Frontier to target cable subscribers impacted by outages and price hikes

Frontier Communications (Nasdaq: FTR) is looking to grow its high-speed Internet business by targeting cable subscribers in areas impacted by service outages and rate hikes, president and COO Dan McCarthy said at the Goldman Sachs Communacopia conference Thursday.

The rural telco, whose chief cable rivals are Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and Charter Communications (Nasdaq: CHTR), will look for surgical marketing opportunities, McCarthy said.

"People don't wake up every day, and say, 'I want to switch broadband providers.' It's really about finding what is that lever to pull. Sometimes it's a message at a key point--it could be during an outage, it could be during change of prices for them. It could be there are some substandard speeds that are being offered," McCarthy said. "We are looking at what is the right mix of messaging and promotional offers that really allow us to do that. I think you'll see us be pretty aggressive in that area," he added.

Frontier has struggled with large outages itself this year. The company disclosed in a Securities and Exchange Commission filing on Thursday that 277 of its central offices in West Virginia, Pennsylvania, Indiana and the Carolinas were impacted by storms in June and early July, forcing it to buy 203,000 generators and replace 167,000 feet of cable. Frontier said its incremental overtime and contractor costs in the third quarter are expected to increase by $15 million compared to the second quarter.

Frontier offers subscribers on systems that it acquired from Verizon (NYSE: VZ) FiOS TV, and it resells Dish Network (Nasdaq: DISH) programming. It also began selling a standalone DSL service in the second quarter called Simply Broadband. "We are seeing success in attracting and retaining customers with this product and it is having a positive impact on our Q3 residential customer counts," Frontier said in the SEC filing.

For more:
- see the SEC filing

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