Mstar’s failure.
A cable company or independent phone company with a few thousand customers has very few managers. Mstar can survive if they start operating like the company they are and not the company they wanted to be.
Add the staff as you grow.
…and stop those daily ads in the Daily Herald for SOS computer help using Mormon cursing (Fetch, etc.) and advertise YOUR own products to grow YOUR company.
June 17th, 2008 at 11:35 am
MStar is in large part a good reason why UTOPIA is suffering. They are *the* largest ISP on the network, and yet offer terrible customer service (their “Service” is fine, their “Customer service” lacks).
MStar failed to effectively market to the homes that are already available, and thus the project is suffering.
In my honest opinion, UTOPIA would be far better off if MStar closed up shop entirely, and migrated the UTOPIA MStar customers off to one of their other, more competent, ISPs….. someone that eXcels at it.
June 17th, 2008 at 12:06 pm
If those other service providers are so much better than Mstar at marketing and customer service, why does Mstar have the most customers?
Mstar is also the ONLY UTOPIA service provider that offers video and the triple play. Video is the most difficult service to deliver and a service many people use for 6-8 hours a day or more.
Video also generates the most service calls in large part due to the bad decision by UTOPIA (Dynamic City with UTOPIA not providing sufficient oversight?) to buy all Amino 120 set top boxes (which have a serious problem).
So Mstar fields all the video problem calls that really rest at UTOPIA’s feet as they, not Mstar, selected and own the boxes that cause the problem. After over a year of knowing the boxes cause problems UTOPIA has done little to solve the problem.
Mstar must lease bad boxes from UTOPIA and provide them to their video customers.
Other providers apparently have neither the skill set or the desire to deliver video. Customers generate more revenue for both the service provider and the network (UTOPIA) when they take more services. Customers like to bundle services. Leaving the video connected with Comcast allows Comcast a direct, free advertising line into the customers home with which to sell them Comcast data and phone.
There’s lots of blame to go around. But if those other providers were so good, they would have the lions share of the customers. Some even started with a long history and existing subscriber base…yet have fewer customers than Mstar?
Why?
June 17th, 2008 at 12:13 pm
You answered it yourself. MStar is the largest SP because they are the only SP to offer video. As you stated, video is a HUGE selling point. If another SP offered it, MStar wouldnt have the “corner” on the market for UTOPIA video customers, and they would no longer be the largest due to their lack luster customer service.
UTOPIA, get another SP on the network that provides video, and wash your hands of MStar.
June 17th, 2008 at 12:25 pm
I really hope that part of the concessions MSTAR received from Broadweave is to keep the video going to UTOPIA. Or UTOPIA in a world of hurt again.
If MSTAR loses video there goes the triple play and then people will really leave MSTAR.
June 17th, 2008 at 12:34 pm
The problem is that any other service provider that also provided video would have the problem of dealing with the same equipment that Mstar has dealt with…therefore not resolving the problem….customer service wouldn’t be so strained if the equipment actually worked. There are better options out there. Utopia is working on getting new equipment and providing better options. We just have to give them time because they just barely got more money to work with.
June 17th, 2008 at 12:43 pm
I think this highlights that those service providers that don’t offer video are actually doing harm to UTOPIA in some way by not offering a full compliment of services. Which may be good for them, but not for UTOPIA.
Now UTOPIA has Broadweave as a service provider (since they bought Veracity/NuVont) and they offer video on iProvo. They will also own the iProvo headend that serves Mstar and UTOPIA.
Until the set top box problem is fixed, and a real offering of VOD (video on demand) is added (not hundreds but thousands of selections as Comcast has). UTOPIA video will not be able to compete with Comcast. Both of those problems are currently UTOPIA problems. They own the VOD server and the set top boxes.
iProvo has started replacing their bad Amino 120 set top boxes.
With video being so popular and important you must do it right and offer a competitive package. UTOPIA (and iProvo) are not offering that. Comcast is VERY GOOD at video.
Most importantly on video!
UTOPIA does not want to get involved in video now. Their original plan called for UTOPIA building it’s own headend. But times have changed.
