Deeper Dive—Frontier sees the ‘debundling’ of video, broadband

Frontier Communications has joined a growing crowd of internet service providers to accept the decline of traditional video and embrace alternatives.

Scott Beasley, chief financial officer at Frontier Communications, was asked this week at a Citi investor conference about his company’s traditional video product and whether it fits with Frontier’s broadband focus going forward.

“We think that the overall trends around the debundling of video from connectivity work very much in our favor,” he said, pointing toward the still-accelerating movement toward consumers buying broadband and skipping the expensive video package. “We want to de-emphasize our focus on selling linear video. We do still have some linear video customers in our fiber legacy footprint, but we’ll focus all of our attention on increasing the options our customers have for OTT available through us.”

It echoes comments Beasley made in November during Frontier’s third-quarter earnings call, where he said his company decided to stop marketing video to new customers earlier in 2021.

“It is important to note that while video generates significant revenue, it generates only minimal profit due to high content costs,” he said, according to a Motley Fool earnings transcript.

Frontier directly offers its customers Dish TV, DirecTV Stream and, most recently, YouTube TV, a partnership it kicked off by offering its customers the service for $10 off per month for 12 months, bringing the cost down to $54.99 per month.

“This partnership with YouTube TV gives our customers the opportunity to cut the cord and still watch the live and on-demand content they love,” said John Harrobin, executive vice president of consumer at Frontier, in a statement. “Customers can now enjoy our fiber-optic broadband service plus YouTube TV for the best price available in the market.”

YouTube TV—along with fellow virtual MVPDs like Sling TV, fuboTV, DirecTV Stream and Philo—have become popular alternative options for ISPs who have all but given up on linear video. Verizon, WOW!, Google Fiber, CenturyLink and others have all been steering their customers toward some combination of the abovementioned vMVPDs instead of traditional TV.

And more and more, cable and telco operators are framing cord cutting as an opportunity, not a problem. John Stratton, executive chairman of the board at Frontier Communications, said in November that his company’s customers are looking at their triple plays and questioning why they’re continuing to pay so much for a massive bundle of channels, the majority of which they don’t watch.

“That’s creating a moment of truth and is something we really enjoy, because as we think about the essence of our value proposition as we go forward, we’re a broadband provider,” he said. “And so, the ability for us to make that clear to customers, you really should think this over. There’s an opportunity for you to reconsider how entertainment is delivered, that creates a stimulus for change as well, and it impacts how we plan to compete in all these markets.”