Nick Jeffery: Yes. Perhaps — thanks, Peter. I’ll take that and then — hand to Scott. I mean, look, our long-term penetration rates, as we’ve said, are to some extent, founded on the fact that we have many of our more mature markets already at or above our 45% or better terminal penetration rate. So we know this is doable, point one. Point two, that base was at some point inherited from the companies that Frontier bought that from where penetration was actually higher in the past. And for various reasons, way before any of the current team — here, that penetration was lot down [ph]. We’re now systematically building it back up to levels that it was previously at. And why is that doable? Well, because we’ve got an extremely favorable market structure, where in 86% of our fiber footprint, we have one or fewer gigabit plus capable competitors.
And that market structure is likely to remain very stable into the future. And that, combined with our fiber expansion plans, our ever better go to market are very purposeful and clear pricing strategy means I strongly believe we’ll be able to grow our terminal penetration right across the base over time to 45% or above. Scott?
Scott Beasley: Yes. And Peter, on your question of kind of cohort by cohort penetration, have we taken the best ones and left subpar once for later. The answer is no. We have a long enough track record now, if you look at 2020 cohort 2021 cohort 2022 cohort — those are all within the target ranges of 15% to 20% after 12 months, 25% to 30% after 24 months. Those all look different. They have different mixes of geographies, different mixes of unit types. We’ve said every cohort is different. But eventually, at 12 months and 24 months, it will get into the same penetration range. We’ve now expanded our build. We’re building in roughly 15 states. We think the new states that we’re building in are just as attractive penetration wise as the states that we started building in. So when we look at the next several years of penetration, we expect each of those individual cohorts to be in that 15% to 20% range at 12 months.
Operator: Our next question comes from the line of Michael Rollins with Citi.
Michael Rollins: Thanks. I’m curious if you can give us an update on the last 1/3 of the footprint in terms of what you may be thinking today in terms of monetization opportunities for some of the footprint, fiber builds and deed opportunities. And then just more broadly, how is the fiber board and management team viewing the public market as the right place for Frontier to be for the multiyear investment plan for your fiber strategy?
Nick Jeffery: Thanks, Michael. Perhaps I’ll take the last one and Scott [ph]. I mean, look, we’re not going to comment on whether the public market or other structures are the right structure for Frontier to operate within. I mean, that’s something for the Board to consider. And the Board is always considering all of the options for Frontier to create long-term shareholder value. What I can say is that I firmly believe in the strategy that we’ve got of building fiber as fast as we can, penetrating that fiber rapidly, improving customer care for all customers and continuing to become an ever more efficient business is exactly the right mechanic to create long-term shareholder value by expanding our fiber footprint in a way that we know there is clear demand for. We know we can penetrate these markets, we know we can build efficiently and we believe that, that is the right recipe to create long-term shareholder value. Scott, do you want to comment on BEAD?
Scott Beasley: Sure. So Michael, your question — on your question of the last 1/3 of our footprint. So the $5 million [ph] following the committed build of $10 million [ph]. I think that $5 million [ph] falls in a few buckets. One, we’ve said beyond the committed build of $10 million [ph], there could be $1 million to $2 million [ph] that makes sense for private capital. So our capital to pass. That has not been the focus of ours thus far is on the $10 million but we are starting to look at ways to potentially expand into that $1 million to $2 million. The bulk of that $5 million be best built out with fiber if we receive subsidies. So we are active in subsidy programs now before BEAD really gets rolling, we’ll be an active participant in BEAD.
And we think the BEAD program is very important to connect all of the unserved and underserved homes and businesses to the digital economy and we active participant in BEAD [ph]. So the focus is on the committed build of $10 million [ph] but we are starting to look at creating value beyond that $10 million [ph].
Operator: Our next question comes from the line of Simon Flannery with Morgan Stanley.
Simon Flannery: Great. Nice to see the ARPU trends coming through. Could you just talk a little bit about what you’re seeing on the tier mix? What levels are people coming in at? Are you getting existing customers upgrading to higher speeds? I know you’ve had some — a lot of focus on some of your above 1 gig type tiers. And then, any comment on — you talked about different moves with different sales channels. Perhaps you could update us on where you stand on that? And I guess, finally, the cable companies, particularly Charter is coming up on the first anniversary of some of these discounted bundles. Do you think there’s an opportunity for you there to take share as those prices get reset?
Nick Jeffery: Yes, Simon, thanks. It’s Nick. I mean, we don’t disclose the individual mix on sort of a gigabit plus speed — but what I can say is as we’ve extended our gigabit pricing ladder from 0.5 gig to 1 gig, 1 gig to 2 gig and then more recently, 5 gig, it has had exactly the impact on the overall speed mix that we hoped it would. So we have the kind of headline product, 5-gig — first company to launch 5 gig to metrical services network-wide, the first company launched 2-gig symmetrical services network wide. And in both cases, we found as a cohort of customers who want the newest, who want the best, who want the fastest and they buy into that tier. That then has the effect of pulling the tier below up speed ladder. And so it shifts the entire speed mix to the right and up.
And then, of course, we unbundled value-added services that we used to give away for free and started charging those, have the kind of strange effect that then actually the take rate went up. So we generated more revenue and greater take rate on value-added services. And those things combined are what’s leading to a very systematic, structural determined, purposeful way of increasing customer value systematically. And we’re not done there, by the way. Our network is already 10 gig capable end-to-end and there’s a clear path to 25 gig and beyond at a very, very low CapEx requirement. If we ever needed to do that and we haven’t made that decision but it’s an option for us in the future. So very pleased with the way that pricing ladder is working and it clearly meets a customer demand at every speed and price point.
On sales channels, again, we don’t disclose the exact mix but across door-to-door, telesales, digital sales [ph] and so on. We are continually optimizing that mix. And we optimize it not just across the country but state by state, city by city and make sure that the channel best meets the demographic and penetration rate that we’re trying to sell into, are always looking at the most efficient way to sell. And sometimes that throws up strange thing you think digital would perhaps be the most efficient way to sell. Sometimes it is and sometimes it isn’t. And we are just day-to-day, month-to-month as we go forward, always trying to find the best way to drive penetration at the lowest unit cost.
