Cincinnati Bell 2009 Annual Report Download - page 5

widespread appeal, smartphone subscribers account for
only 22% of our postpaid subscribers at the end of
2009. As a result, we will continue to emphasize sales of
these devices and the sales of the high-value data plans.
2Q091Q094Q08 3Q09 4Q09
Wireless Postpaid
Smartphone Customers
(in thousands)
83
64
59
50
43
Wireless service revenue of $284 million in 2009
decreased 2% compared to 2008 primarily due to fewer
subscribers. Lack of handset availability continues to be
an issue for us when competing against the national
carriers, but we have some exciting phones coming in
the first half of 2010 that we believe will help level the
playing field. We began selling Third Generation
Network (3G) smartphones in our stores at the end of
January 2010, and expect to have a full line up of 3G
Blackberry, Android and other devices in the first half of
this year. Wireless operating income decreased by $14
million to $33 million in 2009, primarily as a result of
the revenue decline, higher subsidies to support the
smartphone growth, and a loss on sale of spectrum for
non-operating areas.
Wireline
Cost Reductions Maintain Wireline Profitability
New Product Introduction Revitalizes the Segment
Like all wireline providers, Cincinnati Bell continues to
experience access line loss due primarily to wireless
substitution. Total access lines including VoIP (voice
over internet protocol) equivalents declined by 6%,
reflecting an in-territory access line decline of 8% offset
by VoIP access line equivalents and net access line
additions in out-of-territory markets. Business access
lines, when including the access line equivalents of new
and existing customers migrating to VoIP services,
remained essentially flat. We believe this is an
outstanding result in the midst of an economic
downturn that has produced an increased rate of small
business failures and job losses.
Despite the $46 million reduction in Wireline revenue
from access line losses, we were able to generate
Wireline operating income of $261 million in 2009, a
flat result to the prior year. This is an incredible
achievement. The significant benefits from the cost
reduction initiatives previously mentioned and the
decrease to restructuring charges effectively offset the
revenue declines in 2009.
We invested in the long-term viability of the Wireline
segment in 2009 by introducing our new Fioptics suite
of services. Fioptics is a fiber-to-the-home suite of
services that provides entertainment, high-speed
internet, and traditional voice services. We sell our
Fioptics internet product at speeds up to 30 megabits
per second, which is the fastest internet service in our
region, and offer 300 basic and premium video
entertainment channels, including 50 channels in high
definition. At the end of 2009, our Fioptics services
were available to 41,000 homes in Greater Cincinnati,
and we had 11,100 customers for our Fioptics
entertainment services, 10,200 high-speed internet
customers, and 7,500 voice customers. We are very
pleased with the initial results of these services,
particularly with the almost 30% customer penetration
rate of homes passed that we are achieving after six
months. We are equally pleased with the bundling
results within the Fioptics product suite. Over 80% of
our Fioptics customers take two or more of our
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