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The Stage Is Set to Kill Telco ADSL: Cable Operators Prepare for DOCSIS 3.1 Competitive Assault

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Next year’s upgrade to DOCSIS 3.1 will support cable broadband speeds up to one gigabit shortly after introduction.

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

slowJust a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

DSL speed upgrades have been spotty and more modest.

DSL speed upgrades have been spotty and more modest.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

Bradford County, Pa. Complains About Poor Service, Frontier Sends ‘Cease & Desist’ Letter

The slow lane

The best way Frontier Communications believes it can resolve service problems in Pennsylvania is to threaten those complaining with a cease and desist letter that accuses the complainant of misrepresenting Frontier’s excellent service.

Bradford County, Pa. officials learned this first hand when Commissioner Darryl Miller wrote to Frontier alerting them that service outages in northeastern Pennsylvania are becoming a public safety issue. The company responded with a letter warning the commissioner to end the criticism or else.

“We’re simply looking for answers,” Commissioner Miller told WNEP-TV’s investigations reporter Dave Bohman. Miller adds he thinks it’s heavy-handed to use the words, “cease and desist.”

Miller isn’t the only one looking for answers. WNEP interviewed Susan Moore, who lives alone in the rural community of Orwell. Her phone service went out of service at least once a week over the summer.

“I’ve got a lot of health issues,” she told the TV station. The implications of not having landline service became all too clear to Moore in August when she needed to send for an ambulance.

Bradford County, Pa.

Bradford County, Pa.

Moore pressed her lifeline call alert button which relies on Frontier phone service to reach medical aid in case she falls and cannot get up or has a medical emergency. Nothing happened. Her phone service was out again.

“Without the phone service, my Life Alert doesn’t work,” Moore said. “That’s when I decided, as much pain as I was in, I got in a car and drove 20 miles to get to a hospital.”

Bradford County officials hear stories like Moore’s so often, they now eclipse complaints about potholes and taxes.

The problems affect both traditional landline dial tone service and DSL. If outages are not the subject of the complaint, slow and unresponsive Internet access usually is. Some customers were told Frontier oversold its DSL service in Bradford County and the company is waiting for federal broadband subsidies to improve service in the area.

Frontier Communications vice president Elena Kilpatrick said Frontier will spend part of a $2 million broadband improvement subsidy to deliver better service in Bradford County over the next six years. At the same time Frontier is tapping a ratepayer-funded subsidy to improve its existing service, the company is spending $10.5 billion of its own money to acquire Verizon landline infrastructure and customers in Florida, Texas, and California.

Despite the fact it will take up to six years to fully spend the subsidy, Kilpatrick claims the company has already upgraded phone and Internet service and fixed several problems reported by customers. She defended the company’s use of a threatening “cease and desist” letter sent to Commissioner Miller, claiming Frontier wanted the “misrepresentation of the facts” to stop.

Despite Kilpatrick’s claims, the complaints keep rolling in.

Randy, a Frontier customer in Bradford County reports he endures Frontier outages just about every Saturday since October, despite repeated service calls. Janise Groover wrote a Frontier technician tried to blame cobwebs for interfering with her Wi-Fi signals and poor DSL speeds — problems that are still unresolved — for which she pays Frontier $103 a month. Janice Bellinger complained her Frontier DSL connection drops “three or four times a day.” Customers in Monroe, Luzerne and Sullivan counties echoed Frontier service is dreadful in their areas as well.

Customers experiencing problems with their phone service in Pennsylvania can file an informal complaint with the state Public Utilities Commission and the FCC.

http://www.phillipdampier.com/video/WNEP Scranton Frontier Service Problems 11-16-15.mp4

WNEP in Scranton reports Frontier’s solution to a county commissioner’s complaints about service was to send him a “cease and desist” letter. (3:16)

Frontier Makes Excuses for Customer Losses: People Moved Away

frontierFrontier Communications continues to face challenges keeping customers in its legacy copper wire service areas, where only modest investments in network upgrades have proved insufficient to stop customers shopping around for better service.

