Frontier Communications 2013 Annual Report Download - page 10

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As of December 31, 2013 and 2012, we had expanded our broadband availability to the households
throughout the Company’s territories as follows:
(In excess of) 2013 2012
1 Mbps ........................................................................... 90% 88%
3 Mbps ........................................................................... 86% 83%
4 Mbps ........................................................................... 83% 77%
6 Mbps ........................................................................... 76% 74%
12 Mbps. . . ....................................................................... 61% 51%
20 Mbps. . . ....................................................................... 48% 40%
Rapid and significant changes in technology are expected to continue to occur in the communications
industry. Our success will depend, in part, on our ability to anticipate and adapt to technological changes. We
believe that our existing network architecture strategy will enable us to respond to these ongoing technological
changes efficiently. In addition, we anticipate 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, satellite video, satellite
broadband and other wireline carriers. We believe that as of December 31, 2013, approximately 95% of the
households in our territories could receive voice, data and video services from a competitive provider.
As a result of competition and the current state of the economy, some of our customers may discontinue
our services. These trends may continue and may result in a continued challenging business environment.
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 prudent capital expenditures.
On the business side of our operations, we are focused on many of the same strategies and enhancements
described above as well as providing transport services (wireless backhaul) 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).
We are focused on enhancing the customer experience to differentiate us from our competition. Our
commitment to 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 voice customers. Our bundled services include broadband, unlimited
long distance calling, enhanced voice 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 and the Frontier Secure product suite. We had a total of
465,000 Frontier Secure customers as of December 31, 2013, or 25% penetration of our broadband base, as
compared to 375,500 customers at December 31, 2012, or 21% penetration of our broadband base. Frontier
Secure offers products and services to protect key aspects of digital life, including computer security, cloud
backup and sharing, identity protection, equipment insurance and 24/7 premium U.S.-based technical support.
These products and services are sold nationwide directly to consumers and small businesses, and wholesale
through strategic partnerships under either a private brand or the Frontier Secure brand. 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.
9
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES