Frontier’s McCarthy: We see 30K on-net business fiber opportunities in our CTF footprint

fiber (pixabay)

As Frontier advances its business service reach in its California, Texas and Florida (CTF) footprint, the telco's CEO said its greatest advantage over the cable operators is the fiber network it purchased from Verizon.

Dan McCarthy, CEO of Frontier, told investors during the telco’s fourth quarter earnings call that it has deployed field sales teams that match up where its network is located in order to drive potential market and wallet share growth.

“Our focus on selling where we have highly scalable and robust infrastructure is capital efficient and allows us to have aggressive installation intervals that competitors will have difficulty meeting,” McCarthy said during the earnings call, according to a Seeking Alpha transcript. “As an example, we have mapped and targeted over 30,000 on net fiber-fed multi-customer buildings and footprint.”

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By being able to tap into an abundance of on-net fiber buildings means that Frontier can not only attract businesses with higher speed services, but also control the experience for each customer on that network. The fiber-based connections can also be used as a way for Frontier to differentiate itself from local CLECs that may rely on renting off-net circuits and cable operators that have eaten into the CTF markets after Verizon largely left these markets alone.

Now that Frontier has split the company down the middle with teams dedicated to serving businesses and consumers, the telco can be more responsive to the specific needs of each market segment.

“In addition to reducing expense and allowing us to be a nimbler operation, the goal of our restructuring into two business units is to take a more customer-centric approach and this is a key driver of our commercial strategy,” McCarthy said.

Ramping Ethernet over Copper

Fiber is only one part of the Frontier business services story. As an ILEC, Frontier has an abundance of copper facilities inside the buildings where it reaches today.

Depending on the condition of the copper pairs, Ethernet over Copper (EoC) allows traditional telcos and CLECs to offer from as low as 5 Mbps to 100 Mbps and beyond of data speeds.

While the service provider did not reveal any specific plans for EoC during the fourth-quarter earnings call, the service provider currently offers an EoC option for medium and large businesses that purchase its Ethernet LAN (E-LAN) or its Ethernet Virtual Private Line (EVPL) services.

“We have substantial opportunity on copper-fed Ethernet systems in other markets that are in addition to the fiber in those buildings,” McCarthy said. “We have reorganized our sales teams around these opportunities.”

Overcoming SMB challenges

Following what was a challenging integration process of the Verizon CTF properties and process to turn off nonpaying customers, the small- to medium-sized business (SMB) segment has been a bit challenging for Frontier in the fourth quarter.

While Frontier has set a good strategy in place, the service provider has its work cut out for itself after seeing another round of business service revenue declines in the fourth quarter.

Business revenue of $439 million was down $17 million or 3.7% in the quarter. Frontier said that $9 million of the decline in business service revenues was due to delinquent account cleanup. During the quarter, the service provider lost 14,000 business customers to end the period with a total of 502 customers.

“We have enjoyed stability in our SME customer base over the last several years; however, during this past quarter, we did see some weakness in our Legacy market,” McCarthy said. “This was directly attributable to the disruption of our contact centers and sales channels during the previous quarter.”

McCarthy added that “the CTF SMB segment was impacted by slightly slower sales but also the cleanup of aged accounts.”

Despite the near-term challenges, Frontier is making SMBs a priority in the CTF markets. After Verizon entered the CTF markets following its acquisition of the former GTE, the service provider did little to upgrade and market to these customers, leaving them as open prey to aggressive cable competitors like Charter and Comcast.

“We have also enhanced our alternate channel relationships and launched a new channel dedicated to the smaller segment that will be an entirely new source of sales for Frontier,” McCarthy said. “These were not focus areas for Verizon in the CTF markets and we expect to drive significant sales results as we build momentum.”

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