frontier – Techdirt (original) (raw)

Monopolized U.S. Telecom Industry Eyes More Consolidation, Because What Could Go Wrong

from the do-not-pass-go,-do-not-collect-$200 dept

The ink is barely dry on Verizon’s $20 billion proposed acquisition of Frontier, but industry analysts — ever excited to boost stock valuations via speculation — are already pushing for greater consolidation in the very broken U.S. telecom industry.

Telecom industry trade magazines are all frothy at the potential for even more mergers, including a potential Verizon purchase of Lumen (formerly CenturyLink):

“Analyst Jonathan Chaplin wrote in a research note issued Friday that an unnamed person pitched that idea to New Street Research about two weeks ago. Such an acquisition could help shore up Verizon’s fiber base and convergence strategy. “It is speculative. But it makes a lot of sense,” Chaplin wrote.”

…”I think Lumen is up for grabs. They are probably the next one to drop,” Jeff Heynen, a VP at The Dell’Oro Group focused on broadband access and home networking, tells Light Reading.

Ah yes, the “convergence strategy” of gobbling up every single provider of an essential service in order to create a barely regulated monopoly over broadband access across much of the country. What could go wrong? Where in history has that ever shown to be folly?

As we’re currently seeing in streaming, pressures for continued quarterly returns are challenged when your market starts to saturate and subscriber growth slows. So then companies turn to cutting corners (usually labor, customer service) and nickel-and-diming subscribers (usage caps, hidden fees) to goose earnings.

When those efforts are taxed out, they then turn to often mindless mergers and acquisitions to temporarily boost stock valuations and drive massive tax reductions. That consolidation not only leads to less competition generally (resulting in high prices, spottier broadband access, and crappier service), but as we saw with previous deals between Verizon and Frontier, the huge debt loads created by such deals result in additional cuts, usually impacting labor, service quality, or users.

This kind of stuff isn’t of any real interest to most telecom industry analysts, whose primary function is to ensure that shareholders get their sweet, justified returns. And it’s amusing to watch everybody involved in this self-serving chain utterly refuse to learn absolutely anything from history. Almost none of the debate considers, even for a fleeting second, the impact debt-fueled consolidation has on employees and users. It’s just deemed a tangential irrelevance.

U.S. broadband is a patchwork of regional monopolies, coddled by corrupt federal and state lawmakers, who’ve worked tirelessly to demolish anything closely resembling competition in local broadband markets. More mindless consolidation is the exact opposite of what the broken industry needs, but the zeal in which folks pursue such “synergy creation” and “convergence” is unrelenting all the same.

Filed Under: broadband, competition, consolidation, high speed internet, mergers, telecom
Companies: centurylink, frontier, lumen, verizon

Press Happily Parrots Verizon’s Claim That Its $20 Billion Purchase Of Frontier Will Be A Huge Boon To Consumers

from the merge-ALL-the-things! dept

Fri, Sep 6th 2024 05:20am - Karl Bode

Tell me if you’ve heard this one before: a major U.S. regional telecom monopoly is looking to buy another major U.S. regional telecom monopoly in a massive transaction that both companies insist holds vast benefits for American consumers.

This time it’s Verizon stating it intends to purchase Frontier in a massive $20 billion deal that would transfer ownership of Frontier’s fiber, voice, and DSL networks back to Verizon. The deal, Verizon insists in a press release, will make U.S. broadband better and (somehow) more competitive:

The acquisition of Frontier is a strategic fit. It will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network.

In telecom, pre-merger promises are always meaningless. These deals generally saddle companies with massive debt, resulting in the surviving company cutting corners and imposing countless layoffs to regain equilibrium. The consolidation exists simply as a way to temporarily boost stock valuations, drive massive new tax breaks, and give overcompensated executives the false belief they’re savvy deal makers and bold innovators who definitely haven’t run out of any actual, innovative ideas.

Frontier perfected something I affectionately call “fiber to the press release,” where a telco makes a bunch of fiber deployment promises nobody independently verifies, and the press happily parrots them. Every merger or request for tax cuts, subsidies, and deregulation is accompanied by a promise of massive fiber deployment that never actually happens at the scale that’s promised.

This deal — which will transfer Frontier’s 2.2 million subscribers across 25 states to Verizon — is particularly amusing because in 2015 Frontier bought a huge chunk of Verizon’s network making all the same promises. None of those promises came true; the transition was an historic mess resulting in Frontier’s bankruptcy, untold layoffs, numerous network failures, and terrible overall broadband service.