June 17th, 2008 at 12:50 pm
One rumor I heard is that one of the big cable companies was in negotiations to join UTOPIA after they have at least 50,000 serviceable addresses. Since there’s a gentleman’s agreement between cable companies to not encroach on each other’s service areas (which was confirmed at the UTOPIA bond hearing in West Valley City), they’re scared to death of doing it and want to make sure the customer base will be large enough to justify the potential risk.
I can also confirm that some equipment changes are in the works, though I don’t think I’m at liberty to confirm exactly what they are. Suffice to say that I’m confident they are a Good Thing(TM) and will result in less involvement on the part of PacketFront/DynamicCity.
June 17th, 2008 at 3:32 pm
VOD and yet another cable provider are nice and all, but i think they are plenty of other services that are just as profitable. http://www.xmission.com/products/connections/utopia/utopiatls/
for example.
June 17th, 2008 at 4:06 pm
Video is not a very profitable service, but it’s an expected foundation service.
All services are important and the more services you offer, the better for UTOPIA. I believe almost all data carries offer transparent LAN services.I believe both Veracity and Mstar offered that service on iProvo.
Just as you would not want an ISP not to offer transparent LAN services you would not want a service provider to not offer video.
As I mentioned, if you leave the video with Comcast you increase the chance the customer will move all services to Comcast. Comcast (all video providers) get free ad time on ESPN, CNN, etc. (Local Insertion) and they all use that generate revenue by selling it….and to insert their own commercials to get you to take more services. It should be no surprise that seeing ads on TV sells stuff…including these services.
Leaving the video connected to Comcast is like letting the fox in the henhouse! You want them to disconnect completely from Comcast or Qwest.
Something XMission is just not able to have done! They are a GREAT internet company, but UTOPIA needs more. They need to sell the triple play (and add’s ons to that like computer back-up, home security, etc.)
It’s not subscribers that count these days, it’s RGU (Revenue Generating Units), the number of different services a customer pays you for.
It’s not rocket science to see that more is better….and if you cannot (or will not) offer video (or any other revenue generating service)you are hurting the network.
It’s not one service OR the other. To make UTOPIA successful it will take service providers that sell ALL services to a broad range of customers.
June 17th, 2008 at 10:27 pm
utopia’s average revenue per unit is 48$ right now, and i think that number is a result business connections more so then video services. And comparing TLS services on utopia to what is provided by other networks is rather silly, what would qwest charge for a 1gig TLS connection, or even a 100meg TLS connection, comcast cant offer such services. Utopia needs to leverage their unique network to its fullest and pass as many serviceable address’s as possible things like VOD and cable tv are things the providers will work out sooner or later.
because utopia will be charging an installation fee they wont need to eat those costs and every connection becomes valuable not just the top crust that gets triple play service.
Not every customer wants triple play service. I will get the 15meg or 50meg internet from xmission when utopia gets to my address. I don’t have nor want any form of land line phone service or cable TV, even if xmission was triple play it wouldn’t help utopia’s bottom line in my case.
Utopia needs more service Providers not senseless rules that scare off providers, iprovo did that, look where that ended up.
June 17th, 2008 at 10:35 pm
I’m seeing both points here. Capt. Video has made a good point that making services as widely available as possible helps push accounts with bundled services. Those are not only more profitable in the short run, but they also have a much lower churn rate than single- or double-play accounts.
Luminous also makes the good point that allowing lots of retailers onto the network and allowing them some creativity in their offers is a Good Thing(TM) that can create all kinds of new uses for those fat pipes.
I don’t see that either point is exclusively valid, but I think a happy medium of provider creativity and encouraging bundles can be found.
June 18th, 2008 at 10:12 am
Luminous:
I’m not downplaying the importance of more service providers or business LAN services all very good and very important. You should not discount the value of triple play subscribers.
All customers are NOT equal and you would be a less desirable customer to any network as you are only buying 1 service. The construction and install costs to serve you remain the same, but the revenue you generate is lower.
