Frontier Communications is scheduled to announce its emergence from bankruptcy reorganization as early as Friday, beginning a new era with a reduced debt load, new leadership, and a plan to retire a considerable amount of its copper wire network in favor of fiber optics over the next decade.

“Frontier is ready to set a new course as a revitalized public company. Through the restructuring process, the company has stabilized its business and recapitalized its balance sheet, while making significant progress on the early stages of implementing our initial fiber expansion plan,” said John Stratton, incoming executive chairman of the board. “Frontier’s success with the Fiber-to-the-Home pilot program, which upgraded more than 60,000 locations from copper to fiber optic service in 2020, is just one example of the important work already underway. Frontier’s future is bright. I’m eager to work closely with our new board, our CEO Nick Jeffery, and the rest of the leadership team to build the new Frontier.”

As part of its reorganization, Frontier shed nearly $10 billion in debt, most attributable to its earlier buying spree of castoff landline customers formerly served by AT&T and Verizon. The company’s budget busting 2016 acquisition of Verizon service areas in California, Texas, and Florida was called “a textbook case of how not to do an acquisition,” by The Dallas Morning News. 

For at least a decade covering 2010-2020, Frontier was regarded as one of the worst phone companies in America in consumer surveys. Most of its legacy customers still suffer with Frontier’s dilapidated and deteriorating copper wire network and the slow speed DSL service barely supported on it. Speeds of 1-3 Mbps maximum are still common in some places, even in urban areas. Frontier’s acquisition of Verizon FiOS and AT&T U-verse service areas in states like Indiana, Washington, Connecticut, Florida, Texas and California gave a minority of customers access to pre-built fiber to the home networks, but Frontier’s notoriously poor switchover from Verizon and AT&T’s billing systems to their own effectively drove off hundreds of thousands of formerly loyal customers.

Under the leadership of former CEOs Maggie Wilderotter and Dan McCarthy, Frontier dragged from one quarter to the next, promising improvements that failed to materialize for most customers. The company’s $10.5 billion acquisition of landlines in California, Texas and Florida was particularly costly as the company sold bonds offering astonishing 10.5-11% interest rates to investors to cover more than $5 billion in debt coming due for repayment. A year after the Verizon deal, a half million Frontier customers left for good and the company lost $262 million.

Frontier’s latest fiber plan is to target upgrades in its legacy service areas, noted in blue on this map. These areas are all almost entirely served by copper wire, provide slow speed DSL, and are long overdue for fiber upgrades. Frontier will also expand fiber in its acquired service areas, represented by other colors on the map. Note that Frontier sold its Pacific Northwest region, marked by the red box, to Zipply Fiber, which also plans to scrap Frontier’s copper wire network in favor of fiber. (Map courtesy of Light Reading)

By the time bankruptcy was inevitable, Frontier was saddled with billions in debt and no financial ability to embark on fiber upgrades the company should have committed to a decade ago. Almost all of its existing fiber footprint was acquired from other companies.

Stratton

Frontier’s new management includes John Stratton, a former Verizon executive. Stratton believes Frontier’s future depends on the company expanding its fiber footprint. In 2020, it put that plan to the test by expanding fiber to the home service to 60,000 additional homes in a pilot project proving Frontier can plan and execute fiber upgrades on time and on budget. But a closer look at the numbers shows the majority of homes Frontier “upgraded” were brand new. Of the 60,000 homes, 44,000 were located in new housing developments or were unwired previously. These “greenfield” locations are typically easier to provision and much less expensive to service than pre-existing homes where Frontier first needs to decommission its existing copper wiring and replace it with fiber optics. Only around 16,000 pre-existing homes saw copper wire replaced with fiber in so-called “brownfield” locations.

For Frontier to succeed, it will need to move a lot more copper customers to fiber optics to remain competitive in the marketplace. Currently, Frontier serves approximately three million fiber homes and 11 million copper homes. Frontier is expected to announce fiber upgrades for an additional six million homes and target about 85% of its footprint to be serviced by fiber… eventually.

Some proposals hint the company could take five years or more to complete upgrades at the same time independent fiber to the home providers, next generation satellite internet, and wireless home 4G/5G internet plans are expanding. Much of Frontier’s service area is serviced by cable companies already providing high speed internet. Frontier’s plan assumes it will capture about 40% of the market — a tall order in communities like Rochester, N.Y., where dominant cable provider Charter Spectrum is assumed to have 70+% of the home broadband market. When competing fiber providers enter the market, Spectrum often slashes promotional pricing to $30 a month for 400 Mbps internet service for two years. Spectrum will probably offer similar pricing in newly competitive markets to retain customers threatening to cancel service and switch to Frontier.

Frontier plans to discuss its exit from bankruptcy and where the company will go in the future in a webcast presentation this Friday, April 30, 2021 at 10:00am ET.