Such a transaction might wind up being a better deal for Frontier consumers if Verizon winds up being more competent in upgrading aging networks to fiber and improving abysmal industry customer service. But given the lack of U.S. broadband competition and the fecklessness of captured U.S. Telecom regulators, there’s very little real financial incentive for Verizon to do that.

I suspect the timing of this deal is mostly triggered by Verizon’s interest in getting Frontier’s share of the $42.5 Billion in BEAD broadband subsidy money soon heading to the states courtesy of the 2021 infrastructure bill. As per tradition, a good number of those states (like Pennsylvania) will largely just take that taxpayer money, dump it in Verizon’s lap for promised fiber network investment, then fail to follow up.

The “fun” part is if you peruse the U.S. press coverage of this deal, almost none of the outlets can be bothered to truly explain all of the numerous, terrible problems the last merger caused. Or the fact that both of these companies have zero credibility when it comes to promising much of anything, especially as it pertains to what major mergers will or won’t accomplish.

Nor can major press outlets be bothered to explain more generally that mindless consolidation and pathetic regulatory oversight is why U.S. broadband is patchy, expensive, and slow (with routinely awful customer service) in the first place.

None of that is deemed to be useful, relevant context for readership. They’ll just parrot the companies’ promises of untold new consolidation synergies because the primary focus is money — not tech, or broadband, or actual people, and certainly not the real world impact of a relentless attack on competition.

This is the U.S. Telecom industry: a rotating collection of massively unpopular regional monopolies that have carved the country into fiefdoms. All protected by a largely feckless regulatory apparatus disinterested in antitrust reform, and propped up by a lazy corporate press equally disinterested in documenting the impact of monopoly power or mindless consolidation.

Filed Under: broadband, consolidation, fiber, monopoly, telecom, wireless
Companies: frontier, verizon

Broadband Giant Frontier Dinged Yet Again For Lying About Crappy Broadband Speeds

from the if-you-get-caught,-just-lie-lie-again dept

Mon, May 16th 2022 05:25am - Karl Bode

We’ve long discussed how if you really want to understand how the highly monopolistic U.S. broadband industry really works, you should look at regional phone monopoly Frontier Communications. Especially in states like West Virginia, where the company has spent decades lagging on fiber upgrades and DSL and phone repairs under a regime of regulatory capture that rarely holds them accountable for fiber under-investment, outright ripping off taxpayers, or failing to adhere to even basic quality standards.

After more than a decade of this dysfunction — including a completely bungled acquisition of some unwanted Verizon phone, DSL, and fiber customers — the company went bankrupt in 2020.

Since then, Frontier has been engaged in a kind of image reclamation effort, in which it admits that under-investing in fiber was a big part of its downfall, and claims that it will stop doing all of the things that brought it to this point. Yet if there’s no real competition in many of the markets the company services (83 million Americans live under a monopoly), there’s no organic incentive to truly improve.

Enter telecom regulators, who, in functioning economies and democracies, step in to nudge things along when the market fails, even if that is largely little more than a few belated wrist slaps. For example the FTC last week announced it would be taking action against Frontier because the company routinely advertised broadband speeds its aging DSL network couldn’t actually provide:

“Frontier lied about its speeds and ripped off customers by charging high-speed prices for slow service,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s proposed order requires Frontier to back up its high-speed claims. It also arms customers lured in by Frontier’s lies with free, easy options for dropping their slow service.”

The FTC’s original complaint and lawsuit against Frontier, filed just about a year ago, was jointly filed with the AGs of Arizona, Indiana, Michigan, North Carolina, and Wisconsin, and the district attorneys’ offices of LA County and Riverside County, California. All pointing out that the company routinely, for years, advertised DSL speeds it knew its network wasn’t delivering.

As a result of the deal Frontier needs to adopt more transparency in its pricing. But most of the benefits are exclusive to users in California. Frontier has to dole out 8.5millionincivilpenaltiesandcoststotheLosAngelesCountyandRiversideCountyDistrictAttorneys’officesonbehalfofCaliforniaconsumers.Butitalsohastoupgrade60,000CaliforniacustomersoncrappyDSLtofiberatacostof8.5 million in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers. But it also has to upgrade 60,000 California customers on crappy DSL to fiber at a cost of 8.5millionincivilpenaltiesandcoststotheLosAngelesCountyandRiversideCountyDistrictAttorneys’officesonbehalfofCaliforniaconsumers.Butitalsohastoupgrade60,000CaliforniacustomersoncrappyDSLtofiberatacostof50 to $60 million.

