When thinking about writing an article on how Frontier Communications liquidates surplus assets, it occurred to me that perhaps the most important thing I’ve learned over the years is how it shouldn’t be done. Let me explain…

I’ve been in the business of selling/dispositioning no-longer-needed assets for 24 years—the past 16 of which I’ve been liquidating assets for telecommunication companies. During that time, I’ve learned that complicating the process of liquidating assets is not the way to go.

For example, in the past, a company I worked for implemented a computerized system for dispositioning assets. Automating the process, everything visible…on the surface, that sounds good, right? However, once the system was implemented, the amount of materials recycled—along with proceeds from sales— fell off. Dramatically. An investigation quickly brought to light the cause; complexity of the process. It was determined that it took 27 screens to disposition scrap metal—whether it was 1 pound or 20,000 pounds.

Why the disconnect between the process and the result? It happened because the actual goal was 100 percent accountability… not an improved user experience. Very little thought went into who would be using the system or into providing an easyto- follow protocol. In practice, the people within the company generating the scrap or other surplus assets simply needed those assets to go away. Spending lots of time to disposition assets was not their primary job function. The prospect of spending 30 minutes to get rid of a pile of scrap became unfathomable. The complicated process got in the way. Simply stated, it became easier to place no-longer-needed items in with municipal waste. Doing so required no sign-on and very little time.

Unintended consequences of a complicated process.

Don’t get me wrong…this is not an endorsement of throwing assets away…in fact, it’s the opposite. Although the accountants were happy that a computerized surplus asset management system was in place, the bad news was that the wrong things started taking place regarding asset disposition because the process was so cumbersome. The result? More trash; less cash!

Simplifying the process.

When Frontier initially began to formalize its investment recovery operations, each region was empowered to disposition no-longer-needed assets as it saw fit. This process was ripe with environmental and accountability problems. When I was tasked with implementing a centrally managed investment recovery program at Frontier, it was like working with a blank canvas.

Through training I received during the Investment Recovery Association’s conferences, I learned that securing executive support is prime for operating any IR program. Thank goodness I was reporting to a vice president at the time! When I explained the pitfalls (and potential liability) of allowing each region the freedom to liquidate assets as it saw fit, she directed me to draw up and implement a company policy on what to do with nolonger- needed assets. In addition, I went to work crafting contracts for service providers to sell our surplus (revenue share based) and disposition scrap metal. Criteria for screening potential vendors, such as having national capabilities, were put in place to determine the best fit for our surplus needs.

Centralized management.

Doing business from the West Coast to the East Coast, with about 3 million residential customers, 300,000 business customers, and 14,000 employees, Frontier Communications is a complex organization. To help simplify the process, investment recovery at Frontier is managed by a strong companywide policy and a dedicated website.

A task comes in to liquidate office furnishings…that task is assigned to a service provider (or auctioneer) who can liquidate it. The next task is to liquidate scrap metal…that job goes to the scrap metal service provider under contract… and so on and so forth. Both the surplus office furnishings and scrap metal surplus and sales are reported to Frontier IR via our dedicated investment recovery website (www.frontierir.com). Access to the site is available to anyone with an Internet connection.

But unlike the cord boards, where operators were physically required to make the connection, the beauty here is that our IR website can be accessed by company personnel and contractors without a sign-on. Tools are provided on the site to report details about surplus (make, model serial number age, and condition) along with reports of full scrap containers. Importantly, once submitted, these orders automatically flow to the secure side of the site. Data on the secure side becomes a daily work queue. Tracking numbers are assigned to all surplus and scrap provided to service providers for disposition. Frontier Treasury is included on all tracking number assignments. Once a week, a purge is completed on closed-out (paid for) tracking numbers. The IR team conducts follow-up on tracking numbers not closed out after 30 days.

At the end of the day, our quest is to keep it simple, yet provide ease of use, environmental excellence, accountability, and proceeds from no-longer-needed assets.

Michael Beardsley, CMIR, Frontier Communications Mike.beardsley@ftr.com 425.356.3067