Frontier Communications 2009 Annual Report Download - page 35

products and services, many of which can also be purchased separately. Customer retention is also enhanced by
offering one-, two- and three-year price protection plans where customers commit to a term in exchange for
predictable pricing and/or promotional offers. Additionally, we are focused on enhancing the customer
experience as we believe exceptional customer service will differentiate us from our competition. Our
commitment to providing exemplary customer service is demonstrated by our expanded customer service hours,
shorter scheduling windows for in-home appointments and the previously implemented call reminders and
follow-up calls for service appointments. In addition, our 70 local area markets are operated by local managers
with responsibility for the customer experience, as well as the financial results, in those markets. Customers in
our markets have direct access to those local managers to help them manage their communications needs.
We utilize targeted and innovative promotions like “aspirational gifts” (e.g., personal computers) or
promotional credits to attract new customers, including those moving into our territory, to win back former
customers and to upgrade and up-sell existing customers a variety of service offerings including HSI, video,
and enhanced long distance and feature packages in order to maximize the average revenue per customer
(wallet share) paid to us. Depending upon market and economic conditions, we may offer such promotions to
drive sales in the future.
We have restructured and augmented our sales distribution channels to improve coverage of all segments
of the business customer base. This includes adding new sales teams dedicated to small business customers and
enhancing the business selling and support skills in our customer sales and service centers. We have also
increased our focus on customer premise equipment (CPE) sales for customers requiring an equipment solution,
and have extended our CPE sales reach beyond a handful of markets. In addition, we are introducing new
products utilizing wireless and Internet technologies. We believe the combination of new products and
distribution channel improvements will help us improve business customer acquisition and retention.
We are also focused on increasing sales of newer products, including unlimited long distance minutes,
bundles of long distance minutes, wireless data, Internet portal advertising, and the Frontier Peace of Mind
product suite. This last category is a suite of products that is aimed at managing the total communications and
personal computing experience for our customers and designed to provide value and simplicity to meet our
customers’ ever-changing needs. The Frontier Peace of Mind products and services suite includes services such
as an in-home, full installation of our HSI product, two hour appointment windows for the installation, hard
drive back-up services, 24-7 help desk PC support and inside wire maintenance (when bundled). In 2009, the
Frontier Peace of Mind products generated approximately $3.2 million in revenue. Most recently, we
introduced our myfitv.com website which provides easy online access to video content, entertainment and news
available on the worldwide web. Our hard drive back-up services, 24-7 help desk PC support and myfitv.com
services are also available outside of our service territories. Although we are optimistic about the opportunities
provided by each of these initiatives to increase revenue and reduce churn, we can provide no assurance about
their long-term profitability or impact on revenue.
We believe that the combination of offering multiple products and services to our customers pursuant to
price protection programs, billing them on a single bill, providing superior customer service, and being active
in our local communities will make our customers more loyal, and will help us generate new, and retain
existing, customer revenue.
(a) Liquidity and Capital Resources
As of December 31, 2009, we had cash and cash equivalents aggregating $358.7 million. Our primary
source of funds continued to be cash generated from operations. For the year ended December 31, 2009, we
used cash flow from operations, new borrowings and cash on hand to fund all of our investing and financing
activities, including debt repayments.
We believe our operating cash flows, existing cash balances, and revolving credit facility will be adequate
to finance our working capital requirements, fund capital expenditures, make required debt payments, pay
taxes, pay dividends to our stockholders in accordance with our dividend policy, pay our acquisition and
integration costs and capital expenditures, and support our short-term and long-term operating strategies
through 2010. However, a number of factors, including but not limited to, losses of access lines, pricing
pressure from increased competition, lower subsidy and access revenues and the impact of the current economic
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES