Frontier's Losing Customers And Swimming in Debt Frontier's gamble to hoover up Verizon's unwanted phone, DSL and fiber customers isn't going so well. We'd already noted how the company was headed for trouble after it bungled the acquisition of Verizon's unwanted customers in Florida, Texas and California. And we've talked about the fact that an unwillingness (and financial inability) to upgrade its network at any scale has customers fleeing to cable competitors at an alarming rate.

We've also discussed how reports indicate that morale at the company is at an " all time low " as employees say management refuses to take accountability for their mistakes. Only recently has Wall Street begun to notice the warning signs as well. The Wall Street Journal over the weekend was quick to highlight how Frontier's deal with Verizon has been a horror show for Frontier, but a fantastic deal for Verizon. Frontier now has $17 billion in debt after not only gobbling up Verizon's unwanted networks, but AT&T's unwanted networks in Connecticut. Frontier stock has dropped 69% this year, and it's pushing a 1-for-15 reverse stock split today in the hopes of retaining its NASDAQ listing. "This last acquisition was largely about acquiring fiber," Frontier CFO Perley McBride tells the Journal. "It's just integration that didn't go well. When you double in size and you don't do it well, it's sort of up front and center." But it wasn't just fiber that Frontier acquired. It also acquired oodles of taxpayer-subsidized, still very-much-in-use DSL connections that the company hasn't been able or willing to upgrade, the debt from which slowed upgrades in many Frontier legacy areas as well. Frontier executives had previously insisted they'd be able to convert these users somehow into gold quickly, an idea McBride now isn't quite so bullish on and admits may take some time. Again the big "winner" here is Verizon, which Frontier tells the Journal "stopped writing off overdue accounts before the deal closed, saddling the acquirer with thousands of subscribers unlikely to pay their outstanding bills." Verizon has signed off on many similar deals with over-eager, smaller telcos, using Reverse Morris Trusts and other complicated financial schemes designed to lower Verizon's taxes, but saddle these companies with untenable mountains of debt. Several of these companies (like Fairpoint Communications and Hawaii Telecom) went bankrupt after the deals were completed. There's some very serious indications that Frontier won't be too far behind them. There's some very serious indications that Frontier won't be too far behind them.







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Most recommended from 78 comments



Mike

Mod

join:2000-09-17

Pittsburgh, PA 30 recommendations Mike Mod VZ's grand plan is working Sell off less profitable areas to an excited idiot, watch them tank it, scoop up assets. Walk off with two tax breaks in the process.



I'll be your CEO for half of whatever the old white guy in a suit is getting.

maartena

Elmo

Premium Member

join:2002-05-10

Orange, CA 20 recommendations maartena Premium Member They left people offline for weeks.... When they took over FIOS in California, it was a disaster. Several people I know got cut off on day 1, and 3 weeks later they still weren't back online. Most of them switched to cable after a few weeks, but some people were left offline for almost 6 weeks before they got around to fixing them.



What Frontier did is the equivalent of McDonalds buying a 5-star steak restaurant, and then replacing the renowned chefs in that restaurant with their own fast order cooks, and hoping the customers won't notice. Now, I am not saying that Verizon actually IS a 5-star steak restaurant in the first place, but Frontier is a DSL company with no experience whatsoever in fiberoptic deployments, and they pretty much gave their people a crash course on fiber connections and hoped for the best..... and it went horribly wrong. So the analogy may not be that far from the truth.....



On top of that, Frontier never sold TV before, and they were handed a million customers on DSL and FIOS, and about a third of them had television over FIOS. And while Verizon's FIOS actually evolved, now offering 500 Mbps and Gigabit tiers, Frontier's FIOS takeovers are only "150 Mbs in some areas". They took over the speeds Verizon had, but did not expand the network or increase speeds anywhere.



With this, combined with lousy customer service and no experience in television, it isn't at all surprising Frontier is sledding down bankruptcy hill with due speed.....

