Frontier has yet to purge itself of the FiOS video customers in three markets where it acquired lines from Verizon. In its first quarter earnings report yesterday, Frontier revealed that it had net additions of 4,400 video customers during first quarter, which included 9,200 net additions of satellite TV customers and a net loss of 4,800 FiOS video customers.
When Frontier acquired 4.8 million lines in 14 states from Verizon in 2010, it also acquired fiber-to-the-home infrastructure supporting triple play FiOS services in parts of Indiana, Oregon and Washington. Shortly thereafter, Frontier announced that it would dramatically increase the price for FiOS video – a move the company said was necessitated by programming costs, which were higher than what Verizon had paid.
As an alternative, FiOS did its best to move FiOS video customers to satellite video from DISH Network, offering customers a year of free service for switching. But that move, in combination with the price hike, caused endless headaches for Frontier. The carrier drew the wrath of state and local regulators in Oregon, where local authorities denied Frontier’s request to cease providing FiOS video – a move that would have reduced the municipalities’ revenue stream.
To make matters worse, Comcast – which competes with Frontier in the Northwest – attempted to muddy the waters by telling customers they should switch to Comcast video and data because Frontier was not supporting FiOS. Frontier has continuously insisted that it will continue to offer FiOS data, but that message may have been lost on some customers.
Some tier 2 and 3 carriers may not be at all surprised that Frontier found it couldn’t make money on FiOS video. Many of them have also struggled with offering a profitable video service because of high programming costs.
It could be another year or two before Frontier sees the light at the end of the FiOS video tunnel. The company said previously that it started with 124,000 FiOS video customers. I did a cumulative tally of FiOS video customer losses and it came to 46,300 – and the pace of losses has decreased from a high of 13,700 in the second quarter of 2011.