The number of subscribers required to be profitable increases significantly as subscribers take fewer services.
Since getting more subscribers increases costs and is just harder to do. It’s clear that network owners are much better off when each subscriber takes more services.
Comcast revenue per sub is $107
http://www.multichannel.com/article/CA6557232.html
But companies define revenue per sub differently. (I have also seen Comcast revenue per sub reported as about $43 but I believe that is after expenses.)
Just for fun take the UTOPIA monthly bond payment amount (?) and divide it by $48 (monthly revenue per sub?) to find the number of subscribers UTOPIA would need to pay the bond. (Don’t forget you need to take out operating costs if they are not already out.) Now how many customers would they need if there were getting $60 per sub (a $12 or 25% increase, by selling more services to those subs).
They would need 25% fewer subs and operating costs and construction costs would be lower.
As far as the situation of iProvo and UTOPIA, I think iProvo has done better than UTOPIA.
iProvo spent $60+ million LESS than UTOPIA, yet they own their own headend, and have more homes they can serve, more customers and lower operating costs. I’ll bet all UTOPIA cities wish their city was fully built as Provo is. Will any UTOPIA city ever be fully built out? In what year?
But I’m are way off topic for this thread, which was the changes at Mstar.
June 20th, 2008 at 12:34 am
Utopia will be charging the install costs to the customer so every customer will be a revenue positive for them not just the cash cow triple play customers.
Customers right now can order different services from different providers(according to utopia rep at layton rebonding meeting awhile back). If you ISP of choice doesn’t have VOD/Cable tv get it from a different utopia provider.
I would suggest that Utopia provides a means for a provider that does not have a particular service to be able to get the customer setup with just that service though another provider and gain a commission from that process.
Utopia needs to improve the advertising to let customers know they can do that. And providers need a reason to want customers to know that also. That would increase revenue for all Partys involved without any none sense rules about required services to run on utopia as a provider or customer.
Lastly no customer is any less valuable then any other customer less profitable maybe, But Utopia needs both the triple play and the single service customer we cant cherry pick here. If utopia is available in an area they need everyone they can get in that area.
June 20th, 2008 at 10:06 am
Even with UTOPIA charging an install fee (and it’s yet to be seen if that plan will work) this just means that UTOPIA makes more profit sooner, as it does not take over a year to start making a profit. (Paying back just the install fee from a customer will take over a year with no install fee.)
Your suggestion that UTOPIA provide a means to allow all providers to sell (if not deliver) all services is going in the right direction. Currently customers lose the benefit of the lower rates bundling provides if they take services from 2 or more service providers. Service providers are concerned about the “other” provider using their connection to the customer to sell the bundle and get customers to drop the other UTOPIA provider.
If a rate scale is created that provides some bundled rate to the customer, and some agreement to not market other services to the customer is made, that might work….but those are not in place today.
I fully support the concept, but UTOPIA needs to change the rate structure and service providers must agree to who takes the revenue hit on bundled services, and address the “stealing” customer issues.
Customer segmentation (not all customers are equal) is a fact of business. Typically customers are valuable to a business because they are profitable. More profitable customers are more valuable. You would pay more to get them, keep them, and they are worth more when you sell them. If that does not make them more valuable I guess I don’t know what “value” is.
http://www.dionco.com/articles/article6.html
A Google search of “not all customers are created equal” brings up over a million hits.
That is not to say you don’t want single service customers or should not provide them with outstanding customer service. But most any business would gladly trade them for a more profitable customer. All businesses would be better off with customers that bought more from them and generated more revenue.
I believe this is an undisputed FACT:
1: UTOPIA’s chances to be successful increase if they have more customers that take more services.
2: Customers are more likely to buy more services if they are able to buy all services from all providers.
If you accept these as true, then you must see that service providers that don’t offer all services don’t help UTOPIA as much as they would if they offered all services (even if delivered by another provider on the network).
You must see the advantage of needing to build past, install and sell to 25% fewer customers (significant savings!!!) if you increase the revenue per subscriber by 25% ($12) by selling them more services.