Granted the FTC’s authority here is limited. It can only act when something is very clearly “unfair and deceptive” under the FTC Act. And the FCC’s ability to police a lot of this stuff was curtailed courtesy of the Trump FCC’s net neutrality repeal.

A telecom giant simply has to engage in a small bit of creativity in order to rip off captive U.S. subscribers with relative impunity (see: various surcharges with bullshit names affixed to your cable and broadband bills, or technically unnecessary monthly usage caps). Still, accountability usually finds its way through the haze of lobbying-induced apathy.

The Minnesota AG blasted the company for routinely failing to upgrade or repair its aging network. Washington State’s AG fined Frontier for ripping off subscribers with bogus fees. These efforts have a positive impact overall, but they’re often too scattered to meaningfully derail such practices industry wide. And again, notice that Frontier customers in West Virginia (or other states) see no accountability.

The financial penalties Frontier will face are nothing compared to the money made off the back of captive customers without any competitive alternatives to flee to. Policymakers could avoid these outcomes by tackling the real source of the problem: monopolization and the corruption that protects it. But given that creates political risk, the U.S. instead likes to apply band-aids after the fact, and consider the case closed.

Filed Under: broadband, digital divide, dsl, false advertising, fiber, ftc, high speed internet
Companies: frontier

After Going Bankrupt For Underinvesting In Fiber, Frontier Communications Pretends It Has Seen The Light

from the do-not-pass-go,-do-not-collect-$200 dept

Wed, Mar 2nd 2022 06:22am - Karl Bode

We’ve long discussed how if you really want to understand how the highly monopolistic U.S. broadband industry really works, you should look at regional phone monopoly Frontier Communications. Especially in states like West Virginia, where the company has spent decades lagging on fundamental fiber upgrades, or DSL and phone repairs under a regime of regulatory capture that never holds them accountable for fiber under-investment, outright ripping off taxpayers, or failing to adhere to even basic quality standards.

After more than a decade of this dysfunction — including a completely bungled acquisition of some unwanted Verizon phone, DSL, and fiber customers — the company went bankrupt in 2020.

There were a lot of reasons for this, including terrible customer service, an unwillingness to repair its aging phone and DSL lines, taking on “growth for growth’s sake” merger acquisitions of dying phone networks it couldn’t really afford, and having just a seeming disdain toward its paying, often captive customers who lack competitive alternatives. Filings to the SEC also acknowledged something the company denied for years: its refusal to meaningfully upgrade its aging network to fiber was a big part of its unraveling.

Two years later the company is on an image-reclamation effort to portray itself as more cutting edge. That included an announcement this week that the company would be offering 2 Gbps fiber for $150 a month “network wide.” Of course, by “network wide” the company actually means locations that already have fiber, not the millions of Frontier customers still stuck on aging DSL lines:

“We’re thrilled to become the first and only major ISP to deliver network-wide 2 Gig internet service, as we unleash the power of our fiber network,” said Nick Jeffery, President and CEO of Frontier. “Today is proof that Frontier is doing what customers want and cable can’t–bringing faster speeds and greater value to consumers as we Build Gigabit America.”

Many news outlets were happy to parrot the company’s “network wide” rhetoric in headlines without really discussing the company’s long history of fiber deployment failures in any meaningful detail. The goal for Frontier is to try and get folks to forget it spent a decade fighting competition and shirking on network upgrades as it tries to slow defections to dominant cable providers like Comcast. Other recent company press releases herald the ISP’s transformation into a “fiber first” company, noting that it deployed fiber to an additional 638,000 locations in 2021. That’s not nothing, but in a country where 20-40 million still lack broadband of any kind, it’s not revolutionary either.

The problem here is several fold. One, many phone companies underinvested in fiber because Wall Street is generally only interested in short term profit gains; prolonged, expensive fiber deployments have always been despised (they still are), and companies are simply responding accordingly. That’s not going to magically change just because Frontier claims to have seen the light. Monopoly service sucks, prices are high, and upgrades are spotty in part because Wall Street wants regional monopolies to exploit limited competition to raise rates, cut customer service, and engage in mindless acquisitions for growth to deliver quarterly returns.