Company officials reported a loss of about 30,000 residential customers during the last quarter, a drop of nearly 1% of its total customer base. Nearly 2% of Frontier’s business customers also took their business elsewhere, leaving the company with 3.1 million remaining residential customers and 294,000 business customers.

Frontier CEO Dan McCarthy blamed many of the customer losses on customers moving.

“During the summer, we do tend to see an uptick in customer [losses] that might have double play and in some cases triple play, as they move or make their decisions about moving their homes to a different location,” McCarthy said, claiming that most of Frontier’s losses overall came from voice-only customers.

As Frontier expands rural broadband opportunities, the phone company is still adding Internet customers, picking up a net gain of 27,200 broadband accounts. The company depends heavily on broadband to replace revenue lost from landline disconnects.

“We continue to see more customers choose higher-speed broadband products,” McCarthy said on a conference call to investors earlier today. “In the third quarter, 47% of the broadband activity was above the basic speed tier of 6Mbps. More than 70% of our residential broadband customers are still utilizing our basic speed tier, so we have substantial opportunity to improve our average revenue per customer as they upgrade their service.”

McCarthy offered no statistics about how many of Frontier’s DSL customers can substantially upgrade their speeds using Frontier’s existing infrastructure. Many Frontier broadband customers have complained their speeds reflect the maximum capacity of Frontier’s network in the immediate area, and many claim they do not consistently receive the speed level Frontier advertises.

Service is appreciably better in areas upgraded before being acquired by Frontier. McCarthy said some areas of Connecticut, acquired from AT&T, are now able to get speed “in excess of 100Mbps over our copper infrastructure.”

“Over time, we will be expanding the technology we use for 100Mbps in Connecticut to more of our markets elsewhere,” McCarthy promised. “In our FiOS markets, we already offer speed up to one gigabit and we have seen the benefit of offering these higher speeds as customers choose speed tiers to match their lifestyle choices.”

Frontier also separately notified the Federal Communications Commission it has no immediate plans to slap usage caps or metered service on customers.

“Frontier does not apply usage-based pricing to any of its broadband offerings,” Frontier said in an FCC filing. “Frontier has no plans at this time to offer a metered broadband service. We continue to monitor the market and continue to consider a usage-based offering as an option.”

Frontier suggested several factors would be considered when discussing usage-based billing: “the FCC’s Open Internet rules, policies of other companies, consumer demand, network capacity, and cost, among other factors.”

Frontier: Less is More – Deregulate² and Stop Bugging Us About Broadband Speeds

frontier frankRequiring Frontier Communications to increase broadband speeds could make the service unaffordable for rural and poor Americans, the company is arguing before federal and state regulators.

In separate filings with the New York Public Service Commission and the Federal Communications Commission, Frontier has asked both for further deregulation and less oversight to ease everything from minimum broadband speed definitions to video franchising regulations.

Frontier’s market focus is primarily on rural communities where it delivers traditional DSL broadband service, typically up to 6Mbps, although many customers complain they get lower speeds than advertised. The FCC is working to modernize the Lifeline program, which offers substantial discounts on basic telephone service to low-income Americans. The Commission is studying the possibility of requiring providers to offer Lifeline Internet access for the first time. What worries Frontier is the Commission’s proposed requirement that providers offer Lifeline Internet speeds starting at 10/1Mbps, something Frontier strongly opposes.

frontier dslFrontier’s ability to deliver consistent 10Mbps service in rural areas is the issue.

“Certain rural consumers […] may not currently have access to 10/1Mbps fixed Internet speeds and would thus be prevented from choosing to use Lifeline for a fixed Internet service,” Frontier wrote in its filing with the Commission. “Even if higher speeds are available, a minimum speed standard may prevent a customer from opting for a lower speed plan that may better meet their budget.”

