frontier_newAt a time when some of the nation’s largest carriers are focused on many new lines of business and in some cases de-emphasizing legacy wireline broadband, Frontier broadband growth has been strong. At an investor conference today, Frontier Communications Executive Vice President and Chief Financial Officer John Jureller offered some insight into how the company is achieving this at a time when some other carriers are seeing a decline in broadband net-adds.

“We spent a lot of capital from 2010 forward making sure that we’ve got a robust network,” said Jureller. He noted that customers in 57% of Frontier’s serving area can get broadband at speeds above 20 Mbps, including 10% who can get service based on fiber-to-the-home.

Although 70% of Frontier’s broadband base continues to take service at what Jureller called “basic” rates of about 6 Mbps, half of new activity in Frontier broadband growth has been at higher speeds.

Frontier Broadband Growth
Frontier’s broadband gains have come, in part, through its acquisition of lines from AT&T and Verizon, many of which had been upgraded to fiber-to-the-node or FTTH. But Frontier also has upgraded lower-speed lines in those serving areas. Some customers in the Connecticut territory that Frontier acquired from AT&T can now get 100 Mbps broadband over copper. And when Frontier on April 1 takes control of lines in California, Texas and Florida that it is buying from Verizon, it plans to upgrade non-FTTH lines to higher-speed DSL.

“We can take copper to a significant [speed] level . . . in pretty short order,” commented Jureller. Only some relatively simple upgrades, including changing out electronics, would be required to take customers from broadband speeds of 7 Mbps to 50 Mbps, he said.

Frontier also has become more aggressive on video as a means of boosting broadband sales as part of a service bundle. For years the company has re-sold satellite-based video. But according to Jureller, the cost for Frontier to deliver its own video service has decreased as a result of advances in compression and server technology. As a result, Frontier expects to be able to bring video to 40 markets, or about 3 million households, within three to four years at a cost of just $150 million.

“It’s a low capex way to add a product and service where consumers want choice,” he said. Even with “modest” take rates, Jureller expects to see “some nice outcomes for us.” Customer acquisition and retention both get a boost when video is added to the service bundle, Jureller said.

Frontier already has rolled out video service in Durham, N.C. and has “three to four markets in sight,” Jureller said.

A Contrarian Move?
Frontier’s move into video may seem like a contrarian move at a time when some companies are shifting away from video, citing high programming costs and the threat from over-the-top video offerings. But Frontier has gained significant scale as a result of previous purchases from AT&T and Verizon – and will get a further boost from the new Verizon properties. And that already has given it better negotiating power with content providers, Jureller said.

Previously Frontier said it expects to keep Verizon service offerings when it picks up additional Verizon lines, and according to Jureller today, that includes Verizon’s Custom TV offering – a lower-cost, scaled-back content offering that has caused concern with at least one large content provider, ESPN. Initially ESPN was left out of the Custom TV package but Verizon has since introduced a Custom TV package that includes ESPN.

Jureller didn’t specify whether Frontier would match that offering, but that would seem likely, considering that Frontier, like Verizon, will want to maintain a positive relationship with ESPN.

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