Until now, Frontier Communications upper management has remained aloof from ongoing disputes about video price hikes in three states—Indiana, Oregon and Washington–where the carrier acquired FiOS lines from Verizon. But that changed this week, as Frontier CEO Maggie Wilderotter addressed the issue on the company’s first quarter earnings call.
In a supreme understatement, Wilderotter said, “Our focus is not on new FiOS video deployment.”
Pointing to high installation, set-up and marketing costs, as well as increasing content costs, Wilderotter noted that Frontier had increased FiOS video installation prices in all three states. She also said the company had implemented a monthly price hike in Indiana and has “positioned to raise prices in Washington and Oregon as well” but has not yet done so.
What she didn’t say was how high prices have been raised. Video installation prices went from $79 to $500 in Oregon, where a state consumer protection agency has accused Frontier of reneging on promises made during the approval process for its acquisition of the Verizon lines.
The local response in Oregon is likely what drove Frontier to postpone its planned monthly Verizon FiOS price increase, intended to be as high as 46%, in that state and its Washington neighbor. Apparently consumers and governing bodies in Indiana did not raise such a fuss, as Frontier went ahead with price increases there, which were on par with what caused all the controversy in Oregon.
Not surprisingly, the carrier lost 12,000 out of 124,000 FiOS video customers in the three FiOS states in first quarter—as well as 5,000 FiOS data customers. But those losses were offset by 27,000 new video additions through Frontier’s satellite partners throughout the company’s entire footprint, which was more than double the rate of Q410—and Wilderotter noted that the company is also promoting satellite as an alternative to FiOS video in the three FiOS video states.
Wilderotter also emphasized that Frontier “is focused on keeping voice customers and on deploying more high-speed broadband bundled with satellite TV offers.” Rather than deploying fiber-to-the-home as Verizon did with FiOS, however, she said Frontier’s broadband deployments will be based on “a combination of copper and fiber infrastructure.”
Wilderotter referred to the FiOS video situation as “headwinds in our customer broadband and video net adds” that would impact the next few quarters—and financial analysts on the earnings call seemed to accept Wilderotter’s explanation of the FiOS situation without question, perhaps because the company’s overall video numbers showed an increase.
Uneconomical video content costs have been an ongoing concern for many Tier 2 and Tier 3 telcos, including Frontier. But Frontier has been the highest-profile complainer about this situation. And it looks like local Frontier management is likely to take continued heat from local interests—in Oregon, at least.
