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Frontier’s Future Plans: Delivering DSL and DirecTV Options for Its FiOS Customers, Contracts for Others

Phillip Dampier November 18, 2010 Audio, Broadband Speed, Competition, Frontier, Rural Broadband, Video 5 Comments

Don’t want blazing fast fiber optic broadband speeds?  Unhappy with fiber optic quality video and want to go back to putting a satellite dish on your roof?  If the answer to either question is “yes,” Frontier Communications has good news for you.

The phone company, which assumed control of a handful of communities formerly served by Verizon’s fiber-to-the-home FiOS network, has announced it will begin marketing DSL and satellite TV services to its fiber customers.

Frontier CEO Maggie Wilderotter told investors on a third quarter results conference call that FiOS broadband could be too expensive.

Wilderotter noted Verizon would not allow customers in a FiOS neighborhood to buy DSL service, which leaves budget-minded customers behind.

“Now, FiOS starts at like 50Mbps and it’s very expensive. It’s like $50 a month for a customer. So they left a whole host of customers behind from an affordability perspective who didn’t need that kind of capability on broadband.” Wilderotter explained. “We have just over the last 30 to 60 days opened up DSL in all of the FiOS markets to give the customer choice. So the customer can choose whether they want FiOS broadband or they want high-speed Internet service, typically, and in those markets we’re offering around 6 to 7Mbps.”

Time Warner Cable occasionally runs promotions helping customers break free from Frontier's multi-year service contracts.

Of course, Frontier FiOS starts at 15Mbps — not 50, and that costs $50 a month for standalone service.  For $99, ($89 in Verizon FiOS areas), customers can get broadband, cable TV and unlimited phone service.  Frontier’s “Turbo” DSL service is priced at $40 a month for up to 7.1Mbps service.

Wilderotter also noted their FiOS customers can also choose to skip fiber video and go with DirecTV.

“We think that customers should be able to choose what kind of video they want,” she said. “We have aggressive offers in the market for both DirecTV and for FiOS video, but in our vernacular, what we care about is keeping the customer, getting the customer to take more products and services from us and making sure the customer is happy with the choice.”

Wilderotter said Frontier is prepared to tolerate more congestion on its DSL circuits than Verizon permitted, which opens the door to potential traffic slow-downs down the road.

“We’ve opened up in many of these locations the opportunity to sell high-speed service up to 95% capacity on the equipment that we have out in the field. Verizon had set a parameter at 75%,” Wilderotter said.

The company continues to study whether Frontier FiOS is worth maintaining or expanding outside of the Verizon territories where it was originally constructed.

“We are still evaluating it from a financial perspective and a customer perspective, and from a cost perspective and a revenue perspective,” Wilderotter told investors. “In terms of what that does for us overall, what it does for churn, how much does it really cost to extend this capability in the markets that we’re in today — we think that analysis and evaluation will go on through the first quarter [of 2011] and then we’ll be able to make some [decisions] in terms of what we want to do with FiOS from an expansion perspective or a maintenance perspective.”

Frontier Communications CEO Maggie Wilderotter answered questions about broadband expansion and the impact of the fall elections on telecommunications policy in Washington. (11 minutes)
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Frontier's largely rural service areas provide a captive audience for the company's DSL broadband service.

In the near term Frontier has several plans to get more aggressive in the marketplace to meet its target goal of losing only 8 percent of their customers per year — a goal that illustrates legacy phone companies are still on a trajectory towards fewer and fewer customers:

