Frontier Communications agreed Wednesday to acquire nearly five million telephone customers being spun off from Verizon, primarily in rural areas, for $5.25 billion in stock. The buyout supercharges Frontier into the nation’s largest rural telephone company.  But the deal also puts a spotlight on large providers sacrificing their rural customers to focus on their larger urban markets.  About 700,000 of those Verizon customers are now off the list for Verizon FiOS deployment, as they transition into Frontier service territories.

Verizon’s chairman and CEO Ivan Seidenberg characterized the spinoff as part of Verizon’s interest in larger cities where advanced technology deployment makes sense.

“This transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services and other broadband development, and global IP,” he said.

Our analysis of this will focus on the broadband implications of the transaction.  With this acquisition, Verizon wins by offloading more expensive and difficult-to-serve rural communities, where it is unlikely to deploy large broadband platforms in the future.  Frontier wins by becoming the nation’s largest rural telephone and communications services provider, potentially accessing even larger shares of forthcoming broadband stimulus money and other revenue available from the Universal Service Fund to sustain rural telephone service.

But will customers win?  Today’s announcement provides additional evidence that broadband service is diverging in urban and rural communities.  Large communities are enjoying deployment of advanced broadband platforms, and rural communities are simply not.

Frontier Communications Believes Rural America -Is- Their Business

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Frontier Essentially Accuses Time Warner Cable of Being a Shakedown Artist

Frontier Communications has continued its aggressive campaign to hit back against its cable competition, most notably Time Warner Cable.  In its most recent advertising in the Rochester area, Frontier compared Time Warner Cable’s broadband usage caps and rate hikes “the Cable shakedown.”  Wow.  Even we don’t go that far.

Frontier has gotten aggressive since Time Warner Cable made Rochester, Frontier’s largest service area, a test market for its Cap ‘n Tier program, temporarily shelved.  Frontier doesn’t believe for a second that Time Warner Cable is done with metered billing in this community, and neither do we.  So they are going to spend the summer continuing efforts to poach Time Warner’s customers.

Meanwhile, Frontier CEO and Chairwoman Maggie Wilderotter has penned an e-mail being sent to every Frontier customer commenting on the economy and calling out cable for annual rate increases:

Dear Frontier Customer,

We are in tough economic times. As you look for ways to save money, I want to assure you Frontier is dedicated to providing you with robust, value-added voice, high-speed data and video products.

Now, more than ever, Frontier is committed to the communities we serve. As a significant employer and a major taxpayer, Frontier takes pride in our active role in our markets. Our local managers and front line employees are highly visible and involved in many community organizations and events. They stand ready to suggest ways to use our services and resources wisely.

We provide innovative solutions and products for all types of communications needs. Fast, reliable communications technology, especially broadband, has never been more important. Customers tell me that as their budgets get smaller, the value of using our services in the home increases. Many families rely on Frontier products for their jobs, education and entertainment. Whether it’s Digital Voice, Data, or Video, we are here to help you explore different product and pricing options. Just visit any Frontier location or give us a call at 800-921-8101 and our customer care representatives will help you.

Despite recessionary times, Frontier continues to invest in the technology that gives you the power to connect at home, in the office or on the go with speed and reliability. We are committed to your complete satisfaction. Unlike our Cable Operator competitors, we don’t depend upon an annual rate increase; in fact, Frontier provides price protection plans so you know what to expect during your agreement term. We are proud to offer the best products at the best prices in our markets – with unparalleled service to make the customer experience the best it can be. Frontier is local, financially solid, and optimistic about the future.

Although none of us know when it will happen, I do believe better times are ahead. We have been tested before and emerged stronger. We will get through this, and Frontier is here for you in good times and challenging times.

Thank you again for your business and support. We take it seriously and all of us at Frontier will continue to work hard to provide you with the best communications products and services.

Sincerely,
Maggie Wilderotter
Chairman and CEO
Frontier Communications
[email protected]
I can help you!

Now if only their DSL product could deliver consistent results no matter where their customers might live (and they keep their own 5GB ‘acceptable use’ stuff unmonitored and unenforced.)

For your convenience, I have compiled a package of media on the 1st Quarter Results for Frontier Communications, including audio from this morning’s investor conference call, and copies of the reports for your review. You must remain on this page to stream audio clips.

A cue sheet is referenced below for the different audio actualities. The complete conference call is available for download as an MP3 file.

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Frontier Communications reported its 1st quarter 2009 results this morning, demonstrating a growing proportion of its overall business is coming from data products and services.  Frontier is an independent telephone company serving rural and suburban communities across the United States, with its largest market being Rochester, New York.

CEO Maggie Wilderotter put a positive spin on an otherwise lackluster report, showing the company’s revenue had declined when compared with last year’s same quarter results.

“I am very pleased with Frontier Communication’s 2009 first quarter results bolstered by our “Rolling Thunder” promotional campaign,” said Maggie Wilderotter, Frontier Communications Chairman and CEO.

“Frontier surpassed 600,000 High-Speed Internet customers and as of today has surpassed 150,000 DISH Network video customers. Our first quarter High-Speed growth was the best since the first quarter of 2008 and our first quarter DISH video growth was equal to all video subscribers added during the entire year of 2008. We took market share from our cable competition and we improved our customer churn. Access line losses improved for the third consecutive quarter, Wilderotter reported.”

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The month long experiment with Frontier DSL ended today when I canceled the service.  Frontier Communications of Rochester is the only broadband competitor for Time Warner in the Flower City, advertising speeds up to 10Mbps.  The key words there are “up to” and the fine print where they disclose they do not guarantee speed is something very important to consider, because they mean it.

I have to say that Frontier’s second tier of customer support personnel are friendly, helpful, and accommodating, which is a net plus for them.  The front line customer service representatives in DeLand, Florida are another matter.  They do not know their own products, messed up my account twice, and one managed to refer to their wireless network in this city as “wee-fee” for several weeks before I corrected her.  She was surprised when I explained it was pronounced “why-fi.”

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