Frontier told the Commission that most subscribers are happy buying 6Mbps service from Frontier, coincidentally the same speed it advertises as widely available across its service areas. Frontier argues if it was required to consistently provide 10Mbps service, the cost of the service may become unaffordable to many.

While Frontier argues against speed standards that are difficult for its aging copper-based network to consistently provide, it is using that same copper network as an argument against further regulation and oversight in New York.

“Traditional telephone service providers like Frontier continue to be legitimate and viable competitors in the marketplace—a testament to our tenacity and the quality of our services,” Frontier wrote in comments to the Public Service Commission. “To ensure that this continues to be the case, in the near-term, an immediate no-cost investment that the State can make in the existing copper-based network is to eliminate the regulatory requirements that apply to [traditional phone companies] but that do not apply to other telecommunications providers.

Frontier added, “consumers have a multitude of communications channels available to them including wireline and wireless voice services and wireline, wireless, cable and satellite broadband services.”

Frontier did West Virginia few favors when it took over Verizon's landline business in the state.

Frontier did West Virginia few favors when it took over Verizon’s landline business in the state.

Ironically, Frontier argued New York’s allegedly robust and fast broadband networks (offered by its competitors but usually not itself) are reason enough to support a “light regulatory touch.”

“Today, every municipality in New York has access to one or more wired or wireless networks that can provide voice, video and data services to residents and businesses,” Frontier claimed. “Over 95% of the state has access to the FCC benchmark speed of 25/3 Mbps and 98% of the State has 200kbps speed in at least one direction. New York’s broadband speeds are significantly faster than the national average and other countries.”

But Frontier failed to mention it is incapable of providing consistent access at or above the FCC benchmark speed because it still relies on a antiquated copper-based network throughout most of its New York service areas. Despite Frontier’s claims of offering quality service, the J.D. Power U.S. Residential Telephone Service Provider Satisfaction Study (2015) ranks Frontier dead last among all significant providers in the eastern U.S. It dropped Frontier this year from consideration for its Internet Provider Satisfaction Study, but a year earlier rated Frontier the worst ISP in the eastern U.S.

Although Frontier suggests it faces “robust competition” from “over 100 different broadband providers, especially at lower speeds,” in most of its service areas in New York it faces Time Warner Cable or no competitor at all.

Frontier’s latest defense over why it has failed to significantly upgrade its network infrastructure to remain competitive with cable is ‘customers don’t want or need faster speeds.’ While advertising lightning fast service on its acquired Verizon FiOS and AT&T U-verse networks, Frontier argues New York regulators “must keep in mind the consumer demands on broadband speeds.”

Frontier points to two rural broadband projects in New York, one in Hamilton County and the other in Warren County to make its speed argument (emphasis ours):

“These projects are examples of the importance of collaboration and innovation—rather than dogmatic adherence to performance requirements that are largely aspirational for many NYS citizen—in bringing high quality and transformative broadband access to unserved and underserved communities. Flexibility with regard to technology and broadband speed will enhance an already robust marketplace and result in greater affordability and access.”

Frontier has also told New York officials it wants to eliminate local oversight of video franchising and move New York to a “statewide video franchising” system to “promote competition and to streamline competitive entry into the video market in the state.”

“This will provide enhanced consumer choice as well as additional investment in broadband and video services,” Frontier argued. “In other states that have followed this model, such as Connecticut, consumers have a rich array of video providers and services from which to choose at competitive prices.”

That “rich array of video providers” in Connecticut is primarily Cablevision and Frontier. Frontier acquired a pre-existing U-verse network originally owned and operated by AT&T in the state.

Comcast, Frontier: It’s Too ‘Hilly and Woodsy’ to Bring Broadband to Rural Connecticut

no signalAn aversion of open, hilly landscapes and trees is apparently responsible for keeping residents of rural Connecticut from getting broadband service from the state’s two dominant providers — Comcast and Frontier Communications.

