Frontier’s broadband growth bucks trend

Frontier Communications bucked the current industry trend of poor broadband performance to some extent in the second quarter, reporting growth where larger rivals have seen significant declines.

Frontier, formerly Citizens Communications, added 16,300 broadband customers in the quarter, 3% more than the previous quarter and nearly 17% more than a year earlier. That includes 7800 dialup customers who converted to higher speeds in the quarter. The additions raise the carrier’s residential broadband penetration to nearly 36%.

Maggie Wilderotter, the company’s chief executive officer, said Frontier’s broadband business was aided by offers targeted toward budget-conscious residents, including a 768-kb/s product for $19.99 per month.

“Our ability to segment the market and offer appropriate products is a particularly valuable way to retain budget-sensitive customers during today’s challenging economic conditions,” Wilderotter said during a conference call today to discuss the quarterly earnings.

The company also reported a 3% decline in total revenue from a year earlier, to less than $563 million. And it lost 45,400 access lines in the quarter, a decline of nearly 2%.

Further describing general economy, chief financial officer Donald Shassian pointed to what he called “positive trends to look for, including [the fact that] our non-paid disconnects have sequentially declined in the last two quarters.”

Frontier’s second-quarter broadband results run contrary to those reported so far by other US carriers, especially its much larger counterparts. Last week, following second-quarter reports from a handful of US broadband providers including AT&T and Verizon Communications, Teresa Mastrangelo, principal analyst for BroadbandTrends.com, wrote in a newsletter that “all indications are that DSL will experience its worst quarter on record.”

AT&T’s broadband subscriber additions in the second quarter were down 90% to 46,000, as the carrier reported seeing broadband disconnects from residential customers tightening their household budgets amid the tough economic climate. Verizon, which added 54,000 broadband subscribers (including fiber-to-the-premises customers), saw a decline of 133,000 DSL subscribers (not counting the divestiture of its New England network to Fairpoint Communications).

“Cable operators appear to be weathering the crisis in much better shape,” Mastrangelo wrote. “Although cable modem net additions are down from previous quarters, their decline is far less dramatic than that experienced by DSL operators.”

When asked on today’s conference call whether Frontier owes its broadband performance in part to the fact that its rivals in the cable space are less competitive, Wilderotter said, laughing, “Of course they’re less competitive than we are.”