[FiOS] Fios TV Customers Does anyone know approximately how many FIOS TV customers there are? I asked Frontier's Investor Relations staff and they said they did not disclose it. Thanks.
Forest Grove, OR
Not the complete answer but maybe you can send a query this way:
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I sent an email requesting the information. Fierce Cable has not responded but it has only been one business day. My guess is 115,000 to begin with and then losing about 4-9,000 Fios TV customers per quarter equals about 55 - 65,000 today. My second guess is Frontier will eventually outsource its TV product to Uverse in the same manner it uses Dish as an OTT provider and get out of the direct TV business. In other words, Frontier will become a reseller of Uverse, ATT Wireless, and Dish. Those are sad but lofty goals.
Based on other things I've read and heard, Frontier has an interest in keeping its TV service viable in preparation for an eventual sale. Frontier missed its opt-out date for the cable TV franchises it holds in Washington State by almost a year at this point. The agreements I've read state that Frontier could only opt out 90 days after the three year mark has passed; that, in Redmond, would have been December, 2011. Frontier is now stuck with those agreements that are rather expensive to exit.
Here's my very uninformed but somewhat educated guess: Frontier desperately wants to swap the fiber markets back to Verizon. Why? Several reasons:
1) Frontier has been rumored to be considering buying Verizon's copper assets in Texas and California. Verizon has made several public statements to the effect that it would love to be rid of the copper systems for various reasons (unions, maintenance, PUC requirements, and so on).
2) Frontier has opened a customer service center in Texas, in the site of one of Verizon's former GTE SuperPages offices, and a back-office site in leased space nearby. It already has business space in California.
3) The expiration of the "claw back" date for the Reverse Morris Trust transaction that Verizon and Frontier did to make the transfer of assets tax free is coming up at the end of this year.
4) There are other tax avoidance strategies available to the two companies (a 1031 exchange, for instance) that will still be available under current law through 2013.
5) Therefore, Frontier could "swap" the fiber systems it currently owns to Verizon for Verizon's copper systems. This results in Frontier going back to being what it was, a rural/semi-rural copper-based phone company. It also returns fiber markets back to Verizon and Verizon keeps the healthy chunk of cash it received from Frontier in the first transaction when the fiber systems were sold. Now that the build-out in WA, OR, and IN is mostly "paid for" with that money, the ROI on those fiber systems increases in short order.
The problem with this is that Frontier needs to keep subscribers on these systems and keep the marketing for them as un-tarnished as it can. Yes, damage has already been done but Frontier is taking steps to undo that, such as adding Pac12. It also assumes that Verizon would be more interested in dumping copper than it would be for the downside of taking back markets it previously thought were unprofitable.
If my theory of a swap doesn't pan out, Frontier could either sell the whole system to a cable operator like Comcast--who already operates hybrid fiber-coax systems--or, less possible, even just sell the video rights to a third party (again, Comcast would be the most likely).
I assume the "claw back" date is another name for the "look back" period. I enjoyed your response. Your logic is suportable. I just look at what they are doing with Dish (an infinite return on assets) and see where they could retain the fiber to serve their internet customers and the phone is cheap enough that everyone won't run out and buy OOMA. I also think Comcast is driving them out of business as it is and the freebies Comcast is using to buy business is a lot less that the cost per subscriber on a sales basis.
What is the commitment in terms of time for the cable franchsie?
I will pay for quality every time. I think, in the case of television, most folks do not care that much.
No matter, it has been a great summer in the Northwest.
You are right, I meant look back.
The problem with retaining fiber just to serve Internet customers is that there's not the ROI on a pure fiber play. That's why Verizon added television as fast as the law allowed. At least in Redmond, Comcast and Frontier are comparable on bundle packages. Frontier is more expensive on straight Internet, but look at the composition of most of the cities where Frontier offers service: An astounding number of technology-oriented folks (Microsoft, for one, DigiPen students, Frontier itself, Amazon/Boeing/Googlers who live on the Eastside) or people who have been burned by Comcast (ohai Oregon folks!).
I think pay television is getting a bad rap because of perceived value. If providers--Frontier included--can find a way to get that value back (sports channels, I'm looking at you even though I love my baseball), the reliability and ease of use will draw people back. I pay for quality and ease of use, too. Netflix has been way too unstable for me and I'm not willing to have four different media streamers to account for the various services selling or renting television shows. CableCARD, TiVo, and one active FiOS TV subscription are all I need. It's entertainment, it isn't supposed to be hard. :P
As for the franchise, the City of Redmond says it signed either a 10 or 12 year agreement with Frontier (then Verizon, of course) in September 2008. Depending on which date you go for, Frontier is off the hook in 2018 or 2020.
It is my understanding that Comcast now offers Tivo with VOD (works with the latest generation of Tivo). I love my Tivos and if it wasn't for the great picture quality of Frontier, I would move to Comcast. I agree on the streaming issues: I have built in streaming on my latest television and it is still not that great. Like you, I use my Tivo and Frontier Fios and it makes me happy. Now, last chance: How many Fios TV customers do you think they have?
I didn't know that TiVo VOD now worked on the eastside. Either way, I wouldn't switch because of the same reason as a lot of people: bundling. There's no way I'm giving up 35Mbps service from FiOS and paying separately is expensive. Plus, I can't get Comcast SportsNet Northwest in HD on Comcast, just on Frontier. (Hah!)
My guess for number of FiOS TV subscribers: When Verizon sold the system, a report I read from a Kirkland business newspaper said that there were 137,000 subscribers. Some back of the envelope math says that Fronter has experienced 6,200 defections per quarter, so that'd be 55,000 losses (like you got), or 82,000 remaining.
I wonder where they're going... It's not like Frontier makes ordering TV difficult these days, and Comcast in Seattle doesn't appear to carry this new college sports channel everyone wanted. Could they really all be from people going Internet-only?
Ans: Directv and now Dish Satellite. CSNW or Pac12 in HD = no to Comcast. If your starting number is accurate, your estimate is a good one.
Oh, one more thought I had: Watch the state legislatures in both Washington and Oregon early next year. If either or both have a statewide video franchise as a proposed bill, that's a very sure sign that Verizon is sniffing around.