In the Litchfield Hills of northwestern Connecticut, you can visit some of the state’s finest antique shops and Revolutionary War-era inns, tour vineyards and even establish roots in the Upper Naugatuck Valley in towns like Barkhamsted, Colebrook, Goshen, Hartland, Harwinton, Litchfield, Morris, New Hartford, Norfolk, Torrington, and Winchester. Just leave your cellphone, tablet, and personal computer behind because chances are good you will find yourself in a wireless dead spot and Internet-free zone.

Obtaining even a smidgen of cell phone service often means leaning out a second story window or worse, climbing the nearest church steeple. The wealthiest residents, often second-homeowners from New York or California, can afford to spend several thousand dollars to entice the cable company to extend a coaxial cable their way or buy commercial broadband service at eye-popping prices from Frontier Communications, which acquired AT&T’s wireline network in the state. But for many, dial-up Internet remains the only affordable or available option.

Despite the area’s significant number of high income residents ready and willing to pay for service, Comcast and Frontier blame hilly terrain and dense woods for staying away. Those excuses get little regard from residents who suggest it is all about the money, not the landscape.

Northwest Connecticut region is shown in green and the Litchfield Hills region in blue.

Broadband-challenged areas in northwest Connecticut are shown in green and the often “No signal” and “No Internet” Litchfield Hills region is shown in blue.

Despite the need for service, deregulation largely allows cable and phone companies to decide where to offer broadband service, and arguments about fulfilling a public need and performing a community service don’t get far with Wall Street and shareholders that constantly pressure companies to deliver profits, not expensive investments that may never pay off.

State Rep. Roberta Willis (D-Salisbury) told the Register Citizen News the status quo is not acceptable — telecommunications companies are not doing enough to build out their networks.

“You just can’t say it’s the topography and walk away,” she told the newspaper. “If electricity companies were deregulated like this there would be no electricity in my district.”

Comcast spokeswoman Laura Brubaker Crisco claims the company extended cable service nearly 62 miles in northwest Connecticut since 2005 (ten years ago) and completed nearly 100 projects extending fiber more than 10 miles in the past two years. But many of those projects overhauled Comcast’s existing middle-mile network and extended cable service to profitable new markets serving commercial customers, especially office parks and commercial storefronts. Comcast’s other priority was to reach new high-income residential developments being built as the area continues to grow. Rural customers who could not meet Comcast’s Return On Investment formula in 2005 are still unlikely to have service in 2015 unless population density increases in their immediate area.

Connecticut's effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Connecticut’s effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Crisco admits Comcast does not wire low density areas and isn’t surprised other providers won’t either.

Frontier prefers to blame the area’s topography for keeping broadband out.

David Snyder, vice president for engineering for the east region of Frontier Communications, told the newspaper “it’s just natural the investment and the time become more challenging.”

Frontier does say it has expanded broadband to 40,000 additional households in Connecticut since taking over for AT&T a year ago. But nobody seems to know exactly who can get broadband in the state and who cannot. The have-nots are the most likely to complain, and those businesses that serve visitors are in peril of losing business without offering reasonable Wi-Fi or Internet access. Rural families with school-age children are also at risk from having their kids fall behind those that can get broadband.

Wireless Internet Service Providers, which offer long-range wireless broadband in rural areas, complain the federal government is wasting money on studies instead of helping to underwrite solutions that can quickly bring Internet access to the rural masses.

Others believe talking to Frontier and Comcast is futile. They prefer to follow the lead of western Massachusetts, where 24 small communities across the region have joined forces to build a public fiber to the home broadband network. One estimate suggests 22 Connecticut towns covering 200,000 residents could be reached with a bond-financed fiber network completed by 2018. That network would likely reach more unserved customers than Frontier or Comcast will elect to serve over the next three years combined.

A separate effort to establish gigabit fiber broadband across the state — the CT Gig Project — promptly ran into a buzzsaw of opposition, primarily from incumbent telecommunications companies that refuse to offer that service now. With a threat to current profitable business models, it was not unexpected to hear opposition from Paul Cianelli, CEO of the New England Cable & Telecom Association — a cable company lobbying group.

