Frontier Communications successfully navigated supply chain constraints to the point that the telco set another fiber network buildout record in the second quarter of 2022. And, for good measure, Frontier has also raised its fiber-to-the-premises (FTTP) buildout target for the full year.

Frontier built fiber to a record 281,000 new locations in Q2 2022, up from 211,000 in the prior quarter. Coming out of the second quarter, Frontier's fiber network passed 4.4 million locations (out of a total footprint of 15 million locations covering parts of 25 states), a marker on the way to a grander plan to build FTTP to at least 10 million locations by 2025.

Figure 1: Click here for a larger version of this image.
(Source: Frontier Communications Q2 2022 earnings presentation)

Tied in, Frontier has raised its 2022 fiber build target to a range of 1.1 million to 1.2 million locations, up 10% to 20% from an earlier target of about 1 million locations.

Frontier was able to accelerate its Q2 build and expand its full 2022 target in the face of a "challenging supply chain and macroeconomic environment," Frontier President and CEO Nick Jeffery said on the company's recent Q2 earnings call.

Jeffery pointed out that Frontier has diversified its fiber build into six additional states and plans to be building in at least 12 states by the end of the year. "This geographic diversity expands our opportunity to build fiber and provides redundancy for maintaining our build pace," he said.

Frontier is pairing that with additional contracts for both labor and equipment and realizing cost efficiencies using a blend of "cluster density" and new construction techniques – moves that are helping the company manage through both inflation and labor-related challenges, Jeffery added.

'Wave 3' buildout potential

Frontier's current FTTP buildout plan covering 10 million locations focuses on a portion of its footprint referred to as Wave 1 and Wave 2. The telco is also piecing together a plan for Wave 3 – a portion of its footprint with 5 million locations in rural areas deemed to be financially less attractive to build fiber.

However, Frontier execs said a fresh analysis indicates that between 1 million to 2 million of those Wave 3 locations can be converted to FTTP economically without government subsidies.

John Stratton, Frontier's executive chairman, said the other 3 million to 4 million remaining locations in Wave 3 could also meet the company's return-on-investment thresholds depending on how the distribution of some $42 billion in federal infrastructure funding pans out in the coming years.

However, the overall funding plan for a Wave 3 build is still being ironed out. Frontier is also exploring other options for Wave 3, including partnerships and joint ventures.

Fiber gains outpace copper losses

In tandem with the network buildout, Frontier's fiber subscriber growth stayed steady in Q2. The telco added 50,000 consumer fiber broadband subs, a tick below the 52,000 it added in the prior quarter (Frontier attributed the small shortfall in Q2 to seasonable movement in Florida).

As US cable operators and telcos struggled to gain broadband subs in Q2 2022, Frontier bucked the trend, adding 9,000 total broadband subs in the period when a loss of 41,000 legacy DSL/copper subs were included.

Jeffery estimated that between 45% to 50% of all new Frontier fiber subs selected speeds of 1-Gig or more. Frontier launched a symmetrical 2-Gig fiber service in February.

Copper-to-fiber migrations are part of Frontier's subscriber total, but the "vast majority" of those additions are coming from new customers, CFO Scott Beasley said.

"I think it's clear to see from recent results that, as we've always said, fiber is a superior product to cable," Jeffery said. "And while the cable and fiber market remains competitive, it's also worth reminding ourselves that in our specific footprint, we have 84% of that where we have one or fewer competitors today. That said, in this quarter, we gained share against every competitor in every geography we operate in."

Depending on the market, Frontier's cable competition includes Comcast, Charter Communications and Altice USA.

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— Jeff Baumgartner, Senior Editor, Light Reading