Frontier expects FiOS subscriber growth to grow 25% sequentially in Q3, Q4

Frontier Communications (Frontier Communications)
Image: Frontier

Now that Frontier has put the initial installation and customer service issues behind it following its Verizon deal, the service provider said FiOS subscriber additions in the upcoming quarters in its newly acquired markets.

Dan McCarthy, CEO of Frontier, told investors during the Goldman Sachs Communacopia 2016 event that third quarter subscriber tends to be better than the second quarter, with even more improvement seen in the fourth quarter.

“On the broadband side, you should expect to see a 25 percent improvement in the third quarter and the fourth quarter,” McCarthy said.

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McCarthy said the improvements will come as it sharpens its customer service representatives that it has taken back in-house and ramps up its marketing campaigns.

“When you look at the seasonal nature of our marketing calendars, the third quarter is traditionally the toughest on driving direct response marketing,” McCarthy said. “We did see some slowness in July and into mid-August we’re starting to see some nice improvements, but it will take until the fourth quarter levels that Verizon would see.”

It’s clear that the integration of the Verizon properties took a toll on Frontier during the second quarter as the telco lost 40,000 potential new customers

Another possible initiative that could help broadband expansion is the ongoing expansion of higher speed services to more customers.

During the second quarter earnings call, Frontier said that it plans to upgrade its copper plant to provide up to 50 Mbps-capable or higher speeds to additional homes. This includes its existing markets and those it entered through the Verizon acquisition where FiOS is not currently available. 

McCarthy said that 500,000 of the homes it will upgrade are in the new markets it acquired through the Verizon acquisition.

“When you look at those markets in many instances they were markets Verizon put in a harvest mode and capped for sale because there was limited capability to add new electronic equipment,” McCarthy said. “These are attractive markets, but because they were in a FiOS strategy they were not able to dedicate any additional capex to do anything on the copper side.”

However, since the markets already have the necessary network transmission equipment in place to backhaul traffic, McCarthy said it can quickly upgrade the last mile infrastructure to deliver higher speeds.

“By moving that limited amount of capex to that area, and we’re picking dense areas in California, we can transform the product set in that market from a 7 Mbps product to anywhere up to a 100 Mbps product over copper,” McCarthy said. “It’s a very different product set we’ll introduce there and is going to be well received because we’re hearing from customers that they’re tired of not getting competitive choice in those areas.”

As it increases network speeds, Frontier has been improving its customer service capabilities by bringing all of its customer service representatives back into the United States. Following the completion of the three-state Verizon deal, Frontier was using an off-shore calling center in the Philippines.

As of July, Frontier said it had reduced trouble reports from 6.55 incidents per 100 lines in May to 5.78. It was able to fulfill 97.3 percent of its repair commitments in July compared to around 60 percent in May, as well. 

“We used the same contractor Verizon used historically,” McCarthy said. “We decided early on in the integration that the right thing to do was accelerate moving them on shore to domestic providers, which we did faster than we planned because of the degradation customers saw.”

McCarthy said that as it brings on 4,000 new customer representatives, “it takes a while for them to become competent and build their skillsets around our processes so it’s a learning curve.”

For more:
- listen to the webcast (reg. req.)

Related articles:
Frontier subscriber levels will improve in Verizon properties in Q3, says Wells Fargo
Frontier lays FiOS transition troubles at door of Philippines call center
Frontier names McBride CFO, resets focus on operations, cost cutting
CenturyLink, Frontier say special access proposals from Verizon/Incompas and FCC will hurt network investments

This article was updated on Sept. 23 to note that the broadband growth will be in new FiOS markets. 

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