So if you don’t actually tackle the lack of competition in Frontier markets (read: unchecked monopolization), or the regulatory capture (read: state and federal corruption) that protect apathetic telecom giants, there’s no real reason to believe that Frontier has fundamentally changed. And because U.S. broadband maps continue to suck, state and federal regulators still don’t have the tools necessary to determine if a company like Frontier is even telling the truth about fiber deployments in the first place.

This all opens the door to a trend I affectionately call “fiber to the press release,” where a telco makes a bunch of fiber deployment promises nobody independently verifies, and the press happily parrots them. Customers in many markets then call their local telco to sign up for “2 Gbps fiber,” only to find it’s still not available. Rinse, wash, repeat.

Filed Under: broadband, competition, fiber
Companies: frontier

Want To Understand Why U.S. Broadband Sucks? Look At Frontier Communications In Wisconsin, West Virginia

from the do-not-pass-go,-do-not-collect-$200 dept

Fri, Oct 22nd 2021 09:43am - Karl Bode

So for years I’ve noted if you really want to understand why U.S. broadband is so crappy, you should take a long, close look at Frontier Communications in states like West Virginia. For decades the ISP has provided slow and expensive service, routinely failed to upgrade or repair its network, and generally personified the typical bumbling, apathetic, regional monopoly. And its punishment, year after year, has generally been a parade of regulatory favors, tax breaks, and millions in subsidies. At no point do “telecom policy leaders” or politicians ever try to do much differently.

Case in point: Frontier, fresh off of an ugly bankruptcy, numerous AG and FTC lawsuits over repair delays, and repeated subsidy scandals, is positioning itself to nab yet more subsidies from the state of Wisconsin. Frontier is asking the state of for $35 million in additional grants, despite the fact Wisconsin was just one of several states whose AGs recently sued the company for being generally terrible. Folks familiar with the company argue it shouldn’t be seeing a single, additional dime in taxpayer resources given fifteen years of scandal:

“I hope the state will seriously consider the track record of companies to understand which ones have a long record of meeting the needs of residents and businesses,? Christopher Mitchell, director of the Community Broadband Networks Initiative, a Minnesota-based think tank supporting communities? telecommunications efforts, said in an interview with The Badger Project.

“Frankly, Frontier?s record suggests it should not receive a single additional dollar from any government,? he added. ?Local companies, communities, and cooperatives have proven to be much better at turning public subsidies into needed networks.”

Keep in mind Frontier has been accused of taking state and federal subsidies on several occasions, misleadingly billing the government extra, then basically just shrugging when asked for the money back. To date nobody has done much about any of it. Also keep in mind Frontier routinely lobbies for (and often ghost writes) state laws banning towns and cities from building their own broadband networks. They’re also directly responsible for the gutting of state and federal regulatory and consumer protection authority. Facing little real competition and feckless oversight in most states, nothing much changes. By design.

Historically, state politicians and regulators ignore these kinds of problems, because, it should be made clear, they’re corrupt. Regional monopolies find it immensely easy to throw a few bucks at state leaders in exchange for just mindless rubber stamping of whatever goal they’re interested in (merger approvals, new subsidies, the gutting of consumer protections, tax breaks, zero accountability). That this strategy continually results in terrible, substandard, and expensive service never seems to enter into the picture. It’s just rinse, wash, repeat in a long line of states.

The Wisconsin State Public Service Commission is expected to grant or deny Frontier’s request by the end of the month. The company is also first in line to grab new federal broadband funding from the Biden FCC. It will be curious to see if just a parade of unprecedented scandal reduces Frontier’s ability to have millions in additional taxpayer money thrown at it in the slightest. My guess is it doesn’t. At all.

There are two, indisputable reasons U.S. broadband generally sucks: regional monopolization and the corruption that protects it. But when you see news articles, regulators, many think tankers, or politicians talking about broadband, notice how many are capable of even clearly acknowledging that fact, much less genuinely interested in actually doing anything about it.

