When the City of Loveland discussed bringing a 100% fiber-optic, community-owned communications utility to its citizens, a big portion of that conversation centered around take rates. What will it take to break even? What do we anticipate for residential service? What about business service?
What’s a take rate you ask? A take rate is the percentage of potential residents or businesses that actually subscribe for Pulse service. What does it mean? Well – it is one indicator of a project’s health, and overall success.
Even before Pulse broke ground, in-depth research indicated that we could expect to gain approximately 42% of the market within four years. Not quite a year into the process, and after only three months offering service, we are happy to report that we are meeting expected ramp-up rates necessary to meet our long-term take rate objectives.
Found on our Fiber to the Premise dashboard, the new take rate metric will provide the Loveland community additional perspective on the progress of the Pulse project.
To help clarify, here’s a little more info on how Pulse has approached our take rate measurement.
Pulse take rate includes active subscribers from fiber-enabled premises available in the Pulse network 90 days or more. Here is a breakdown.
- Active Subscribers: These are Pulse customers that are connected and receiving bits and bytes. This does not include customers that are in the install stage of service.
- Fiber-enabled Premises: As Pulse builds out it’s network, we have been able to activate service to areas as we go. Once we can provide service to a premise, we call this a “fiber-enabled premise”. This does not include apartment complexes that do not grant us access to serve a property since we still can not provide those residents service.
- Why 90 days? Once we are able to provide service to an area, we allow a 90-day window of time to notify residents and businesses that service is available, giving them time to call and subscribe to service. This also gives us time to install and activate customers once they have subscribed.
So if take rate is a measurement of success, then what does success look like? During the start-up of Loveland’s new utility there are several take rate milestones.
- Ramp-up (where we are now): Crawl. Walk. Run. As anybody who has built a business will tell you, it’s a journey and success does not happen overnight. During our planning process we knew it would take time to build up to our ultimate goal, and forecasted accordingly. After all, the network will take 3-4 years to build-out and as new potential customers are available, several factors are in play that will impact take rate numbers during this time. These include customers waiting for current contracts to expire before switching and the expected time it takes for Pulse to build awareness of a new service option. A take rate between 0-32% was forecasted and is expected within our “ramp-up period.”
- Break Even: Our break-even point during the planning process was identified at 32% after full buildout and after the payback period. This allows us to sustain operations, maintenance and replacement/refurbishment cycles and pay back the bond within the bond period of 23 years.
- Expected Take Rate: While we need 32% to fully sustain our operations, our research indicates that Loveland is ready for fast, reliable internet. During our planning process, several studies indicated that 42% was well within reach.
- Projections Exceeded: We are in a competitive industry and strive for success. While we need to maintain a 32% take rate after build-out and anticipate that we can achieve a 42% take rate, we’re here to build something great – something we know Loveland will…well… love. So – we’re going to set our sights high, and put this one out there to let you know that we’re here to serve you Loveland!
While we are still in the early stages of this process, we are excited about the first numbers that have come in for the project. Our take rate percentage may show slight fluctuations up and down as we open up new areas and sign-up customers, and that is to be expected with a project and ongoing service as incremental growth occurs.
We hope this information is helpful to you and gives you a glimpse into what we are working on and the great things in store for Loveland through Pulse. On behalf of the Pulse team, your trusted, local communications utility, we thank you for your continued confidence in our efforts and look forward to installing your Pulse service in the near future.
To view the most recent Fiber to the Premise dashboard, visit: www.pulsefiber.org/PulseInProgress.
Note: Milestones used above are for residential services. Business service milestones include: Break Even – 27%, Expected Take Rate – 27%, Projections Exceeded – >27%.