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Frontier’s executive chairman talked competition at a J.P. Morgan investor conference
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In short, the company isn’t too worried about FWA and fiber overbuilders
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A standalone wireless product isn't in the cards for Frontier
Earlier this month, Frontier posted positive quarterly revenue for the first time in nearly a decade. But maybe that’s not so surprising, given fiber has become its golden goose.
At a J.P. Morgan investor conference, Frontier Executive Chairman John Stratton reiterated the company’s year-end goal of building 1.3 million fiber passings. It’s also about “68-70%” complete on its multi-year target to reach 10 million locations with fiber.
He said Frontier looks at its fiber build in “three levels:” if it’s deploying fiber “at the right velocity,” the right pace and the right level of quality.
While those factors “are tracking in the manner we had hoped,” Stratton pointed out one thing.
“No value is created when we build the fiber. It all comes from putting customers on the network and selling fiber,” he said.
Here’s looking at the competition
Stratton thinks fixed wireless access (FWA) operators have been “very credible” with how they’ve framed their markets.
“When they say, you know this is six or eight million [population] kind of capacity, [it’s] probably about right,” he said. “I think it can be a bit of a strong positive niche for those players, particularly in the B2B segment.”
But ultimately, it comes down to consumption. Stratton noted Frontier fiber customers are consuming “a terabyte or more per month.” Speaking from his experience in the wireless space, FWA networks were “not engineered” for that amount of consumption.
And data from OpenVault has shown average monthly consumption for U.S. broadband consumers has more than doubled over the past five years.
“So no, we don’t see that as a significant point of competition,” he stated. But Frontier “recognize[s] it has a place in the [market].”
What about other fiber providers? Stratton said since Frontier emerged from bankruptcy in April 2021, off the bat it “communicated to the broader market” about its intent to build 10 million fiber passings.
He thinks that “had a bit of a freezing effect” on fiber overbuilders on how they’ve thought about entering Frontier’s footprint.
“And really from that time, we’ve seen very little – if any – evidence of overbuilders in our markets,” said Stratton. “It’s not to say they don’t exist, they’re not out there. They are.”
It’s just they’re more likely in markets where the ILEC has been “slower to move to fiber,” with cable and DSL being the primary providers.
“I do think the increased cost of capital, and the higher input costs, labor costs and material costs may be dampening the enthusiasm for some of the overbuilders in terms of going to those lesser developed markets,” he said.
“But in terms of the Frontier markets, we’ve seen almost no evidence.”
Any ways to wireless?
Stratton was asked about how Frontier’s looking at “convergence” and whether it would ever consider launching a mobile product.
He noted Frontier gets this question “a lot.” To date, executives for the company have consistently said they have no plans to launch a mobile product, but do have the ability to do so rapidly if the need arises.
“We look at the data very, very closely. And specifically we look to see in what way, if at all, are our gross ad trends impacted by the lack of a combination of wireless and fixed offering[s]?” Stratton said. “Do we see anything in terms of significant levels of defections, churn, where you’ve got competitive switching activity because people are really desiring to have a converged offering?”
In short? “We don’t see it,” he concluded, emphasizing Frontier’s goal right now is to “maintain a maniacal focus” on building and servicing fiber networks.