Frontier’s CEO insists 5 Gig internet isn’t an excuse to raise prices
Hardly anyone needs 5 gigabit-per-second internet service right now, and Frontier CEO Nick Jeffery knows it.
Nonetheless, Jeffery has overseen the rollout of 5 Gig service across Frontier’s entire fiber footprint, making it the first nationwide internet service provider to do so. For $155 per month, Frontier fiber customers can now buy enough bandwidth to stream 200 Netflix videos in 4K HDR simultaneously. (The priciest Netflix plan allows for no more than four streams at once.)
In an interview with Fast Company, Jeffery acknowledges that such speeds are unnecessary for most people, but while other internet providers sometimes use speed upgrades as an excuse to charge more, he insists that’s not happening here. Having emerged from bankruptcy in 2021 with a newfound focus on fiber expansion, Frontier is now one of many companies that’s trying to win over jaded cable customers. That means competing on price, but also letting customers indulge in internet speed overkill if that’s what they desire.
“We don’t want to be the gatekeepers of speed,” Jeffery says. “We don’t want to be the ones that say, ‘No, you can’t do that.’ We want to be the ones that say, ‘Yeah, you can do it, and we can’t wait to see what you do with it.’”
Turnaround time
Frontier was a much-maligned internet service provider when it filed for bankruptcy three years ago. As Ars Technica reports, the company admitted to investors that it had underinvested in fiber, leaving more than half of its 2.6 million customers with sluggish DSL connections. The company also developed a reputation for lengthy service outages and sneaky fees, and had piled up thousands of complaints with state regulators.
Roger Entner, the founder and lead analyst of Recon Analytics, says the result has been a dramatic drop in Frontier’s market share, to as little as 25% in some markets. “DSL is not even competitive against cable, and they’ve lost against cable for the last decade,” Entner says.
All that happened before Jeffery joined the company in March 2021, coming from Vodafone U.K., where he improved the company’s profit margins and increased customer satisfaction scores over five years as CEO. Frontier brought him on board in hopes of a turnaround, following a bankruptcy settlement in which it agreed to expand its fiber footprint.
Since 2020, the company has been building out fiber in California, Connecticut, Florida, and Texas, and is now expanding the rollout to 16 states in total. Jeffery says he aim to build a modern, tech-oriented company with a product that people actually want.
“There’s a tremendous opportunity to grow a really great American company, to create a great American turnaround, give customers what they want, and hopefully give real competition to the home broadband market, where frankly it’s been lacking for a very long time,” he says.
Perceived need for speed
Of course, the company also has to make a return on its investment, and its plans for doing so hinge on increasing its average revenue per user. Spencer Kurn, Frontier’s senior vice president of investor relations, told investors last fall that it will achieve this through modest annual price hikes and—more important—growing adoption of pricier speed tiers.
Hence the push for ever-faster internet speeds. While even 1 Gbps speeds are overkill for the vast majority of today’s internet use cases, Jeffery says half of Frontier’s new customers sign up for gigabit plans or higher instead of its baseline 500 Mbps service.
The reasoning isn’t always scientific. Just as users buy the latest iPhone despite barely-perceptible differences from the previous year’s model, customers will pay for faster internet speeds simply because they want the best possible option. There’s a bit of a “neighborhood pride” effect as well, he says, of customers buying 2 Gig or 5 Gig plans for bragging rights, which in turn convinces others to do the same.
“It’s a bit like if you buy a new car,” he says. “You could get one that’s really small and built on old technology and not very fast . . . But people don’t do that. They want the new model.”
While that might seem a bit cynical, Recon Analytics has found that splurging makes people happier. Its ongoing surveys of more than 125,000 internet subscribers has shown that as customers move to higher speed tiers, their Net Promoter’s customer experience scores also go up.
“People are more satisfied when they have a faster connection,” Entner says. “Now, is this real, or is it a placebo effect? That’s a different question. But people report higher satisfaction with higher speeds.”
Some actual use cases may also bubble up as faster speeds become available. Entner points to augmented reality along with six-degree-of-freedom video, which would allow users to view content from virtually any perspective. Those use cases, Entner says, use “an ungodly amount of bandwidth” and would easily justify a 5 Gbps connection.
Jeffery doesn’t offer any of his own examples of what those speeds might accomplish, but expects that businesses will figure out what to do with them once they’re available.
“Our job is not to create the applications that use this,” he says. “Our job is to create space that enables applications to be invented.”
What’s the catch?
Those accustomed to being squeezed by cable giants may be skeptical of Frontier’s motives, as it’s not unheard of for internet providers to use speed upgrades as cover for price hikes. Charter, for instance, has gradually replaced slower tiers with faster and more expensive ones, and Comcast enforces data caps in many markets so that customers who take full advantage of their speedy connections get hit with overage fees.
They also have a habit of overselling. Comcast, for instance, suggests gigabit speeds for users with more than 12 devices on their network, even though a decent Wi-Fi router would have no issues with that number of devices on a slower connection. Frontier makes similar claims about the need for gigabit speeds on its own website.
Jeffery says Frontier isn’t trying to force people off of more affordable options. The company continues to offer 500 Mbps service for $50 per month, and when it launched 5 Gig service, the price for its existing 2-Gig plan fell from $150 to $100 per month.
Jeffery also says Frontier will never implement data caps for fiber subscribers, and it gives customers free Eero routers. He says the diagnostic data from those routers help the company know when customers need better Wi-Fi rather than speed upgrades. (To that end, Frontier also leases two-packs of additional Eeros for $10 per month.)
“We’re not trying to get people to buy the best speeds,” he says. “We just want to offer the full range of speeds at great price points and let people figure out what they want.”
Competitive streak
Overall, Jeffery is more interested in extolling the benefits of fiber rather than any particular speed tier, and is eager to talk about how fiber beats cable. (The main advantage: Most fiber providers offer equal upload and download speeds, whereas cable upload speeds tend to be much slower, hindering video conferencing and data backups.) His message is clear: While Frontier was once an also-ran against cable, now it can compete with them directly.
“We’ve really got three competitors, Comcast, Charter, and Altice, and we take the vast majority of our new customers from cable,” Jeffery says.
In taking on cable, Frontier joins a wave of companies providing a fresh infusion of home internet competition. AT&T and a slew of smaller providers have been expanding their fiber offerings, while 5G home internet from T-Mobile and Verizon is providing cheaper alternatives.
That means companies like Frontier may not be able to embrace cable’s worst tactics even if it wanted to. But as Jeffery tells it, that’s not a problem.
“There is more choice for customers and more competition, and I’m a great believer in that. I think that’s a good thing,” he says. “It tends to spur whole industries into action and innovation.”
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