Despite making revenue growth the top priority at Frontier Communications, the company still managed to lose 3% in year over year revenue as another 51,800 customers pulled the plug on their Frontier landline and slow DSL service.

Frontier’s latest quarterly earnings showed a net income rise to $67 million, a major improvement over $20.4 million earned during the same quarter last year. The earnings improvement comes from reduced operating expenses, down 12 percent to $977.3 million and rate increases for certain Frontier markets in less-competitive areas.

Frontier CEO Maggie Wilderotter told investors the company has been reviewing accounts obtained from Verizon Communications, scrutinizing for “unnecessary credits, adjustments, and discounts, ” and systematically eliminating them.

“We’ve got a number of [ex-Verizon] customers that have been with us at a very, very, very low price point; they’ve been on promotions,” said Donald Shassian, Frontier’s chief financial officer. “They’ve been in existence for years and never got curtailed. And once we converted [those customers] onto [Frontier’s billing system], we identified those.”

Frontier’s plan for future growth is a temporary transition away from expanding broadband service into unserved areas, instead focusing on speed upgrades and service improvements where Frontier already serves.

Frontier: Speed upgrades “help dispel the myth that DSL technology cannot keep up with customer demand.” Faster speeds support IPTV as well.

Frontier has targeted investment on improving speeds and network capacity for customers currently stuck with 1-3Mbps traditional DSL service. Frontier is using its fiber-based middle mile network and more advanced forms of DSL to dramatically increase broadband speeds. According to company officials, 64% of Frontier’s exchanges are now equipped with VDSL2, with speeds up to 40Mbps. At least 73% have equipment capable of bonded ADSL2+ with speeds up to 20Mbps. The target for Frontier’s fastest speeds are commercial customers. By the end of this year, 71% of Frontier’s exchanges will support carrier Ethernet service up to 1Gbps for business accounts.

Most Frontier residential customers will see more modest speed improvements. During the third quarter, Frontier expanded its higher speed offerings with more to come:

• 20Mbps service is now for sale in 34% of its national service territory. By year end, 40% will have access and 52% by 2013;
• 12Mbps service is now available to 48% of its network footprint. By the end of the year, 51% of homes will have access and 60% in 2013;
• 6Mbps is now available to 67% of Frontier-served homes, with 74% expected by year end and 80% by 2013.

“We’re seeing 100Mbps delivery in vendor labs and that should be a reality in the next 12 months in our markets,” Wilderotter said. “This should help dispel the myth that DSL technology cannot keep up with customer demand.”

Wilderotter noted that the latest network upgrades might eventually support television service.

“We think we have the opportunity to offer an IPTV-type service in many of our markets, to many of our customers,” said Wilderotter. “In our labs, we’re doing some experimentation on the DSL platform with certain types of technologies that compress the data stream, so we could actually offer a very good video experience at 6Mbps or above. We’ll be doing some experimentation with that in 2013.”

New Products, More Simplified Pricing, Bigger Promotions

To better compete with cable, Frontier has simplified many of their broadband packages, eliminating the modem rental fee and other hidden surcharges for customers. Wilderotter noted the cable industry has recently started to “nickle and dime” customers with modem rental fees and surcharges, something Frontier has also charged customers in the past.

Frontier is now staking a position in simplified pricing.

“So when a customer gets a quote of $39.99 for broadband, it includes the modem, it includes surcharges, it includes everything,” Wilderotter explained. “So they’re not surprised when they get their bill. And we think that’s a huge value selling point for our product set.”

But simple pricing is not always lower pricing.

Increases in broadband service pricing, a hike in the Subscriber Line Charge, and other surcharges introduced for departing customers helped add to the company’s bottom line. But Frontier insists it adjusts rates only after considering the competitive environment.

“You don’t necessarily see us do price increases on broadband across the board,” explained Shassian. “We also believe that the price increases should be associated with increased value to the customer, too. So in some cases, it’s incremental speeds and capability.”

In an effort to upsell current customers, and even more importantly “win back” those who left, Frontier has introduced an aggressive new promotion that will reward subscribers with up to a $450 Apple gift card when committing to a new two-year contract. The value of the gift card ranges depending on how many services a customer chooses.

