Frontier Communications (NYSE: FTR), like many of its ILEC counterparts, is trying to find ways to offset the inevitable declines in its residential business revenues, but one thing it won't do is build out an IPTV service.
Speaking at this week's 40th Annual J.P. Morgan Global Technology, Media and Telecom Conference in Boston, Donald Shassian, CFO and EVP of Frontier, said that the service provider is taking a two-pronged approach to the problem.
On the residential side, it is offering a number of new service options, including a standalone DSL service, home automation and even wireless service through a relationship with AT&T (NYSE: T).
In addition, a recent report revealed that Frontier is going to license AT&T's U-verse technology to deliver higher speed broadband over a hybrid fiber/copper Fiber to the Node (FTTN) architecture. Frontier would use this service in areas where it currently does not deliver its FiOS Fiber to the Premises (FTTP) services.
While it is considering other options to reduce video delivery costs, it has no plans to deliver IPTV across its nationwide network. Instead, it will continue to deliver video services in its existing FiOS markets and satellite TV via its relationship with DISH Network (Nasdaq: DISH).
"Given the systems conversion and the network we're building, we can lessen the decline and offer more products into that customer base by getting them on broadband, getting them on video and getting them on home automated services," Shassian said. "I think the customer count will continue to decline because there are more choices, but you want to make that choice very difficult by giving them good quality of service, products and enhanced services on top of that."
Outside of the residential market, another key area it thinks it can use to offset residential declines is to drive more growth of strategic business services.
With the integration of the former Verizon rural lines into its fold, the service provider has been building out its metro and core fiber network to deliver a suite of fiber and even copper-based Ethernet services to businesses.
The service provider has a 90-day pipeline for business service sales that is continuing to build month over month. It is also looking at delivering other hosted managed services like storage and security.
"I hope by the end of this year and into next year that we really start seeing some strong growth out of this business," Shassian said. "We're looking to enhance the product suite as well. We want to be able to offer some managed services, some IT security services and even more CPE into that segment."
When asked about other potential mergers or acquisitions, Shassian said it would consider options to add more IT service elements to the business by acquiring other assets or through strategic partnerships.
"Our focus is on enhancing the commercial product suite so are there ways to partner or acquire managed services or IT security services or things that we can enhance products on that channel is the primary focus," he said. "Whether that's partnering or its M&A we'll see how that plays out."
Shassian added that if was to do "scale transactions it would be tuck in opportunities only but we're not looking at those right now."
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