Frontier Communications (NYSE: FTR) has begun charging its customers a mandatory modem fee with no option to purchase.
As reported in Broadband DSL Reports citing one of its forum readers, the fee, which was launched earlier this year, only lets new subscribers rent a traditional DSL modem for $7 a month or $15 for an integrated wireless modem/gateway.
Up until now any user who owned a DSL modem or gateway did not have to pay any support fee. However, Frontier sent a notice to users who owned their own devices, the majority of which were part of its recently completed acquisition of Verizon's rural lines, saying this gear was now "out of warranty."
Regardless if the user owns or rents the device from Frontier, they'll have to pay a $7 "modem support and warranty" monthly fee.
Not surprisingly, one forum participant said the move "is simply a money grab by Frontier in order to charge more than they advertise for their service."
While a $7 or $15 fee does not sound like a lot of money, it will give its cable competitors like Comcast (Nasdaq: CMCSA), which lets users purchase their devices, another issue they can cite to win over customers in areas where it competes with Frontier.
Already, some of Frontier's fee increases for the FiOS service it acquired from Verizon (NYSE: VZ), for example, have been having an ugly effect on its broadband and video subscriber counts.
In Q3 2011, the service provider added 16,200 new broadband, but lost 3,100 FiOS data and 9,900 FiOS video customers. Most likely these customer defections were a result of its decision to raise FiOS installation fees from $79 to $500 earlier this year.
- Broadband DSL Reports has this post
Frontier: Customer decreases, Verizon integration take toll on Q3 results
Frontier faces lawsuit over broadband surcharge
Frontier to switch to Nasdaq market listing
Frontier, Time Warner Cable add home security to their broadband bundles