Customer satisfaction with fiber to the home internet service is so high, one industry leader says the only time customers cancel service is if they move or die.

Carl Russo, CEO of internet equipment vendor Calix, says phone companies are relying on fiber optic networks to turn their struggling businesses around except in the most rural areas of the country.

“Fixed wireless will sometimes be the right choice and Calix’s software supports it. But our telco customers with fiber will lose very few customers. If they provide strong, customer-focused service, no one will have a reason to switch,” Russo told Dave Burstein’s Fast Net News. “It’s only a slight exaggeration to say customers only churn if they move or die. This is provided the service provider chooses to ‘own’ the subscriber experience. A service provider that invests in fiber but doesn’t further invest in an excellent subscriber experience is still vulnerable.”

Russo argues that fiber to the home service has been the right choice for most of the developed world for several years now, at least where there is hearty competition between providers.

Where competition is lacking, phone companies often still rely on archaic DSL service, which is increasingly incapable of competing with even smaller cable operators. Phone companies are now up against the wall, forced to recognize that existing, decades-old copper wire infrastructure cannot sustain their future in the broadband business. Companies that drag their feet on fiber upgrades are bleeding customers, and some companies are even in bankruptcy reorganization.

Russo

Fiber networks are future-proof, with most offering up to gigabit speed to consumers and businesses. But upgrading to 10 Gbps will “add little to the cost” once demand for such faster speed appears, Russo said.

Fast Net News notes that France Telecom, Telefonica Spain, Bell Canada, and Telus have all proven successful using fiber to the home service to compete with cable companies to market internet access. Companies that approved less costly fiber to the neighborhood projects that relied on keeping a portion of a company’s legacy copper network, including AT&T, BT in the United Kingdom, and Deutsche Telekom in Germany, have had to bring back construction equipment to further extend fiber optic cables to individual customer homes — a costly expense.

Even public broadband projects like Australia’s National Broadband Network (NBN) paid dearly for a political decision to downsize the NBN’s original fiber optic design to save money. The NBN was hobbled by a more conservative government that came to power just as the network was being built. Many NBN customers ended up with a more advanced form of DSL supplied from oversubscribed remote terminals, which delivered just 50 Mbps to some subscribers. For-profit companies have also been pressured to keep costs down and limit fiber rollouts by Wall Street and investors. Verizon FiOS is the best known American example, with further network expansion of the fiber optic service essentially shelved in 2010 at the behest of investors that claimed the upgrades cost too much.

Underfunded upgrades often bring customer dissatisfaction as speeds cannot achieve expectations, and many hybrid fiber-copper networks are less robust and more subject to breakdowns. In the United Kingdom, BT’s “super fast” broadband initiative has been a political problem for years, and communities frequently compete to argue who has the worst service in the country. BT’s fiber-to-the-village approach supplies fiber internet service to street cabinets in smaller communities that link to existing BT copper phone lines that are often in poor shape. Customers often get less than 50 Mbps service from BT’s “super fast” service while a few UK cable companies are constructing all-fiber networks in larger cities capable of supplying gigabit internet speed to every customer.

Calix is positioned to earn heavily by selling the equipment and infrastructure that will power future fiber network upgrades that are inevitable if companies want to attract and keep customers. A new round of federal rural broadband funding will help phone companies pay for the upgrades, which means many rural Americans will find fiber to the home service in their future.

One of America’s internet service providers managed to achieve a customer satisfaction score of 94%, an unprecedented vote of approval from consumers that typically loathe their cable or phone company.

What also makes this provider different is that it is owned by the public, and administered by the City of Fairlawn, Ohio. Fairlawn is a suburb of Akron, with a population of around 7,400 people. Akron is dominated by Charter Spectrum for cable and AT&T for telephone service. But the suburbs have been underserved by both companies for decades. As with many northeastern cities, the economic shift away from manufacturing towards high-tech businesses requires robust connectivity. But many communities are stuck with a cable company that will not service less populated areas in town and a phone company that is willing to leave many customers with low-speed DSL and nothing better.

When a community finds it cannot get gigabit fiber optic service for residents, it can either live with what is on offer instead or decide to do something about it. Fairlawn decided it was time to establish FairlawnGig, a municipal broadband utility that would provide gigabit fiber service to every resident in town, if they wanted it.

Broadband Communities reports local residents love the service they are getting:

The online survey results reveal overall satisfaction with FairlawnGig at an astoundingly high number of 94% with more than 3 out of 4 (77%) saying they are “very satisfied.”

Additionally, FairlawnGig 94% of residential customers rated the service they receive from FairlawnGig as “excellent” or “very good.”