Stop the Cap! found Frontier pitching a triple play promotion in Tennessee for $87.99 a month with a $450 Apple gift card for new or returning Frontier customers. The bundle includes 6Mbps DSL, Frontier residential phone service with features and long distance service, and DISH Networks’ America’s Top 120 satellite service.

But there is fine print, including a two year service agreement with a $400 early termination fee for phone and broadband service, a DISH cancellation fee of $17.50 for each month remaining in a two year contract, at least $85 in “setup fees,” a $9.99 “broadband processing fee” if a customer disconnects service, and an online bonus credit a customer has to remember to request within 45 days of service activation.

Other Frontier Developments This Quarter

• Frontier began deploying the FCC Connect America Fund proceeds during the quarter to bring broadband to 92,877 new Frontier homes;
• A wireless partnership trial with AT&T began on October 8 in Washington and Minnesota. The discounted package bundle is only available to customers who also maintain Frontier broadband service;
• Over 203,000 Frontier customers signed up with legacy partner DirecTV saw their satellite service unbundled from their Frontier bills this quarter. Frontier chose DISH Networks as its satellite partner back in 2011, and the company has encouraged its old DirecTV customers to consider switching to DISH;
• Business customers constitute 52% of Frontier customer revenues. Frontier expects more than 66% of total customer revenue to come from broadband service;
• Frontier’s Simply Broadband, a broadband-only product, used to include a free landline. Not anymore;
• Frontier will begin accelerating promotions for its Apple Store gift card starting this week;
• Hughes Net Satellite service was integrated into Frontier’s systems and is pitched to customers as Frontier Satellite Broadband. It will be targeted to 750,000 households that cannot access wired broadband service from Frontier.

Time Warner Cable customers who sign up for a triple play package between now and Jan. 5 can qualify for a free Xbox 360 4GB console and a Best Buy gift card worth $150. Customers signing up for Signature Home ($199/month) receive an even fatter reward — a $500 Best Buy gift card. Both new and existing customers qualify.

The deal also discounts Time Warner’s TV, broadband, and phone service to $89.99 a month for a year, although equipment may cost extra.

Those interested must sign up through Best Buy to qualify.

Ironically, the Xbox 360 allows customers to stream video content from companies other than Time Warner. But the cable company has traditionally never minded much if customers use third-party devices to access content, as long as they are using Time Warner Cable’s broadband service to do it.

The company recently announced it would step up the aggressiveness of some of its customer promotions in an effort to reduce customer churn.

Best Buy does not mind the extra traffic in its stores. The electronics retailer continues to face challenges getting customers inside their stores to buy.

Time Warner Cable has been mailing offers to broadband-only customers offering free cable-TV service if they upgrade their Internet speeds to the company’s Ultimate 50/5Mbps tier, which currently sells for $99.95 a month in most markets.

The company began the promotion in early summer, but targeted broadband-only customers already upgraded to Turbo or Extreme speeds. Now it is available to any Time Warner broadband-0nly customer.

Customers can choose between two levels of service:

• $99.99 a month for 12 months: 50/5Mbps Internet service plus “Digital Essentials” TV, which includes local stations and around 40 additional cable networks;
• $139.99 a month for 12 months: 50/5Mbps Internet service plus “Digital TV,” which includes over 200 television channels and free HD DVR service for 6 months.

Time Warner Cable has regularly targeted its Internet-only customers with promotions to entice them to upgrade to television and phone service, typically marketing a discounted triple play package. This is the first time the company has sought to get broadband customers to upgrade to its most costly Internet tier by throwing in television service as an added incentive.

The company tells customers the deal will improve their online video experience and reduce potential problems when multiple members of a household access Internet services at the same time.

Did you miss out on Google Fiber’s forthcoming gigabit broadband network in Kansas City, Kansas and Missouri? Kansans may not be out of luck, as provider SureWest aggressively continues work to expand its own fiber to the home network in several Kansas City suburbs and nearby communities.