He called public broadband unnecessary and “potentially disastrous.” He wants assurances no government subsidies or loan guarantees are given to the project. He also said providing gigabit service was unnecessary and faster Internet speeds were not important to the majority of customers in the state. Public broadband proponents respond Cianelli should tell that to the residents of Litchfield Hills and other unserved and underserved communities.

Frontier Plans to Finance Acquisition of Verizon Lines With $6.6 Billion in Junk Bonds

frontier-fast-buffalo-large-2To complete an acquisition of landline assets in California, Florida, and Texas from Verizon Communications, Frontier Communications is hoping to raise $6.6 billion in “speculative-grade debt” to finance the deal.

Frontier will begin selling the securities better known as “junk bonds” starting today with a target date of Sept. 15 or 16 to complete the sale, according to Bloomberg News.

Wall Street raised its eyebrows at the amount of the transaction — the second largest junk-rated deal since Valeant Pharmaceuticals sold almost $10 billion in junk bonds in March.

Frontier plans to offer a high yield to attract investors, some already favoring the company’s stock for its reliable shareholder dividend payout. Frontier has been a popular choice for investors relying on dividend income — money Frontier distributes to shareholders — that critics contend limit Frontier’s ability to improve its network of largely rural landlines.

analysisCalifornian consumers are among those most concerned about a Frontier takeover of landline and FiOS service. Verizon ventured far beyond its original service area extending from Maine to Virginia after it acquired independent telephone networks operated by General Telephone (GTE) and Continental Telephone (Contel) in 2000. In 2015, the company wants to return to its core landline service area in the northeast.

junk1David Lazarus, a consumer reporter for the Los Angeles Times, wonders how ratepayers will benefit from a Frontier takeover.

“Financial analysts are generally upbeat about the deal, but that reflects the projected benefits to the corporate players, not consumers,” Lazarus wrote.

Verizon’s claims the sale will help refocus the company on its “core markets” in the east and Frontier’s suggestion the Verizon acquisition will enhance Frontier’s footprint with “rich fiber-based assets” didn’t seem to excite Lazarus.

“I honestly wonder if corporate leaders know how ridiculous they sound when they spout such gobbledygook,” he added.

Lazarus suspects Verizon is worried the Obama Administration may eventually extend universal service obligations to broadband, which would force phone companies to deliver broadband to any telephone customer that wants the service, regardless of how much it costs to offer it. Universal Service remains an important legacy of wireline landline telephone service. Your landline survives under a regulatory framework not applicable to the wireless business, where both AT&T and Verizon Wireless now make the bulk of their profits.

junk2As AT&T and Verizon ponder ditching high-cost landline customers, so long as there are companies like Frontier willing to buy, the deal works for both. Verizon gets a tax-free transaction that benefits both executives and shareholders. An already debt-laden Frontier satisfies shareholders by growing the business, which usually makes the balance sheet look good each quarter.

Even as Frontier takes on a massive new tranche of debt, in the short-term the more landlines Frontier acquires, the happier shareholders will be. More customers equal more revenue — revenue that can assuage fears of Frontier’s eye-popping debt load. That added revenue often also means a nice dividend payout to shareholders, unless that money has to be diverted to debt payments or network improvements.

Unfortunately, like a Ponzi scheme, Frontier will have to continue acquiring new landline customers from other companies indefinitely to make it all work. If it can’t, or if customers continue to flee Frontier for more capable providers, revenue numbers will worsen, only making the company’s large debt obligations look even more ominous. Some shareholders think Frontier’s days of paying very high dividends are already behind them as the company takes on even more debt. The value of Frontier stock has dropped 35% in the last six months. In the second quarter of 2015, Frontier reported losses of $28 million. Last year at the same time, Frontier reported $38 million in profits.

junk3Those losses have to be reflected somewhere, and customers complain they are paying the highest price. West Virginians are among those that regularly accuse Frontier of chronically under-investing in broadband service in the state. Many rural communities obtaining broadband for the first time initially appreciated Frontier’s efforts, but have since grown critical of the performance of Frontier’s DSL service, which can slow to 1Mbps or less during the evenings because Frontier has oversold its network and not kept up with usage demands.

Frontier’s deal with Verizon allows it to acquire a large state of the art FiOS fiber to the home network Frontier has never been willing to build itself. Keeping an existing fiber network up and running is considerably less expensive than building one from scratch. That explains why Frontier customers in ex-Verizon FiOS areas enjoy relatively good service while legacy customers still connected to copper phone lines that were installed in the 1960s (or earlier) are stuck with uneven and slow-performing DSL that rarely meets the FCC’s minimum definition of broadband — 25Mbps. Where customers have a choice between Frontier DSL and another wired provider, most choose fiber or coaxial-based Internet service. Frontier’s rural service focus protects the company by limiting the effects of that kind of competition.

In the near term, Frontier’s biggest threat could eventually come from wireless 4G LTE broadband from AT&T and Verizon Wireless, if the companies can deliver an affordable service for rural residents without a punishing low usage allowance. That remains a big “if.”

(Illustrations by Chris Serra.)

Frontier Adds Limited Fiber to the Home Service in Rochester; $19.99 for 30/30Mbps Service

Phillip Dampier September 8, 2015 Broadband Speed, Competition, Consumer News, Frontier 5 Comments

frontier fiber

A lawn sign promoting Frontier fiber optic broadband at a new housing development in Ogden, N.Y. [Image courtesy: Craig]

Frontier Communications has introduced fiber to the home service limited to certain new housing developments in the suburbs around Rochester, N.Y., offering 30/30Mbps broadband for $19.99 a month.

Stop the Cap! reader Craig sent along word Frontier was using lawn signs to promote fiber broadband outside of the nearly complete Bella Estates — a development in the town of Ogden.

This is not the first project of this type for Frontier, which installs optical fiber in most new housing developments as they are built. Customers are typically offered fiber-fed broadband service at the same download speeds offered to Frontier’s DSL customers. With Frontier committed to providing basic telephone service throughout its operating service areas, stringing new optical fiber costs only a little more than using traditional copper wiring.

However, Frontier’s attitude about scrapping customers’ existing copper wiring in favor of fiber optics is very different. Frontier is among the last major independent phone companies not building its own significant fiber to the neighborhood or fiber-to-the-home service in its legacy service areas. Instead, it has adopted networks acquired from AT&T (U-verse in Connecticut) and Verizon (FiOS in Indiana and the Pacific Northwest, and possibly Florida, Texas and California as well).

“Once again, Frontier is only expanding where it feels like it,” writes Craig.

The Plain Text: Forgot Your E-Mail Password? Frontier Will Share It With You in a Web Chat

Phillip Dampier August 13, 2015 Consumer News, Frontier No Comments

frontier secure1While the online world is beefing up security systems with encryption and two-factor authentication to keep the hackers out, Frontier Communications’ e-mail password system harkens back to an earlier, innocent era when passwords were stored as plain text in a database practically anyone could access.

In this instance, “anyone” turned out to be a Frontier tech support agent named “Shawn,” moonlighting as Frontier’s living password reset system.

Ars Technica shares the surprising story of Andrew Silverman, a Frontier customer in Washington state who needed to reset his forgotten e-mail password. As Stop the Cap! first shared with our readers back in April, the company dumped most of its online web-based self-service functions after the company couldn’t get them to work properly.

frontier secure

Customers like Silverman who need their password reset now have to chat or call Frontier’s technical support. While inconvenient, Silverman was surprised to learn “Shawn” was able to get access to and share his existing password from Frontier’s customer relationship management system:

Shawn asked Silverman for some basic pieces of information—his account number or landline number, the e-mail address he was having trouble with, and the last four digits of his Social Security number. The Frontier employee then asked Silverman what password he tried to type in.