FairlawnGig offers two plans to residents: 300/300 Mbps service for $55 a month or 1,000/1,000 Mbps service for $75. Landline phone service is an extra $25 a month, and the municipal provider has pointed its customers to online cable TV alternatives like Hulu and YouTube TV for television service. Incumbent cable and phone companies usually respond to this kind of competition with cut-rate promotions to keep the customers they have and lure others back. Spectrum has countered with promotions offering 400 Mbps internet for as little as $30/mo for two years. Despite the potential savings, most people in Fairlawn won’t go back to Spectrum regardless of the price. FairlawnGig’s loyalty score is 80, with 85% of those not only sticking with FairlawnGig but also actively recommending it to others.

Residents appreciate the service, deemed very reliable, and that technicians are local and accessible. The City says it works hard to ensure that customer appointments are kept and on time and representatives are available to assist customers with their questions and technical support needs. FairlawnGig claims its technicians spend extra time teaching customers about their services.

City officials candidly admit they were willing to build and launch the municipal fiber service even if it did not recoup its original investment for years to come. That is because the municipal fiber network has benefited the city in other ways:

• It has attracted new residents to town and kept them there.
• Several businesses launched or moved to be within FairlawnGig’s service area. Most are white collar businesses, such as IT firms, software and hardware engineers, and consultants.
• A new orthopaedic hospital is being developed in the town, in part because FairlawnGig can provide connectivity up to 100 Gbps for things like medical imaging and video conferencing.
• As businesses move in, so do workers looking for a shorter commute. Property values in the town have increased and realtors make a point to alert would-be buyers when a property is within FairlawnGig’s service area.

In short, Fairlawn officials see providing internet access as more than just a profit center. It is a public service initiative that is paying back dividends that will eventually exceed the $10 million investment taken from the city’s general fund to build the network. Taxes did not increase as a result of FairlawnGig either. Now other towns around Fairlawn and the city of Akron itself are showing interest in how to join forces to expand the public service well beyond Fairlawn’s town borders.

WOIO in Akron covered FairlawnGig back in January 2019 in this report explaining how a publicly owned fiber to the home service was delivering gig speed to this northeastern Ohio community. (2:31)

Charter Spectrum customers across Ventura County, Calif., are reporting significant outages of TV, internet, and phone service as a result of the region’s ongoing wildfires, which have caused significant damage to Spectrum’s fiber optic lines.

“Our fiber lines have been damaged or destroyed by the fire in multiple areas,” said Spectrum spokeswoman Pamela Yu in an e-mailed statement. “Our technicians will be working to restore service as soon as it is safe to do so, and we get approval from the fire department to go into those areas. We are repairing fiber where we have been given access and crews are restoring services.”

Stop the Cap! reader Juan Hidalgo, who lives outside of Camarillo, told us he lost service late last week, saw it briefly restored on Monday, and is out of service once again.

“I waited on hold 49 minutes before a representative confirmed there was additional damage to their fiber optic service lines, which are spread across the county and have affected Spectrum and other providers,” Hidalgo said. “I know it is not their fault, but I wish they had redundancy in their network so they could transfer service to another cable not affected by the fires.”

Hidalgo and his family are safe, although they could see smoke from the Woolsey fire last weekend. Things have calmed down since then, and Hidalgo says he realizes that his inconvenience pales in comparison to the losses some Californians are experiencing.

“My heart goes out to them and their families, and I am aware that in comparison having your cable out doesn’t really seem that important, but considering how serious fires are becoming in California, finding ways to maintain service to get important messages out seems more urgent than ever,” Hidalgo said.

The fires have also caused disruptions to other service providers, especially fiber-fed cell towers in fire areas. As customers drop landline service, most depend on their cellphones to get urgent alert messages and stay in touch with friends and family, as well as emergency services like 911. Those who escaped from the devastating Camp Fire in northern California reported significant problems making and receiving calls during the peak of the fire and the resulting evacuation. Most reported text messaging was the most reliable service when calls did not go through and internet service was spotty.

Some attempts by volunteer groups and competing ISPs to bring up publicly accessible internet hot spots had mixed results, according to the Ventura County Star.

From the producers of Dividing Lines:

Across the country, state legislatures have created barriers to community involvement in expanding internet access.

In Tennessee, lobbyists from AT&T, Charter, and Comcast spread huge campaign contributions around the state legislature. AT&T’s influence is felt in the governor’s own broadband expansion legislation, which was tailor-written to allow the phone company to collect huge taxpayer subsidies to expand inferior DSL into rural parts of Tennessee.

Meanwhile, some local communities seeking to build state-of-the-art fiber to the home networks capable of delivering 10 gigabit service found that doing so would be illegal under state law.

Think about that for a moment.

A multi-billion dollar telecom company is allowed to expand its slow speed DSL network with taxpayer-funded grants while your local community is forbidden to bring fiber optic service to your home even if your community votes to support such a project. Exactly who is the governor and state legislature working for when it comes to resolving Tennessee’s rural broadband nightmare?

In part two of this series, watch State Senator Janice Bowling describe how much influence AT&T has over the Tennessee state legislature. (5:31)