SureWest, which believes strongly in fiber service, is busy laying fiber in conduits in Fairway, Mission, Roeland Park — all in Kansas. It also offers service in Lenexa, Overland Park, Shawnee and parts of Kansas City, Mo.

With all of this fiber, some Kansans may soon be able to choose between two competing fiber to the home providers.

SureWest General Manager of Kansas City operations Matt Zuschlag says SureWest’s fiber broadband service, which tops out at 50/50Mbps, will work just as well as Google’s gigabit (1,000Mbps) service because most web sites don’t need super fast speeds to load equally as fast. Even some bandwidth-intensive applications will not be able to take full advantage of Google’s fiber speeds because the networks currently supporting them were not designed to deliver sustained gigabit speed to end users.

SureWest works good enough for communities like Prairie Village, which is asking the company to wire its community for fiber service, regardless of where Google expands next.

SureWest competes with traditional cable and phone companies — Time Warner Cable and AT&T in the case of northern Kansas, and sells traditional triple play packages of phone, Internet, and television service.

But SureWest says its fiber network is always laid underground, which the company says offers improved reliability. Google Fiber is being installed largely on overhead lines alongside other utility services. SureWest says going underground allows it to skip the delays associated with obtaining pole use permits.

In a new twist, Comcast has announced rate increases for cable television that are roughly at the rate of inflation (2.3%) — the lowest rate increase for the company since 2001 — but is also hiking rates for Internet service at a substantially higher rate.

The company claims the Internet rate increase is partly due to the increased number of channels on its cable systems in Oregon and southwest Washington, as well as the cost to launch new interactive applications and multi-platform content that customers want and value.

Comcast’s rate increase for video represents the new reality for the cable business — companies continue with 7%+ increases in cable TV rates at the risk of cord cutting, analysts say. With cable television packages increasingly seen as ripe for cutting as they grow more expensive, cable operators are turning to broadband — a service customers can’t live without — to make up the difference.

Comcast had not touched broadband rates in the Pacific Northwest for seven years, until the company began hiking them in 2011. Monthly rates for the popular “Performance” Internet service (15Mbps) are going up again this year, from $48.95 to $51.95, according to The Oregonian. Prices are higher for standalone broadband service. Comcast’s Digital Starter TV package is increasing to $67.49 a month. Rates for customers on promotions will not  increase until those offers expire.

But some customers complain Comcast is now charging nearly $200 a month for its triple-play package.

One customer told the newspaper after his introductory triple play promotion expired, the bill rose to $190 a month for phone, Internet, and cable service with two DVR boxes. The customer does not have any premium movie channels.

The Oregonian has tracked Comcast’s rates in the Pacific Northwest for almost a decade. The staircase of climbing prices for cable television is leveling off as Comcast makes up the difference from its Internet rates.

The newspaper noted Frontier Communications, which provides competition for Comcast in the suburbs of Portland, has given Comcast only a slight headache.

Frontier continues to offer its barely-advertised FiOS television package for around $65 a month, but customer complaints about Frontier’s service in the area have been reflected by Comcast’s growing subscriber numbers.

One Oregonian reader summed up his feelings about Frontier:

Frontier was atrocious. I don’t just mean bad, I mean an embarrassment to humanity […] which chimpanzees and dolphins laugh at us for putting up with. I’ve had Frontier service for a little over a year now only because there is nothing else where I live.

The nightmare started with them coming out hook up DSL at my new house, but instead of hooking me up, [they tore] out the demarc box on the house and left with it,  lost all records of ever having talked to me, much less scheduling an appointment.

After finally getting Internet service a week late, the original [service order] showed up leading them to bill me for multiple accounts, which took five months to  resolve. They never were able to prove to me I actually owed what I ultimately paid (I got them to within one bill’s worth of my calculated value and gave up).

Half of the time I’ve held off paying my bill until a day or two before the due date so it’s too late to mail a check and their online payment system is down, forcing me to call in my payment and pay a $3 service fee.

All of that is on top of the blatant theft of forcing customers who already own modems to pay a “modem rental fee” for a modem they aren’t renting.