Tom Gerke

As the newly named CEO of Embarq, Tom Gerke plans to focus on continuing the momentum Embarq has built selling new products, such as 10 Mb/s Internet access, a video sales portal and fixed-mobile convergence, and continue the company’s recent history as an innovator.

In an interview today, Gerke--who had been interim CEO since Dan Hesse left Embarq to take over Sprint last December--pointed to some of the more promising statistics from Embarq’s recent 2007 earnings, including 24% growth in selling high-speed Internet access, 7% growth in business data sales and 6% growth in average revenue per household.

“We need to sell more to existing customers, but we also have to have more growth engines,” Gerke said. As the core base of access lines declines for all wireline telecom providers, there needs to be more innovation, Gerke added. High on that targeted list is a new kind of digital home phone.

“A broadband phone will come with a screen for visual voice mail, information at a glance, an online phone book – making that product cool and more relevant is something that we as an industry didn’t do,” Gerke said. “We did an enormous amount of innovation in our networks but not in our feature functionality, not in what the consumer can actually see.”

Embarq also is testing a service that provides advanced computer support to its customers and may extend that to its entire service territory, even as the carrier continues to extend the availability of its 10 Mb/s offering to more of its customers.

But Embarq isn’t planning the kind of access network overhaul in which Verizon and AT&T are engaged, Gerke said. The company is happy reselling DISH Network’s service as part of a $99 triple-play bundle.

“We haven’t seen a business case that justifies some of the investments that Verizon and AT&T have made because of the geography and our particular markets,” he said. “We’re offering 10-Meg service, and we continue to make sure we have the bandwidth that is necessary for HSI [high-speed Internet]. We also see a lot of non-linear entertainment coming in the future. We have our new portal we migrated to that includes our video store with 5000 movies, 5000 music videos and 1000 television episodes that our customers can pull down over the 10-Meg pipe. There is a newer generation of customers that wants to see something when they want to see it.”

Embarq also will continue focusing on integrating services, as it has in the past with its fixed-mobile convergence offering.

Keeping the company’s financial house in order, in part by containing costs, is another priority.
While the pace of consolidation in the telecom space may slow this year under tighter capital market constraints, Gerke said it is essential to be ready to act when opportunities arise.

“I think the important thing is to make sure you are always operating your business in the absolute best way possible, so you have an opportunity to control your own destiny,” Gerke said.

So far, Gerke’s message to Embarq employees is on the importance of building on success, meeting and exceeding goals and being prepared to handle change.

“I talk to them about how proud I am of the heritage that they come from,” he said. “I also talk to them about the confidence they have to recognize the amount of change that is in front of us, and to want to be part of a company that leads through change instead of responding.”

On the regulatory front, Gerke would like to see the Federal Communications Commission act on the problem of phantom traffic – network usage that is not properly accounted for and billed – and hopes to avoid onerous Net Neutrality legislation.