Between 45% and 50% of new Frontier fiber broadband customers choose service at speeds of one or two gigabits, said Frontier CEO Nick Jeffery today. That helped put the company on target to increase average revenue per user (ARPU) 3% to 4% this year and the company expects a further ARPU increase for 2023.
Frontier charges $55 for 500 Mbps service, $80 for gigabit service and $150 for 2 Gbps service, with a $5 discount available for customers who choose an auto pay option, Jeffery noted.
Until recently, only about 10% of new Frontier fiber broadband customers opted for 1 Gbps or 2 Gbps service, Jeffery said. But that has changed “since we moved one gig to the front and center of our promotional efforts,” he explained.
New customers comprise about 15% of Frontier’s base, suggesting that the company has considerable upside potential to shift more people to 1 Gbps or 2 Gbps service and to gain the commensurate ARPU boost, Jeffery said.
Jeffery didn’t specify the breakdown between customers taking 1 Gbps or 2 Gbps service, but the portion of 2 Gbps customers undoubtedly is considerably smaller in view of the price difference and the fact that 2 Gbps service was only launched over the last year or so.
It’s worth noting that gigabit speeds are only available where Frontier has fiber broadband deployed and the company still has many areas where its only broadband offering is copper based. The company has been quite aggressive in deploying fiber since Jeffery took the helm, however, and for several quarters it has gained more net new fiber customers than it has lost in copper customers.
Also at today’s event, Frontier CFO Scott Beasley shared some results of Frontier’s analysis of the 5 million locations it refers to as “phase 3” of its fiber deployment plans. Those locations are the costliest to upgrade to fiber and were not part of the company’s initial target of 10 million locations to have fiber available by the end of 2025.
According to Beasley, Frontier believes it can deploy fiber to between one million and two million of the five million phase 3 locations without a government subsidy, leaving between three million and four million that would require a subsidy.
Jeffery and Beasley made their comments at the UBS Global TMT Conference. A replay is available at this link.