  1. Don Shassian, executive vice president and chief financial officer of Frontier reports expansion of DSL remains a top priority for Frontier.  The company is on track to deliver access to 300,000 additional homes by the end of the year.  Verizon delivered access to 64 percent of Frontier’s acquired territories.  Frontier wants to get that number up to 85 percent.  But part of that target is not just expanding service to unserved areas.  It’s also trying to win back customers lost to other providers through promotions and incentives.
  2. Frontier plans to resume aggressive promotions in the coming weeks and months, including its “free Netbook” promotion, which provides a Netbook computer to new customers signing up for several packages of services, committing to remain with Frontier for at least two years.
  3. Frontier intends to push “price protection agreements” on as many customers as possible.  Their “Peace of Mind” program locks customers into multi-year contracts with stiff cancellation penalties.  Wilderotter noted: “I think, as you know, in our legacy markets, 96% of all of our sales are on a price protection plan and we have close to 60% of our residential customers on a one-, two- or three-year price protection plans. That number is below 15% in the acquired markets. So we’re also driving for price protection plans with every sale that we’re doing in these new markets as well.”  Such contracts dramatically discourage a customer from disconnecting Frontier, because fees for doing so can exceed $300 in some cases.  Frontier has been heavily criticized by some customers and State Attorneys General for deceptive business practices regarding contracts.

Frontier continues to enjoy a lack of solid cable competition in its largely rural service areas.  Shassian reports Comcast competes with Frontier in only about 32% of homes in some areas, Time Warner Cable in about 23%, and Charter below 15%.  With reduced competition, Frontier often represents the only broadband option in town.

Frontier is also spending an increased amount of time coping with copper thefts, especially in West Virginia where the company is warning would-be thieves it will prosecute to the fullest extent of the law.

“Damage to our facilities can affect communications access in an emergency, increase company costs and consumer rates, and disrupt community phone and broadband connections,” said Lynne Monaco, Frontier’s Director of Security. “When network connections are severed by copper thieves, it endangers customers and emergency responders and poses significant risks of personal injury and property damage.”

Just last week, West Virginia state police solved another copper caper that disrupted service for some customers.

The Charleston Daily Mail reports:

Photo Credit: West Virginia Regional Jail Authority

Stephanie Burdette of Charleston was arrested in connection with a copper wire theft.

Trooper A.B. Ward from the South Charleston detachment went to the Fishers Branch area of Sissonville last Thursday afternoon when a Frontier worker discovered a section of the communications line missing. The worker found that 300-feet of the 400-pair line, valued at about $5,000, was missing, according to a complaint filed in Kanawha Magistrate Court.

A trooper who had worked on a similar investigation told Ward to check the home of Ervin “Tubby” Page, 49, where troopers had previously found evidence of wire burning. Ward went to Page’s home, described as a Goose Neck travel trailer parked next to the Guthrie Agricultural Center in Sissonville, and found three burn barrels about 50 feet in front of the trailer. One of them was on fire.

Page’s girlfriend Stephanie Marie Burdette, 25, of Cross Lanes, was at the scene when the trooper arrived. Ward spoke to her then checked out the barrels where he found aluminum wrap, which is used to cover the copper communications wiring, and pieces of copper cabling, the complaint said.

Frontier customers are encouraged to report any suspicious activity around telecommunications equipment and facilities by calling the company’s toll free security line 1-800-590-6605. Anyone witnessing a theft in progress should not confront the suspects but should immediately call 911 and then call Frontier. Vehicle and suspect descriptions are very useful. This is a community safety problem, and the cooperation of the public is critical.

WOWK-TV in Charleston covers Frontier’s difficulties with copper wire thieves across the state of West Virginia.  (1 minute)

Currently there are 5 comments on this Article:

  1. rob says:

    The answer is no. People want fiber and speed. They are willing to pay for it. Frontier is a dying dinosaur. Their copper is old and slow. I give them less than 10 years and then they will be done.

    Their CEO is full of propaganda.

  2. PeoriaJoe says:

    Sure sounds as if Maggie is tied to good ole copper POTS, and not thinking much of fiber.
    Looking forward to near by towns expanding their new fiber over to our town.

    Frontier wil be competing with 2 new fiber challengers in Peoria area soon.
    When that happens, it won’t look pretty.

  3. Ian L says:

    Wow…she is…like…out of touch with reality. Completely.

