Frontier pays a price for its California meltdown

by Steve Blum • ,

Frontier Communications’ cutover problems when it took control of Verizon’s wireline systems in California, Texas and Florida were costly, in terms of broadband subscribers and overall revenue. On Frontier’s third quarter earnings call earlier this week, company executives said that they saw a net loss of 100,000 broadband customers in the three states between April and June, and lost another 75,000 from July through September.

In revenue terms, though, the biggest hit in California and the other two states came from phone and video customers: total revenue was down $55 million in the third quarter, compared to the second, with video services accounting for $24 million and phone service for another $20 million.

The losses were attributed to the problems Frontier had in transferring call center operations from the Philippines back to the U.S., as well as tighter credit management. During the first few months, Frontier gave customers considerable slack in making payments, but as the transition was completed normal credit practices came into play.

Looking ahead, Frontier CEO Dan McCarthy said that 300,000 homes in three states will get broadband service upgrades in the next 90 days. Frontier is in the process of upgrading legacy DSL systems it acquired from Verizon, which typically max out at 6 Mbps download speeds, to modern DSL technology with claimed download speeds of 50 Mbps. No mention was made of upload speeds.

Those 300,000 homes represent about 12% of the new subscribers that Frontier picked up in the three states.

McCarthy also said that by the end of the year, 170,000 homes will get broadband upgrades (or broadband service for the first time in many cases) in areas subsidised by the Federal Communications Commission’s Connect America Fund program. Another 90,000 homes that are adjacent to those areas, but aren’t eligible for the subsidies, will also be upgraded. He wasn’t clear on whether those homes were specifically in California, Florida and Texas, though.