Frontier Communications is gearing up to capitalize on broadband funding opportunities created by the recent passage of a sprawling U.S. infrastructure bill, with CFO Scott Beasley pointing to the federal dollars as a key part of its fiber expansion plan. But one thing that's not part of its strategy is the launch of its own MVNO offer, the executive said.
The bill passed by Congress last week includes a total of $65 billion for broadband, with $42.45 billion dedicated to fueling deployments in un-and underserved areas and $14.2 billion set aside to fund a permanent broadband subsidy program. That $42.45 billion pot is set to be divvied up among the states, which are tasked with distributing it to broadband providers through a variety of grant programs.
Though it is expected to take several months before the states receive the funding, Frontier CFO Scott Beasley said during an investor conference the company is already “organizing to really benefit from it.”
“We think it’s an important part of our strategy to be able to win the funding for projects that likely wouldn’t get funded elsewhere – whether they’re very high cost, rural, less dense areas – and we’re excited within our footprint to partner with governments to build out gigabit America to as much of the country as possible,” he said.
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Frontier is aiming to reach a total of 4 million locations by the end of 2021 and grow its footprint to 10 million by the end of 2025. Beasley didn’t provide an exact figure for how many locations it might be able to reach with the help of government funding but stated “we know it’s a significant number…we know there’s a huge part of our footprint that doesn’t have access to broadband now and that this program will be critical in helping bridge that digital divide.”
Frontier is also looking to boost enrollment in the government’s broadband subsidy program, he added.
The Federal Communications Commission launched the temporary $3.2 billion Emergency Broadband Benefit (EBB) program during the pandemic to help ensure low-income households had connectivity. The infrastructure bill has made that program permanent with $14.2 billion in funding and renamed it the Affordable Connectivity program.
The CFO said Frontier currently has around 14,000 customers participating in the EBB, adding “We are investing to make it easier for customers to get access to that affordability fund now that it’s permanent.”
No MVNO – for now
While cable players like Comcast and Charter Communications have talked up the benefits of their mobile MVNO offerings, Beasley said it just doesn’t make sense for Frontier to launch its own wireless product – at least not yet.
“Our focus has been allocating capital to fiber and the returns on fiber have been so strong that shifting our capital allocation to then go do an MVNO doesn’t seem like the right move right now,” he explained. “We haven’t seen the compelling evidence that mobile impacts the trajectory of broadband adds. Now, it may reduce churn, but it hasn’t necessarily shown that it’s a material driver of new broadband additions.”
But if that trend changes and it decides to set up an MVNO, Beasely said “we could do it very quickly and we could do it very well” since Frontier’s leadership team has extensive mobile experience.
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Lumen Technologies President of Mass Markets Maxine Moreau made a similar comment in August, stating it didn’t believe it was critical to have mobile as part of its bundle offering.