Filed Under: broadband, competition, dsl, fcc, subsidies, telecom, upgrades, west virginia, wisconsin
Companies: frontier

California's 'Open Access' Fiber Broadband Plan Is Making Telecom Giants Like AT&T Nervous

from the do-not-pass-go,-do-not-collect-$200 dept

Thu, Aug 26th 2021 05:22am - Karl Bode

Back in 2009, the FCC funded a Harvard study that concluded (pdf) that open access broadband networks (letting multiple ISPs come in and compete over a central, core network) resulted in lower broadband prices and better service in numerous locations worldwide. Of course when the Obama FCC released its “National Broadband Plan” back in 2010, this realization (not to mention an honest accounting of the sector’s limited competition) was nowhere to be found. Both parties ignored the data and instead doubled down on our existing national telecom policy plan: letting AT&T, Verizon, and Comcast do pretty much whatever they’d like. Something, of course, taken to ridiculous new heights during the Trump era.

Since then, “open access” has become somewhat of a dirty word in telecom policy, and even companies like Google Fiber — which originally promised to adhere to the concept on its own network before quietly backpedaling — are eager to pretend the idea doesn’t exist. Why? Because having ISPs compete in layers over a centralized network may improve service, boost speeds, and reduce prices (see: this community-run network in Ammon, Idaho), but it would eat into the revenues of the regional monopolies bone-grafted to our intelligence gathering apparatus, and you simply can’t have that.

Which is why it was surprising to see California recently pass a $6 billion broadband infrastructure bill that does something unique: it mandates the creation of a massive “middle mile” fiber network that will be open access, which should encourage increased competition. The original announcement breaks down the spending this way:

* $3.25 billion to build, operate and maintain an open access, state-owned middle mile network ? high-capacity fiber lines that carry large amounts of data at higher speeds over longer distances between local networks. * $2 billion to set up last-mile broadband connections that will connect homes and businesses with local networks. The legislation expedites project deployment and enables Tribes and local governments to access this funding. * $750 million for a loan loss reserve fund to bolster the ability of local governments and nonprofits to secure financing for broadband infrastructure.

That’s a lot of money that could be potentially going somewhere other than entrenched telecom giants like AT&T and Comcast. That means increased competition, something AT&T, Comcast, Verizon and others fight tooth and nail (rather successfully) to avoid. You can tell AT&T in particular is nervous about it, because the new bill’s passage forced the company to recently launch this silly astroturf website claiming to represent “Californians for broadband equity.” The website is chock full of stock photos of children, and lots of empty lip service to “fixing the digital divide”:

Only if you look at some of the materials posted in the page’s resources section do you see the site is backed by AT&T and Frontier Communications.

To be very clear, dominant regional monopolies in California like AT&T and Frontier love the decades-old US telecom policy approach to broadband. Namely, throw billions of dollars in tax breaks and subsidies at incumbent monopolies, which then fail to deliver what was promised, refuse to give back the money, and then pretend they’re not part of the problem.

There’s an entire universe of AT&T-linked orgs and individuals that suffer an absolute embolism anytime taxpayer resources are used to build local community broadband efforts. But those same groups and individuals are nowhere to be found every time AT&T gets a $42 billion tax cut for doing absolutely nothing. Or gets billions in subsidies and regulatory favors in exchange for fiber networks that are always, mysteriously, half deployed.

In short, AT&T and Frontier want the focus to remain exclusively on giving them yet more money to shore up access in areas they’ve neglected for years. What they don’t want is any money going toward competition within their existing footprint. Despite the fact that high prices due to limited competition are one of the highest barriers to access for many communities (something particularly pronounced during COVID). US broadband is expensive and mediocre thanks to regional monopolization and the state/federal corruption that protects it. There’s a lot of time and money spent trying to ignore or deny that fact.

If you didn’t understand this context you might stumble into this new AT&T website thinking it’s a well intentioned group just super interested in helping poor toddlers get broadband. But it’s really just incumbent monopolies trying to ensure more of California’s new broadband budget goes to them, and less goes to pesky competitors that might force them to (gasp) compete on price. Should AT&T and Comcast not get their adequate slice of California’s planned broadband budget, you can expect a lot more lobbying and policy theatrics of this sort in the fall.

Filed Under: broadband, california, competition, fcc, fiber, open access
Companies: at&t, frontier

Broadband ISP Frontier Just Keeps Happily Ripping People Off With Bogus Fees, And Zero Real Repurcussions

from the do-not-pass-go,-do-not-collect-$200 dept

Wed, Mar 3rd 2021 12:14pm - Karl Bode

When you’re a natural monopoly in America you get away with a lot. Take for example Frontier Communications, which has spent the last few years stumbling in and out of bankruptcy while dodging no shortage of scandals, including allegations of subsidy fraud. Last year, Frontier got a light wrist slap for fraudulently charging its customers a “rental” fee for modems they already owned. The company also paid a tiny $900,000 fine last year to Washington State AG Bob Ferguson for using bogus fees to rip off the company’s captive subscriber base.