TIGERON

join:2008-03-11

Boston, MA Motorola MG7550

9 recommendations TIGERON Member from a bud who works for Verizon in transferring to Frontier: “Frontier didn’t get screwed. The systems stay the same for one year and we gave them an entire IT team to support the backend in the transition. We worked with them for MONTHS before the transition. This is not Verizon’s fault. The reality is that they are using the exact same system we do for FiOS. We just cut the ties in the database so the 2 sides don’t talk. The outages are all on frontier. They got our systems and our people and they still can’t make it work. Vz tried to tell them to convert rather than transition status quo. We even built them a proprietary version of our ordering system. In my mind it was gift wrapped. Interestingly, customers started complaining of slower throughput immediately after Frontier took over… And they are incapable of restoring service… Even though it’s the same people and the same systems.”-end quote



what I just stated above is from a Verizon employee that assisted in the transfer to Frontier so he knows what he’s talking about.



Here’s another post from another Verizon employee :



“The first Frontier purchase in 2009-2010 was relatively smooth because the properties sold were operated as a joint venture for about a year. This gave Frontier time to slowly integrate the newly-acquired properties into their operations so as to minimize disruption.



The 2016 purchase was essentially an immediate conversion. On midnight April 1, the network was cut over from Verizon management and connectivity to Frontier. The connectivity was handled mostly gracefully with central offices maintaining connection to the outside world, but Frontier management systems did not adapt to the sudden influx of heterogeneous elements so well, effectively resulting in bad configs being pushed to individual customers and central office equipment.



There are other aggravating circumstances. The company roughly doubling in size with >10,0000 Verizon employees making the same sudden transition to fundamentally new systems and processes did not help things. Another problem specific to voice is that a large percentage of Verizon fiber customers had migrated to VoIP platforms that Frontier did not have an analogue for (the tiny handful of VoIP fiber customers obtained in 2009-2010 were migrated back to TDM voice). Network management practices had diverged enough in ~7 years that the networks acquired in 2016 were markedly different animals than the 2009-2010 networks. The markets served are also markedly different – Frontier is heavily focused on being a rural to mid-sized city markets; the properties acquired ran the gamut but had an urban focus with different expectations – this may be shading Frontier’s approach to solving the many lingering problems.



The other issue is Frontier does not have a massive backhaul (unlike Verizon with the MCI world com acquisition) network to deal with the new influx of users hence which is why FIOS users see transport and connection problems. Frontier is in the middle of building the backhaul.”



-end quote



This is ALL on Frontier’s end. The other thing is now Wall Street is pushing pressure on the company to UPGRADE its network. That's where G.fast/XG.fast is coming into play. Frontier announced they are deploying the new desperately needed DSL upgrade to their CT market. If those trials go well (which they will) other areas will see quick adoption. This is the only path the company has if it is to recover.



If bankruptcy looms, more than likely what is going to happen is that the government is going to come in and help Frontier with either a bail out, or advise a merger. The only other company that would consider a merger would be Consolidated as they just completed the acquisition of Fairpoint.

Simba7

I Void Warranties

join:2003-03-24

Fromberg, MT 8 recommendations Simba7 Member They're screwed.. Plain and simple. BiggA

Premium Member

join:2005-11-23

Central CT ·Cox HSI

ARRIS SB6141

Asus RT-AC68

8 recommendations BiggA Premium Member Total Incompetence My parents had a landline that they paid a ridiculously high cost for... until Frontier. The thing had issues, and Frontier couldn't figure out how to fix it, or swap pairs, or anything. So that $60/mo landline was moved over to Comcast, who gave them Triple Play for $10 LESS than their previous cable/internet bill for two years plus more channels plus a huge speed increase. Frontier never installed the VRAD that would have gone with their crossbox, so they effectively have no useful services available from Frontier. If they did put the VRAD in, at least they'd have an offering, as they are at 4.2kft, and would be able to get Triple Play through pair bonded VDSL if they wanted it.



