Upstart Internet, phone, and cable provider Frontier Communications (NASDAQ:FTR) has an offer for small-business customers that may tempt them to switch from rivals including Comcast (NASDAQ:CMCSA), AT&T (NYSE:T), and Verizon (NYSE:VZ).
In its limited-time deal, the ISP offers to take away one of things that customers -- companies and individuals -- complain about most. Frontier will be removing the prospect of price increases not just for a lock-in period, but for as long as the small business keeps its service.
It's a bold offer from the company that could entice people to make the switch to the growing service provider. It's certainly a strong move that should at least make companies consider giving Frontier their business.
In a space where it's competing with well-entrenched incumbents, that's an important step toward becoming a serious player.
What is Frontier offering?
Customers who select qualifying Frontier high-speed Internet and business phone packages can "set it and forget it," according to a press release. Their price for Internet and phone will never increase.
The deal launched on Nov. 1, and the company won't say how long it plans to offer it.
"Small-business owners deal with surprises daily, but unexpected rate hikes for Internet and phone services don't have to be among them," said Cory Jones, vice president of commercial marketing at Frontier. "Price for Life gives small business owners 'budget certainty' that their pricing for fast and reliable Internet and phone service will remain the same next month, next year, and for so long as they are a Frontier customer."
Price for Life offers Internet speeds of up to 150 Mbps/150 Mbps (though the starting packages are much slower), along with single- and multi-line voice packages with unlimited long distance. Packages start at $59.99 a month.
Why does this matter?
Price for Life is clearly a gimmick, but it's a smart gimmick the addresses an actual consumer concern. Customers using Comcast, AT&T, and Verizon (as well as other providers) face regular price increases, and in some cases opening your bill can be like appearing on a game show where there's a goat behind every prize curtain.
In many cases, an offer like this would be buried in so many conditions that it would be essentially meaningless -- such as having Comcast not raising prices but tacking on programming and sports fees. The disclaimer text allows for a bit of that, but it's probably legally necessary:
"Limited-time offer. Taxes, fees, and other surcharges are not included in Price for Life guarantee and are therefore subject to increases."
The rest of the disclaimer seems pretty reasonable and not like a back-door way for the company to circumvent the guarantee down the line:
Must subscribe to a qualifying package of Business phone service and new High-Speed Internet with speeds up to 6Mbps or 7Mbps depending on location. Higher speeds available for an additional monthly fee. Actual speeds may vary and are not guaranteed. Service subject to availability. Minimum one-year agreement, $9.99 broadband processing fee upon disconnection of service and early termination fee equal to the remaining balance of the agreement apply. Net Internet installation fee applies: $99.99 for one-year agreements; waived with two-year agreements. Voice service order or install charge may apply. Other terms and conditions apply. Frontier reserves the right to withdraw this offer at any time.
Frontier is clearly covering its bases here, but it could be a lot worse. The company appears to be offering a deal that benefits small business while, of course, locking in customers for the ISP.
It's not too good to be true
While monopolies or duopolies allowed Comcast, Verizon, AT&T, and others to steadily raise prices, those days are over in many markets. As competition increases, with the established cable and phone companies not only battling each other, but also fighting incursions from products such as Alphabet's Google Fiber, prices will probably either stabilize or fall.
Price for Life forfeits Frontier's ability to raise prices, but that may not be a big sacrifice in a market where increased competition is forcing prices down. The company is offering something tangible to customers. Locked-in price certainty has value even if it seems likely that the market will take care of that anyway.
This is a smart offer that should appeal to a segment of the business community. It's also less of a risk for Frontier than it seems so that the company can grow its user base without sacrificing much, if anything, in the way of future upside.
Daniel Kline has no position in any stocks mentioned. He is a Frontier customer who's mostly satisfied, but wishes the picture was better for some New England Patriots games. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.