Of particular annoyance in consumer complaints has been the company’s $4 per month “Internet Infrastructure Surcharge,” which is a completely nonsensical, bullshit charge the company levies below the line. The surcharge doesn’t really go to “infrastructure” (that’s what your entire bill is for). What it does do is give Frontier a way to continually increase consumer prices while falsely advertising a lower rate. Other ISPs engage in similar behavior with little real penalty (see CenturyLink’s “Internet Cost Recovery” fee).

While the 900,000WashingtonStateAGfineissemi−helpful,likemostUSregulatory“penalties”it’satinyfractionofthemoneymadeviathedubiousbusinesspractice.AndwhilethecompanystoppedchargingthefeeinWashington,itstillchargesitacrosstherestofits22statefootprint.NotethatFrontierhas3,735,000broadbandsubscribers,eachpaying900,000 Washington State AG fine is semi-helpful, like most US regulatory “penalties” it’s a tiny fraction of the money made via the dubious business practice. And while the company stopped charging the fee in Washington, it still charges it across the rest of its 22 state footprint. Note that Frontier has 3,735,000 broadband subscribers, each paying 900,000WashingtonStateAGfineissemi−helpful,likemostUSregulatory“penalties”it’satinyfractionofthemoneymadeviathedubiousbusinesspractice.AndwhilethecompanystoppedchargingthefeeinWashington,itstillchargesitacrosstherestofits22statefootprint.NotethatFrontierhas3,735,000broadbandsubscribers,eachpaying4 a month in completely erroneous surcharges. That’s nearly 15millioninbullshitchargesinjustonemonth,or15 million in bullshit charges in just one month, or 15millioninbullshitchargesinjustonemonth,or180 million in dodgy revenue every year.

Facing only a light wrist slap for the practice, Frontier seems intent on doubling down on this behavior. The company this week announced it will be bumping the fee to $7 per month. Frontier attempted to explain away the bogus surcharge this way:

“The increase applies to Frontier customers based on individual service packages and reflects increasing maintenance and other network costs, including the rapidly rising costs of supporting our customers’ increased Internet traffic and usage, and consumer demand for greater bandwidth, services, and other requirements that affect our Internet network. Customers on price-lock and promotional pricing will not see this increase until their terms expire.”

But again, “maintenance and other network costs” is what the entirety of your bill is for, and the fee’s real purpose is to help the iSP engage in false advertising on pricing.

Despite decades of this, federal regulators at the FCC have largely been utterly pathetic on this issue. While there was some basic rules requiring at least some transparency in pricing baked into the FCC’s net neutrality rules, those were gutted by industry lobbyists during the Trump administration repeal. This kind of misleading pricing could also be mitigated via policies that push more competition to market, but since most US markets lack competitive options, and building more competitive options tends to upset politically powerful telecom monopolies, we usually only pay lip service to that concept as well.

Filed Under: bogus fees, broadband, competition, fees
Companies: frontier, frontier communications

Study Shows California Telcos Are Simply Letting Their Networks Fall Apart

from the do-not-pass-go,-do-not-collect-$200 dept

Fri, Feb 26th 2021 06:30am - Karl Bode

On the one hand, it’s understandable that US phone companies companies don’t want to maintain aging copper phone networks in the wake of sagging usage. On the other hand, traditional phone networks are very much still in use (especially among vulnerable elderly populations), many of these DSL lines remain the only option consumers can get thanks to spotty US broadband deployment, and much of the phone and DSL infrastructure was heavily subsidized by American taxpayers. Oh, and as Texas just realized, many of these older copper phone lines still work during disasters, when internet voice services don’t.

As such, there are numerous regulations that prevent these companies from just severing these lines completely. But US telcos, tired of traditional phone and residential broadband service, want to shift focus. So instead of a responsible transition plan (one that might mandate even coverage of wireless or fiber broadband upgrades they don’t want to perform), many of these companies are simply letting the networks fall apart. And refusing to repair the lines when they fail. In large part because they know US state and federal regulators will (usually) be to chickenshit to actually do anything about it.

