Frontier Communications 2011 Annual Report Download - page 12

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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
9
reducing costs through the sharing of best practices across operations, centralization or standardization of functions and
processes, and deployment of technologies and systems that provide for greater efficiencies and profitability.
Competition
Competition in the communications industry is intense. We experience competition from many communications service
providers, including cable operators offering video, data and VoIP products, wireless carriers, long distance providers,
competitive local exchange carriers, Internet providers and other wireline carriers. We believe that as of December 31,
2011, approximately 93% of the households in our territories could receive voice, data and video services from a
competitive provider.
Residential and business customer behavior is affected by the ongoing economic uncertainty. Customers have reduced their
spending by not purchasing our services or by discontinuing some or all of our services. These trends may continue and
may result in a continued challenging revenue environment. The weak economic environment may produce increased
delinquencies and bankruptcies and, therefore, affect our ability to collect money owed to us by residential and business
customers.
We employ a number of strategies to combat the competitive pressures and changes in customer behavior noted above. Our
strategies are focused on preserving and generating new revenues through customer retention, upgrading and up-selling
services to existing customers, new customer growth, win-backs of former customers, new product deployment, and by
managing our profitability and cash flow through targeted reductions in operating expenses and capital expenditures.
We are focused on enhancing the customer experience to differentiate us from our competition. Our commitment to
providing customer service is demonstrated by our 100% U.S.-based workforce, our expanded customer service hours,
shorter scheduling windows for in-home appointments, call reminders and follow-up calls for service appointments.
Additionally, we seek to achieve our customer retention goals by offering attractive packages of value-added services to our
local access line customers. Our bundled services include HSI, unlimited long distance calling, enhanced telephone features
and video offerings.
We are also focused on increasing sales of existing products, including unlimited long distance minutes, bundles of long
distance minutes, wireless data, Internet portal advertising, and the Frontier Secure product suite. This last category is a
suite of products that is aimed at managing the personal computing experience for our customers and is designed to provide
value and simplicity to meet customers’ ever-changing needs. The Frontier Secure products and services suite includes
services such as an in-home, full installation of the Company’s 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 2011,
the Frontier Secure products generated approximately $27.5 million in revenue. Our www.TumTiki.com website, that
launched in November 2011, provides easy online access to free television programs, video on demand movies and other
entertainment. Hard drive back-up services, 24-7 help desk PC support and our www.TumTiki.com website are also
available to consumers and small businesses throughout the United States. Although we are optimistic about the
opportunities to increase revenue and reduce customer churn (i.e., customer attrition) that are provided by each of these
initiatives, we cannot provide assurance about their long term profitability or impact on revenue.
On the commercial side of our business, we are focused on many of the same strategies and enhancements described above
as well as providing state-of-the-art transport services to wireless cell towers in our territories and expanding the number of
people selling and servicing our medium, enterprise and government customers with sophisticated products and services
(e.g., IP PBX, E911 equipment, Ethernet, SIP trunking).
The goal of offering multiple products and services to our customers pursuant to price protection programs, billing on a
single bill, on-line bill pay, providing superior customer service, and being active in our local communities is to generate
customer loyalty which should help us generate new, and retain existing, customer revenue.
For additional discussion of our competitive strategies, see “Company Strategies” above.