I've heard of businesses in the area being unable to get Frontier to do ANYTHING, so they've resorted to getting fiber from the cable companies. It will take Frontier months and months to hook up fiber somewhere, Comcast will show up the next day with a couple of trucks.

Anon4c6a3

@rr.com 8 recommendations Anon4c6a3 Anon Buying crap Frontier bought crap Verizon didn't want



Verizon used that money to buy crap (AOL, Yahoo) that no one wants

tshirt

Premium Member

join:2004-07-11

Snohomish, WA 5 recommendations tshirt Premium Member Swimming in Debt... ...implies they are treading water, and still breathing.

in this case they are shackled to the anchor chain (debt) and plummeting into the abyss, where even the sharks fear to go.

Anon3fdcd

@teksavvy.com 5 recommendations Anon3fdcd Anon Debt should not be transferrable That's your problem you made, you should be forced to be accountable for that. Selling off hidden debt appears to be a tool in crushing competition. Verizon didn't want those customer anyway, but they also didn't want to carry that debt. Win/win for them I guess. Sleazy though. brianiscool

join:2000-08-16

Tampa, FL 4 recommendations brianiscool Member Frontier I have been using them for 13 months now. I think they are doing a fantastic job here.

We don't get many outages here and the service is always up. Cuculain

join:2002-10-10

Beaverton, OR 3 recommendations Cuculain Member Bah Wonder why the stockholders aren't demanding for heads on a silver platter, or changes to the current management, which the board should be doing. The board definitely should not continue to be throwing money at the issue hoping it'd go away. One thing that might help fix this is to take away the senior executives golden parachute. The company fails, they get NOTHING.

Anon70fc7

@nortelnetworks.com 2 recommendations Anon70fc7 Anon Other reasons for their downfall It seems like on the day of the acquisition, they decided to hire anyone that walked past their building. Customer Service, and Technical Support are completely clueless. I live in a community that has Fios Internet and cable as part of our HOA agreement. However, I also received free employee services with TWC/Spectrum. I put off having the service installed while it was Verizon, because I didn't need their service plus My employee services. When the transition went through, I gave them a call to just put in the internet for my wife's home office, and keep everything else the same. They couldn't locate my address for over 2 weeks in their system, once they located it and scheduled the appt - They cancelled my install appt without contacting me, and that happened 3 times. I will no longer be working for the other Sheet-show named Spectrum as of this Friday, so I decided to set up my free service through my HOA. We have an agreement for certain channels and services, I spoke the a rep. who ran through everything with me when setting up the order.Come Saturday, it was installed. I was missing 2/3 of the community channels I was suppose to get, I called with the channel lineup in hand that showed our package. No one could help get the issue resolved. I got transferred from customer service to tech support. Tech support straight up lied to me saying he was talking to the network engineer and he said they was an outage in my area, and some of the channels aren't working. Although the HD channel would work on a few, and the SD would not work and vice versa. So my neighbor came over (who is also the network engineer for Frontier here locally) and his channels were working fine. He had no knowledge on how to instruct me to troubleshoot, I actually had to tell him what I should do to reboot. I told him just to set up a TC appt for a tech to come out.



Frontier knows their weaknesses, the managers, supervisors, and admin aren't giving these agents the proper training, and without it, they can never be able to satisfy their customers and get on track.

Harddrive

Proud American and Infidel since 1968.

Premium Member

join:2000-09-20

Mission, TX 2 recommendations Harddrive Premium Member Trapped customers in Texas. Frontier is only surviving in North Texas because they have their customer base trapped in a contract. I've got coworkers here in Ft Worth that live in Keller that only have Frontier because of said contracts. If they weren't trapped, they would have gone to a competitor. My coworkers, many of them in IT, can't wait until residential 5G so they can ditch Frontier. Yes, it is a few years out. They are hoping that can get into some field trials or early deployment.

If you want a conspiracy theory about it all, Verizon will make it a first priority to come back with 5G into the areas that they sold off. Nail in the coffin for residential service to Frontier.