Better make room for another major player in the already congested US pay-TV space.
Frontier Communications Corp. (NYSE: FTR) President & CEO Daniel McCarthy delivered that message loud and clear last week during the company's fourth-quarter 2015 earnings call. Speaking to financial analysts on the call, McCarthy spelled out Frontier's plans to offer IPTV service to more than 7 million homes across the company's growing, mainly rural footprint by the end of the decade.
Specifically, McCarthy said Frontier intends to roll out video packages to approximately 3 million households in more than 40 of its existing markets over the next three to four years. Once that rollout is complete, he said, the telco will have video service available to half of its current 8.5 million homes passed, or more than 4.2 million homes.
With the expected closing of its pending California, Florida and Texas landline acquisitions from Verizon Communications Inc. (NYSE: VZ) on April 1, Frontier will pick up another 1.5 million FiOS TV subscribers, broadening its video customer base. Earlier Frontier boosted its video subscriber total when it inherited U-verse TV customers from AT&T Inc. (NYSE: T) in Connecticut.
Beyond that immediate lift, McCarthy said Frontier expects to sign up more video subscribers in the current Verizon regions as it revamps the existing plant. "We anticipate additional opportunities as we upgrade select copper markets in the acquired states," he said.
In a unique move, Frontier plans to use its fiber-to-the-node (FTTN) architecture to deliver IPTV service with new compression technology that can squeeze video signals into smaller data packets. McCarthy said this new compression technology, which is presumably High Efficiency Video Codec (HEVC), will enable Frontier to deliver a single HD signal with just 2.5 Mbit/s of bandwidth, or serve four HD TV sets in a home with just 10 Mbit/s of capacity. In turn, that will allow the telco to use the rest of its network capacity for faster broadband service to the home.
"We think a good video product would be about a 15-meg video product," he said. "But we'll have the opportunity, depending upon loop lengths and applications, to take it up to similar to what we're doing in Connecticut, which is four HD streams with 80-plus meg of capability.
Frontier started testing this approach with its recent video service trial in Durham, N.C. Satisfied with the results, the telco has now launched service commercially in that market and is ramping up service in two other, undisclosed markets. (See Frontier Gives Telco TV a Boost .)
Thanks to its video compression strategy and the upgrades that it's been making to its broadband plant, McCarthy claimed that Frontier can extend video service to another 1.3 million households over the next few years without a huge capital outlay. He estimated that it will take less than $150 million in capex to carry out that expansion, enabling the carrier to stay "within our existing capital budget and current forecast."
— Alan Breznick, Cable/Video Practice Leader, Light Reading