Frontier is advancing its fiber footprint amidst ongoing declines in its copper-based legacy DSL broadband business and a slower property market.
Legacy copper declines offset strong fiber revenue growth of 10%.
As of the end of the third quarter, Frontier reached 6.2 million homes and businesses with its fiber broadband network. The provider said it is more than halfway to its goal to reach 10 million locations.
“On fiber penetration, we've grown our fiber broadband customer numbers by about 45% since 2020,” said Nick Jeffery, CEO of Frontier, during the third quarter earnings call. “In our base fiber footprint, we've now achieved penetration of 44%, just shy of our long-term target of 45% or better. And in markets where we're building fiber, our penetration rates are at or above our target ranges at the 1- and 2-year marks.”
He added, “We're doing all of this while also growing ARPU, showing that our fiber offer is attractive to our customers, and we’ve also improved customer service.”
Driving customer growth, ARPU
Frontier was able to buck macroeconomic trends during the quarter in both its base and expansion markets as its broadband base grew 19% over the past year.
Driven by healthy consumer performance, Frontier’s fiber revenue growth rose 10%. The telco’s consumer fiber revenue grew 20% this quarter, excluding its legacy video product. Overall, Consumer fiber revenue grew 13%.
Likewise, consumer fiber broadband ARPU rose 2.4% year-over-year to $64.49 increased, due to increased customer in-take ARPU and annual price increases.
Scott Beasley, CFO of Frontier, said it achieved this growth while advancing ARPU and in a period of low housing movements. “We achieved this solid customer growth while simultaneously growing ARPU,” he said. “We have grown our fiber customer base in an environment with low household moves.”
Accelerating penetration, speeds
Frontier is focused on accelerating its fiber broadband subscriber base penetration in existing markets. This is separate from its expansion market plans.
“We are systematically increasing penetration quarter over quarter over quarter and now well on our track to our terminal penetration of 45% or above,” Jeffrey said.
He added, “We know that's doable because we've got lots of markets already at that level of penetration or indeed some that are higher and then moving the average of that base fiber market up 45% critical indicator of what's possible as we build new fiber.”
Frontier is also eying next-gen PON speeds as it ramps up its penetration. Having built out 10G XGS-PON in its network, the provider has created a strategy allowing it to upgrade to 25G PON when its ready.
In December 2021, Frontier completed a trial of Nokia’s 25G PON broadband technology. At that time, Nokia said the two companies will continue trials on Frontier’s network while planning for commercial deployments.
Also, Frontier has cited interest in Nokia’s Lightspan MF broadband platform with a new optical line terminal (OLT) capable of supporting up to 100G PON.
While Jeffery did not reveal any specific timelines of when it might roll out a 25G or higher offering, he said the network could support such platforms if needed. “Our network is already ten gig capable end-to-end, and there's a clear path to 25 gig and beyond at a very, very low CapEx requirement if we ever needed to do that,” he said. “We haven't made that decision, but it's an option for us in the future.”