Frontier Knows How to Sell Broadband in a Declining Market

Implications: Frontier has shown growth in broadband lines while its larger counterparts (T and VZ) are having difficulties  showing positive growth in that segment.  We need to study the reasons why Frontier is doing so well, even though they are seeing heavy wireline losses like all the telco players, and try to replicate those decisions/actions to stem the downward trends we are seeing now in most telcos.

Analysis: The CATV MSOs must be celebrating a little as the various telcos, large and small report heavy wireline losses AND downward growth trends in their broadband growth.  Many RLECs have stepped away from the wireless play, such as Qwest cancelling Sprint and moving over to Verizon/Vodaphone, or Embarq, who stepped all the way from its Sprint parent, having seen zilch in wireless growth for the year past. Most RLECs, such as Frontier (formerly Citizens Tel) are pushing the broadband/DSL segment very hard, trying to regain the revenue being lost daily by the wireline access line bleeding.  Frontier lost 45,400 lines in the past quarter, saw a 3% decline in total revenue down to $563M, and enjoyed a broadband customer growth number (16,300) 3% higher than the previous quarter and 17+% higher than the previous year.  How did they do that?  Anyone that has a broadband play better be looking at why/how this occurred, and try to make it happen in their turf.  The CFO, Donald Shassian also said that non-paid disconnects have "sequentially declined in the last two quarters."   

AT&T's broadband additions in the second quarter were down 90% to 46,000 to quote the article.  Verizon saw a decline of 133,000 as well per the article.  The Frontier CEO, Maggie Wilderotter, says that Frontier offered slower bandwidth speed packages, attracting customers at less than $20/month as part of the reason.  Perhaps another reason is that the CATV MSOs that compete with Frontier are either sleeping or not able to compete effectively, offering low priced packages and playing to the economic climate, as Frontier is doing.  Perhaps, the other telcos should take some lessons from their smaller brother, Frontier and creatively play to the economic situations most are being faced with as prices of everything rise and home mortgages/credit card issues abound.