Want To Know Why U.S. Broadband Is A Bad Joke? Take a Close Look at Frontier Communications

from the ill-communication dept

In telecom policy circles, there's an army of "experts" who twist themselves into pretzels trying to pretend U.S. telecom is a healthy, normal, vibrant market. Blinded by partisan loyalties, sector financial links, or ideologies embedded decades ago, they're incapable of even acknowledging that Americans pay too much money for spotty, substandard service with historically terrible customer support. They're even less likely to acknowledge the corruption, regulatory capture, and lack of competition that made this dysfunction possible. If it is acknowledged, it's downplayed to a comical degree.

As in the Ma Bell days, at the heart of U.S. broadband dysfunction sits phone companies. Providers, that have long refused to upgrade their aging DSL networks despite millions in taxpayer subsidies, lobby for state laws that ensure nobody else can deliver broadband in these neglected footprints either. These are companies that have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising, then, that many telco DSL customers are fleeing to cable, assuming they even have a second broadband option.

This dynamic often results in some almost comedic dysfunction.

Like in West Virginia, where incumbent telco Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. The graft and corruption in the state is so severe, state leaders have buried reports detailing the depth of the problem, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest.

But it's not just West Virginia. Frontier has since been under investigations from New York to Minnesota for failing to upgrade or even repair its aging network, at points putting human lives at risk. The company has also been repeatedly under fire for blatantly ripping its users off. For example, it has been charging its customers a rental fee for modems they already own. Very rarely do you see state leaders stand up to the company. And you'll certainly never see any kind of substantive pushback by the current, industry-captured FCC.

Customers who can leave (usually to the other end of the duopoly, Comcast), have been fleeing whenever possible, resulting in a looming bankruptcy by the company. In a report to investors this week we're only now starting to finally see something close to truth from the company as it tries to own up to its incompetence. Frontier had apparently tried to redact much of the report detailing the scope of network neglect, but appears to have bungled that as well:

"For example, one redacted sentence says that "Frontier WV's copper network has at least 952,163 connection points that are susceptible to moisture, corrosion, loose connections, etc. that may cause interruptions of service to customers."...The failed redaction of the number of connection points was coupled with failed redactions about the age of the network. The consultant firm's report said that 46.8 percent of Frontier's West Virginia network is between 36 and 47 years old. Both the percentage and the numbers of years were unsuccessfully "redacted" by Frontier.

The report makes it clear that the company probably shouldn't have engaged in mindless M&As, acquiring unwanted aging phone networks from AT&T and Verizon in "growth for growth's sake." Many of those deals were completely bungled and saddled the company with unneeded debt. Most should have been blocked by regulators and lawmakers who were too busy kissing the company's ass. Frontier also should have invested money back into the network to build a stronger company and retain subscribers, instead of engaging in repeated stock buybacks.

There are two reasons the company didn't do better on these fronts. One is sniveling, feckless, U.S. regulators and cash-compromised state and federal lawmakers, who rubber stamp every merger thrown on their desks, and refuse to hold politically powerful monopolies accountable. The other? A lack of competition across most of Frontier's territories:

"So why would a company like Frontier not immediately hit the upgrade button and start a massive copper retirement-fiber upgrade plan to keep the company in the black? In short, Frontier has survived chronic underinvestment because of a lack of broadband competition. Nearly two million Frontier customers have only one choice for internet access: Frontier. For another 11.3 million, there is only one other choice – a cable company that many detest. Frontier has enjoyed its broadband monopoly/duopoly for at least two decades. So long as its customers have fewer options, Frontier is under less pressure to invest in upgrades."

There were ample opportunities for state and federal leaders to step in and correct these problems, while embracing pro-competition policies that minimized the need for government involvement. Instead we let a regional monopoly dictate state and federal policy, and now act surprised when the end result is a smoldering dumpster fire. Granted as Frontier stumbles toward bankruptcy most of its debt will be wiped clean, nobody in the U.S. will learn anything from the process, and a universe of "very serious telecom policy thinkers" will continue to turn a blind eye to the entire mess as history repeats itself.

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Filed Under: broadband, cable, competition, corruption, dsl, fcc, promises, subsidies, west virginia

Companies: frontier