    1. Selling service up to 95% of capacity makes my skin crawl, depending on what we’re talking about. If we’re talking about selling 14 3Mbps customers on a 45 Mbps backhaul, okay, but I seriously doubt that that’s what’s happening here. More likely is that Frontier will keep on selling DSL service until, during peak (or even nonpeak?) times backhauls will be loaded down at 95%, likely measured at 95th percentile. The result: on a 45 mbps backbone (wouldn’t be surprised if there are plenty of those…and maybe lower-capacity ones…out on Frontier’s network) and during peak times, there is a good chance that even a 3 Mbps DSL customer will not be able to get full speed out of their line due to backbone-related issues. Then again, many Frontier customers are already seeing this.

    75%? Good. 80%? Sure. 95%? HECK NO.

    P.S. Good guideline: ALWAYS leave enough capacity on your network so your fastest-tier customer can download full-bore without having speed issues. For 7 Mbps DSL on a 45 Mbps T3 backbone, with actual capacity being on the order of 43 Mbps and DSL speed including overhead needing to be around 8 Mbps, that works out to an 81% peak load rule. Not 95%.

    2. Regressing from providing video, voice and super-high-speed data over fiber to providing HSI and voice over DSL and TV over satellite is pretty much throwing out the baby, the bathware AND the bathtub. For one thing, Frontier’s DSL pricing approaches that of FiOS’s low-end tier. For another, fiber infrastructure is cheaper to maintain than copper. Last but not least, video over fiber is better quality-wise than what’s delivered over satellite, with no dish required.

    Okay, honest opinion time. Wilderotter should be fired. Now. Before she has a chance to screw over her customers and her company. Hopefully the company wakes up when it implements these procedes and sees customers flocking to ANY alternative to Frontier. At that point they should put two and two together and realize that they aren’t in the 1990s anymore and investment in infrastructure, not free netbooks, is what will keep customers signed on with their service, rather than overriding contracts via the BBB and the AG due to downright crappy service.

    • Smith6612 says:

      Agree. Lately I’ve noticed with my Frontier connection is that occasionally I’ll have times of congestion or what seems to be equipment trouble on Frontier’s end. I can be downloading at a consistent speed and then all of a sudden, the connection hits the fan for 5-20 minutes and then goes back to how it should be working. A DSLReports line quality test is suggesting congestion or equipment trouble in Rochester, as that’s where the packet loss starts and eventually ends up to me. A neighbor of mine who has Frontier DSL also sees the same issue. I know recently they did some upgrades to my CO bringing in a load balanced setup instead of running things through a single backhaul for both telephone and Internet, so things have improved a bit. It’s just the congestion on the backbone as well as the routing needs to be fixed up.

      I’ve already informed a local tech in my area about ATM Cell Errors their network seems to love to spit up when downloading at full speed, so that’s one thing he’s going to check into for me as it seems to be a system-wide problem, but the congestion issues Frontier tends to have on their backbone definitely need to be sorted out before they start selling DSL at 95% capacity which is bad. Verizon can get bad in some areas but it’s generally not too hard to solve.

      As for number 2, yes it does seem as though Frontier doesn’t wish to keep FiOS up and running, though if they’re keeping Verizon’s pricing for DSL it’s possible that they are making that simply a second option. This also raises the question though, why not deliver DSL speeds over the fiber? I’d imagine it’d be less trouble to do that (offering maybe 3Mbps/3Mbps speeds) than trying to deal with a copper loop not in the best of shape and possibly a network near capacity.

  4. Watchdog says:

    Spoke with a Tech in Rochester today. I was told that there is an issue with their network and they have NO timetable for fixing this problem. As a result my ticket was being closed as there was no reason to test my line and no field tech was being sent. My bill however is on the way.

    Maggie however needs to stay – long enough for me to short Frontier stock. This company seems to be focussed on their customers much like they were with their employees several years ago. Painting trucks with Frontier decals , locking customers into 1,2 & 3 year “price protection” and maxing out coverage to 95% may work for Wall Street for the time being but it won’t last in this cometitive environment as a business model. They bash Verizon for their policy of maxing at 75%. That’s called delivering the goods to their customers.

    Time Warner should have a field day with this as I am told by a sales rep in the area that business couldn’t be better. It is like shooting fish is a barrel.

    Maggie – cash in your stock options. They may be worthless soon.

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