In California, a report requested by the government found the same thing throughout the state. The April 2019 report, only just released after regional incumbents AT&T and Frontier tried to block it, found that as customer rates skyrocketed for both AT&T and Frontier, both companies increasingly cut back on infrastructure upgrades, repairs, and maintenance over the last decade. The report also found that AT&T has increasingly engaged in “redlining,” or the act of failing to meaningfully upgrade lower income and minority communities at the same rate as more affluent neighborhoods:

“…AT&T’s investment policies have tended to favor higher-income communities, and have thus had a disproportionate impact upon the state’s lowest income areas. For example, the weighted average 2010 median annual household income for… areas that had been upgraded with fiber optic feeder facilities to support broadband services was 72,024,vs.only72,024, vs. only 72,024,vs.only60,795 for wire centers without such upgrades. Using 2010 US Census data, we find a clear inverse relationship between household income and all of the principal service quality metrics. Wire centers serving areas with the lowest household incomes tend to have the highest trouble report rates, the longest out-of-service durations, the lowest percentages of outages cleared within 24 hours, and the longest times required to clear 90 percent of service outages. The opposite is the case for the highest income communities.”

This lack of reliability of infrastructure, combined with steadily skyrocketing prices, runs in stark contrast to what we should actually be doing in the face of a global pandemic and climate destabilization. And of course it’s far from the first time these two companies have been found to be utterly neglecting their networks. It’s why a 90 year old man just had to take out a $10,000 newspaper ad just to get AT&T to finally upgrade his aging DSL line to fiber. And it’s far worse in places like West Virginia, where Frontier’s apathy toward its own customers (or basic upgrades and maintenance) is fairly legendary.

Again, this is what natural monopolies do in the face of limited competition and regulatory capture. Obtain a regional monopoly, do the bare minimum to keep that business afloat (while you focus on other ambitions like mindless media mergers), then throw a few thousand in PAC donations at local politicians so they pretend that none of this is happening.

The answer now is: what will California regulators actually do about it? And even in one of the most “progressive” states in the nation, the answer will be jack shit. It’s fairly trivial for AT&T and Frontier to simply claim these networks don’t matter because they’re old, or to try (as AT&T does in the link above) to insist any data that suggests they’re anything less than the pinnacle of corporate responsibility is fraudulent.

Filed Under: california, competition, copper networks, decay, infrastructure
Companies: at&t, frontier

Broadband Monopolies Keep Getting Money For Networks Never Fully Deployed

from the round-and-round-we-go dept

Tue, Jan 26th 2021 06:19am - Karl Bode

As we’ve noted a few times, there’s an underlying belief in American tech policy that if we just keep throwing money at entrenched broadband monopolies we can lift US broadband out of the depths of mediocrity. But as we’ve noted more than a few times, heavily subsidizing a bunch of regional monopolies, while not doing anything about the conditions that created and insulate those monopolies, doesn’t result in much changing. It’s especially ineffective when you don’t really punish ISPs for decades of taking taxpayer money in exchange for network upgrades that almost always, like clockwork, wind up unfinished.

The latest case in point: in 2015, regional monopolies CenturyLink and Frontier Communications took nearly $800 million in taxpayer funds to expand broadband to underserved areas they deemed too expensive to wire themselves. And guess what happened:

“The deadline to hit 100 percent of the required deployments passed on December 31, 2020. Both CenturyLink and Frontier informed the FCC that they missed the deadline to finish deployment in numerous states.”

CenturyLink rather coyly acknowledged that it failed to meet deployment milestones in more than 25 states. Frontier failed to meet its deployment targets in around 17 states. Under the law, ISPs have a year from the point they finally inform the FCC that haven’t done what they promised to… actually do what they promised.

And while that same law says the the government can take back taxpayer funding “equal to 1.89 times the average amount of support per location received in the support area,” plus another ten percent of the carrier’s total funding in that area, that often never happens. ISP lawyers routinely tap dance over, under, and around those milestones; and penalties are particularly pathetic when there’s a captured regulator like outgoing FCC boss Ajit Pai at the helm.

