Frontier Communications 2012 Annual Report Download - page 6

business.” During the fourth quarter of 2012, we began selling a satellite broadband product with speed
between 256 Kbps and 40 Mbps in selected markets.
Realize Cost Savings. The Company accelerated its final conversion of the Acquired Business systems
onto one company platform in March 2012, ten months ahead of the original target. We have achieved cost
savings of approximately $653 million as a result of the Transaction, principally by: (1) leveraging the
scalability of our existing corporate administrative functions, information technology and network systems to
cover certain former Acquired Business functions and systems; (2) in-sourcing certain functions formerly
provided by third-party service providers to the Acquired Business; and (3) achieving improved efficiencies and
more favorable rates with third-party vendors and the consolidation of certain facilities. The cost savings in
2012 from our targeted initiatives list (which includes, but is not limited to, cancellation or reduction of vendor
services, network cost savings, contractor reductions, benefit changes and real estate savings) was
approximately $101 million on an annualized basis, and when combined with the savings achieved in 2011
and 2010, equates to an annualized cost savings run rate of approximately $653 million, which exceeds our
original estimate of $500 million of cost savings.
Growth through selective acquisitions. We continue to evaluate and may pursue select strategic
acquisitions that would enhance revenues and cash flows. We will continue to adhere to our selective criteria in
any acquisition analysis.
Services
We offer a broad portfolio of high-quality communications services for business and residential customers
in each of our markets. These include services traditionally associated with local telephone companies, as well
as other services such as long distance, Internet access, broadband-enabled services and video services. We
offer these services both a
´la carte and, increasingly, as bundled packages which are purposely designed to
simplify customer purchasing decisions and to provide the customer with pricing discounts. We also offer
incentives and promotions to influence customers to purchase or retain certain services. We also enhance
customer retention by offering one-, two- and three-year price protection plans under which customers commit
to a term in exchange for predictable pricing or other incentives and promotions. We are staffed locally with
skilled technicians and supervisory personnel, which enables us to provide efficiently and reliably an array of
communications services to meet our customers’ needs. Our call center operations and field technicians are
staffed with 100% U.S.-based personnel.
Generation of Revenue
We generate revenue primarily by providing: (1) data and Internet services and wireless data services;
(2) basic local and long distance voice wireline services to business and residential customers in our service
areas; (3) network access to interexchange carriers for origination and termination of long distance voice and
data traffic; (4) sales of third party and owned video services; and (5) sales of customer premise equipment.
Data and Internet services. We offer a wide range of wireline broadband services to our residential,
commercial and carrier customers. Residential services include broadband, dial up Internet, portal and e-mail
products. Commercial services include Ethernet, Dedicated Internet, Multiprotocol Label Switching (MPLS),
and TDM data transport services. These services are all supported by a 24x7 help desk and an advanced
Network Operations Center. Such services are generally offered on a contract basis and the service is billed on
a fixed monthly recurring charge basis. Data and Internet services are typically billed monthly in advance.
We also offer our Frontier Secure suite of products aimed at managing the personal computing experience
for our customers and designed to provide value and simplicity to meet customers’ ever-changing needs. The
Frontier Secure products and services suite includes an in-home, full installation of the Company’s broadband
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).
We offer wireless broadband services (using unlicensed WiFi spectrum) in select markets utilizing
networks that we own or operate. Long-term contracts are billed in advance on an annual or semi-annual basis.
End-user subscribers are billed in advance on a monthly recurring basis and businesses, colleges and
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES