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Frontier prepares for bankruptcy, regrets failure to install enough fiber, Ars Technica

Frontier prepares for bankruptcy, regrets failure to install enough fiber, Ars Technica

      Frontier bankruptcy –

             

Frontier said it lost customers due to “significant under-investment in fiber.”

      

      

           

The presentation for investors, which is included in a Securities and Exchange Commission filing , said that “significant under-investment in fiber deployment and limited enterprise product offerings have created headwinds that the company is repositioning itself to reverse. ” Much of Frontier’s Fiber deployment was actually installed by Verizon before Verizon sold some of its operations to Frontier.

About 88 percent of Frontier revenue comes directly from residential consumers, with the rest mostly from wholesale and business customers. Frontier said the residential segment that provides most of its revenue “has the highest monthly churn,” meaning that customers are leaving the company in large numbers. DSL-customer losses are expected to increase, Frontier said.

Frontier also said a “large portion” of its revenue is from “declining legacy products” like copper-landline phone service. Frontier’s consumer-broadband network is primarily copper-based DSL, whose capabilities are easily surpassed by cable and fiber networks. Frontier Internet service is available to million homes across the United States, but million of those are DSL-only, the presentation said. The remaining 3 million homes, (percent of Frontier’s footprint, have access to fiber.)

Frontier said it has 2.6 million Internet subscribers, with 1.4 million on DSL and 1.2 million on fiber. The homes-passed

and subscriber numbers exclude operations in four Northwest US states that Frontier is selling to WaveDivision Capital. When those four states are included, Frontier’s residential-broadband subscriber base dropped from 3.7 million to 3.5 million in calendar year 95312688. After the four-state sale is completed, Frontier will keep offering service in (states ).

Stop the Cap published a summary of the Frontier presentation yesterday. “Frontier customers are disconnecting the company low-speed DSL service in growing numbers, usually leaving for its biggest residential competitor: Charter Spectrum,” the article said. Customer losses could have been even worse if Frontier faced stronger competition throughout its territory.

In addition to not deploying enough fiber, Frontier has done a poor job maintaining its copper phone and broadband network. Investigations and complaints of chronic outages in New York , Minnesota) , Ohio) , and West Virginia have helped reveal the ISP’s shortcomings.

Bankruptcy plan

Frontier discussed the risks of its likely bankruptcy in

another SEC filing

Frontier is skipping an April 1 debt payment in anticipation of its bankruptcy filing. Frontier was originally expected to file for bankruptcy by mid-March .

While things are bleak now, Frontier says it has a plan to improve performance in the long run. The presentation for investors said Frontier intends to “transforms the business from a provider of legacy telecom services over a primarily copper-based network to a next-generation broadband-service provider with long-lived fiber-based infrastructure.”

Frontier

Recently hired a new CEO , former Dish executive Bernie Han, to lead a turnaround attempt. Though Frontier has failed to prevent customer losses, company leadership apparently believes a restructuring, more investment, and better management would help the ISP compete more effectively against cable and fiber ISPs. Frontier said its potential market is “an attractive investment with opportunity for capital deployment” and that its “undermanaged assets” pose an opportunity. The board of directors is likely to change significantly after bankruptcy, the company said.

After a restructuring, Frontier says it intends to “invest in high-return” fiber-to-the-home upgrades, and fiber expansions “for wireless and wholesale customers.” Frontier said it has identified about 3 million households “with attractive economics for new fiber builds.”

Frontier said it intends to get a slice of

Federal Communications Commission funding

(Disclosure: The Advance / Newhouse Partnership, which owns) percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.

                                                    

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