Frontier Communications CEO Maggie Wilderotter told attendees of the National Association of Regulatory Utility Commissioners committee on telecommunications that rural residents and small businesses deserve better broadband service than they currently receive, and there is a digital divide between rural and urban communities across America.

Wilderotter’s company, Frontier Communications, is the nation’s second largest independent telephone company, focusing on providing service in rural communities formerly served by mom and pop or community-owned telephone operations.

Frontier provides 90% of its customers with at least low speed DSL broadband service, which is available to the majority of the company’s 2.4 million customers.  Frontier’s basic DSL service provides around 1.5Mbps, although some customers closer to telephone company switch facilities can achieve speeds closer to 3Mbps.  Frontier also serves some urban areas, such as metropolitan Rochester, New York with a DSL product that in some instances can achieve close to 10Mbps.

Frontier’s rural DSL service is designed to reach residences and small businesses with what is often their only choice for broadband service, Wilderotter explained to the audience as part of her keynote speech.

The company’s efforts to “bridge the digital divide” have relied mostly on making due with existing copper wire telephone facilities, and attempting to provide service over extended distances, common in more rural communities.  Although customers have often been grateful for the opportunity of getting something beyond dial-up access or obscenely expensive satellite broadband, Frontier’s rural service is often expensive and slow.  The company has been successful in attracting customers with promotions, including a “free” Dell Netbook, in return for a $45 shipping/processing fee and a commitment by the customer to sign up for telephone and broadband service for a minimum two year service commitment.  The company also offers a video bundle promotion, providing DISH Network satellite television at a discount for the first year of service.

Frontier’s broadband division has been one of the company’s major bright spots, attracting subscriber growth even while the company continues to lose wired telephone line business to the competition.  That drives broadband development in Frontier service areas, although customers seeking “cutting edge” services with faster and more consistent speed will need to look elsewhere.

Wilderotter also addressed the need to find ways to serve the remaining 10% of customers who lack broadband service because they are in a remote location, too far away from the telephone switch office to provide reliable service.

She told the audience Frontier would aggressively seek broadband stimulus funding to help underwrite the costs of providing service to these customers.  But she also called for an overhaul to the Universal Service Fund, a fee charged on every telephone subscriber’s bill designed to subsidize telephone service in more rural communities where the cost of providing service for each customer can be dramatically higher.  Wilderotter proposes that the USF now devote some of its resources to funding broadband buildouts in the nation’s rural areas, instead of diverting large sums to large national phone companies that exploit loopholes, she says.

“Those who serve rural America need the funding that will allow us to continue to expand broadband service and capacity.”