A shining example of this lack of accountability is Frontier Communications, which we’ve long held up as a stunning example of monopolization and corruption in states like West Virginia. This is a company that time, and time, and time again has failed to meet its obligations tied to taxpayer subsidies, and in some instances was even caught defrauding the government. The federal response to this? To throw yet more taxpayer and ratepayer money at the company via the recent, scandal-plagued Rural Deployment Opportunity Fund auction:

“CenturyLink and Frontier are both getting more money from the FCC in the new Rural Digital Opportunity Fund, with CenturyLink getting 262.4millionspreadover10yearsandFrontiergetting262.4 million spread over 10 years and Frontier getting 262.4millionspreadover10yearsandFrontiergetting370.9 million over 10 years.

“Sen. Shelley Moore Capito (R-W.Va.) recently urged the FCC to block Frontier’s new funding, saying that “Frontier has a documented pattern of history demonstrating inability to meet FCC deadlines for completion of Connect America Fund Phase II support in West Virginia.”

Folks in DC (especially the Ajit Pai types) claim they’re focus is “lifting burdensome regulations to boost network investment.” In reality, they’ve effectively ceded all policy decisions to regional monopolies, which they’re utterly incapable of holding accountable for much of anything. When the data then shows that this clearly and obviously only results in less competition, stifled investment, wasted money, and mediocrity, the impulse is almost always to pretend that this data isn’t real… then double down on the same decisions that brought us there. Rinse, wash, repeat.

Now with COVID highlighting broadband’s importance in an entirely new way, there’s a massive new push to solve the problem by throwing more money at it. But until and unless policymakers embrace polices that specifically target the dominance of entrenched monopolies, driving more competition to market, we’re not getting off this ridiculous hamster wheel.

Filed Under: broadband, broken promises, fcc, promises, subsidies, taxpayers
Companies: centurylink, frontier, frontier communications

Lawmakers Question Why FCC Is Throwing Taxpayer Money At Incompetent Telcos With History Of Fraud

from the repeat-the-same-mistakes dept

Thu, Dec 17th 2020 06:40am - Karl Bode

In West Virginia, incumbent telco Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. State leaders have buried reports detailing the depth of the grift and dysfunction, and, until a few years back, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest. The result has been about what you’d expect: West Virginia routinely shows up as one of the least connected states in the nation.

Frontier has spent years taking taxpayer money then failing to adequately upgrade its network. So when the FCC recently threw another $9 billion in subsidies at the broken U.S. telecom sector, lawmakers like Republican Sen. Shelley Moore Capito, were kind of annoyed to find Frontier again slated to get 371millionto“expandbroadband”acrosseightstates.371 million to “expand broadband” across eight states. 371millionto“expandbroadband”acrosseightstates.250 million was doled out to Frontier in West Virginia despite its shaky history in the state, something that alarmed Capito in a letter to the FCC last week (pdf):

“The stakes are simply too high to provide nearly $250 million to a company that does not have the capability to deliver on the commitments made to the FCC.”

Consumer groups have also been hammering the FCC, calling its latest auction a “boondoggle” in which ISPs exploited a broken system to obtain money that, with a few exceptions, won’t actually fix broadband availability issues. Capito went on to correctly note that with Frontier’s history of very recent incompetence and grift in West Virginia, throwing more money at the company and expecting some different outcome is foolish:

“Frontier’s mismanagement of prior federal funding through the Broadband Technology Opportunity Fund program, resulting in $4.7 million in funds repaid to the federal government for improper use, raises significant questions about their ability to manage federal funds of this magnitude. Furthermore, Frontier has a documented pattern of history demonstrating inability to meet FCC deadlines for completion of Connect America Fund Phase II support in West Virginia. The inability to deploy federal funds in a timely fashion to make improvements to a network delivering broadband service at speeds of 10/1Mbit/s or higher should raise significant concerns about their capacity to build out a network delivering 100 times that level.”

As we’ve noted a few times now, the U.S. seems intent on throwing taxpayer subsidies at companies with a long history of failing to live up to their promises despite 30 years of this not really working out that well. What we don’t appear to have any interest in is actually tackling the real reason U.S. broadband sucks: a handful of powerful regional monopolies have cornered their respected markets, then successfully lobbied state and federal policymakers to look the other way and pretend none of this is actually happening. It’s a textbook case of monopolization and regulatory capture. And we couldn’t care less.

As COVID lockdowns highlight broadband’s essential role in connection and survival, pressure will only mount to throw even more money at industry. But unless policymakers take aim at the underlying corruption protecting the status quo, history will only repeat itself.

Filed Under: broadband, competition, fcc, fraud, shelley moore capito, subsidies
Companies: frontier