In the past Utopia has failed to see this or at least failed to create an environment that focused service providers on this. Going so far as to allow a service provider to sell off network satellite video services and adding single service providers without policies/procedures to encourage them to sell other UTOPIA service provider services..
How can that be defended as a good business decision for UTOPIA? The fact that it is a good business decision (selling satellite services) for the service providers but NOT UTOPIA highlights a real problem.
June 20th, 2008 at 2:17 pm
25% thats a bit of a pie in the sky number dont you think, i would bet that if utopia only accepted triple play customers they would loose alot more then 25%, Utopia makes revenue from every customer they sign up, the amount they make varies but that doesnt mean less is more. In utopia’s case more is more.
Its silly to suggest that less customers makes more business sense then more customers. Why should utopia loose “25%” of customers to triple play rules, why cant utopia have the triple play and the single service customer why discriminate? their is no reason, revenue is revenue And more is more.
Every last customer is a valuable resource and should be treated that way regardless of the amount of profit they provide.
June 20th, 2008 at 2:41 pm
luminous: It’s not at all silly. Many companies find that around 10% of their customers cause over half of their business costs. It’s sometimes good business sense to drop some high-maintenance customers to improve the bottom line. Certainly we don’t expect UTOPIA to be all business, but more like business with a conscience.
Capt. Video is making a good point that fewer customers with a higher revenue per unit are better for the financial health of the network. Simply making the services available so that customers can bundle more services leads to lower churn and a better revenue stream. He’s not suggesting that a bunch of subscribers be dumped from the network, just that the focus should be on signing up as many profitable triple-play accounts as possible, preferably by allowing multiple providers to offer all three services.
As a side note, this discussion may be better suited to the forums.
June 20th, 2008 at 3:25 pm
Thank you Jesse
That is what I was saying.
June 21st, 2008 at 9:58 am
UTOPIA Single and Triple Play numbers on UTOPIA, from today’s Daily Herald.
“There are a total of nearly 5,000 Mstar customers on UTOPIA, of which 1,400 are Internet-only subscribers, 1,250 video-only subscribers and 1,300 phone-only subscribers. In addition, there are 1,000 Mstar subscribers to all three services.”
I think these numbers are wrong in that they do not reflect 2 service customers. But what is likely right is that only 1 in 5 have the holy grail…the triple play. The sweet spot for UTOPIA?
In part, 4 out of 5 customers don’t have the triple play because 3 out of 4 (or 4 out of 5?) service providers don’t offer it!!!!
June 22nd, 2008 at 12:32 am
your numbers show that 20percent of mstars customers are triple play, 40percent of mstars customers have video service (tho i suppose this excludes 2service customers)
Also i understand that a lot of customers bought into mstar for the video service so i don’t believe that if every isp all of a sudden had triple play that the same percentage trend would carry across the other providers.
but anyway i don’t think we can convince each other one way or the other so lets just agree to disagree.
June 22nd, 2008 at 9:26 am
I’m not sure if these numbers (from the Daily Herald, not me) are Mstar numbers or UTOPIA numbers. I thought those were UTOPIA number and the missing 2000 subs (if UTOPIA has 7000 subs(?), were double play?)
If they are Mstar only numbers would than mean that Mstar has 5000 of UTOPIA’s 7000 subscribers? That can’t be.
I don’t believe that if all service providers offered video the same percent that take video from Mstar would take video from the other providers. As you suggest, some (many?) likely selected Mstar because they offered video. But the video number should be, as was, higher. Mstar has had well over 1000+ subscribers disconnect video (and in some cases all services, in part due to the set top box problems which UTOPIA is responsible for) we should assume the video number would be higher if UTOPIA fixed the video problem. Mstar must share blame for a poor Video On Demand selection (the other video problem).
Never-the-less, I really don’t see how you can disagree with me that:
1: Triple play customers are better for UTOPIA than single or double play.
2: UTOPIA would have MORE triple play customers if the triple play were offered by all service providers.
Are you saying you disagree with these two simple statement? If so, then we really must respectfully agree to disagree.