“I’m not comfortable giving out passwords. Is there a password reset page?” Silverman asked.

“I’m sorry there isn’t,” Shawn replied. “Are you OK with me posting the password in chat? It is a secure network and I have the password in front of me.”

emailSilverman’s password was easy to find because Frontier is storing that information in plain text format, a potentially enormous security risk. Security experts say storing passwords in a plain text format, even if access is limited to customer service representatives, make them vulnerable to hacking. A single disgruntled employee or unknown security hole in a Frontier support center could theoretically expose millions of Frontier customers to password theft. The fact Frontier also e-mails transcripts of customer chat sessions to customers also represents a potential security risk. In Silverman’s case, Frontier helpfully obscured his account number, but not his password.

Ars confirmed with Frontier the company currently lacks an online e-mail password reset system and the online chat or telephone support representatives handle password issues as Silverman described. Frontier also maintains a billing portal which appears to function independently. The billing portal does have a self-service password reset function. But the additional security there might not help if you use the same password for e-mail and account information.

A Frontier spokesperson downplayed the security risk of plain text password storage.

“Customer service reps do not have access, only tech support does and it is only revealed once the customer has provided the security code to verify identity,” the representative told Ars. “Account modification logs are kept to ensure the company knows who accessed the information.”

Ironically, after disclosing Silverman’s password, the representative shifted the call to sell him on the merits of Frontier Secure, Frontier’s antivirus, identity theft, and computer support protection suite that promises to deliver customers “peace of mind” from “hackers that can steal your identity, hijack your equipment and bombard you with malware, viruses and worse.”

Silverman declined.

Frontier Leaves 6,000+ Internet Customers in N.Y. With No DSL Service for More Than a Day

frontier frankA Frontier Communications service outage in New York left more than 6,000 customers without Internet service for more than 24 hours, leaving businesses with no way to process credit card payments and idling home-based telecommuters.

The outage began early Sunday morning leaving customers near Buffalo, Rochester, and the Southern Tier with no broadband and no answers.

Daniel Virella of Irondequoit called Frontier about the outage and a representative spent 30 minutes troubleshooting his connection with no results.

“I [then] asked him if there was an outage and he says, ‘you know what you’re right,” Virella wrote. “I’m like ‘are you serious?'”

As calls poured into Frontier’s customer service center, nobody had any answers about what the problem was or when it would be fixed.

“There was a recording that said if you’re calling from Rochester, you’ve got a problem,” Stephen Lambert told WROC-TV. “I wish someone would tell me what the problem is.”

By late Sunday, customers took to social media to blast Frontier for its lack of response.

“[Frontier’s] Internet goes down constantly,” complained Rochester resident Mary Ellen Frye. “They are aware of the problem but have no idea when it will be fixed. [Their] service level [is] erratic and totally unacceptable!”

Sharon McCauley Barger was without Frontier Internet for two days in Wheatfield (near Niagara Falls).

“We had to add 2GB to our mobile plan because of this,” she complained.

For businesses affected by the outage, the costs were even higher.

A gas station on Winton Road in Rochester lost business as customers discovered their credit cards wouldn’t work because Frontier’s Internet was offline.

sorry-no-internet-today-1Manager Angel Perez told WROC there is every chance the damage done will last longer than the outage itself.

“The impact is definitely lost sales, customers. You don’t know, they just might not come back,” Perez said.

Eva McDaniel can commiserate. Her service has been out for weeks. She let Frontier know she was fed up with them for the last time.

“Very poor customer service and no resolution on an Internet outage for over a month,” she told the company on their Facebook page. “Good riddance Frontier! I am done!”

Frontier eventually issued a statement that a circuit board was responsible for the failure but it would take several more hours before service was restored. Although Frontier claimed they first received reports of the outage “late Sunday,” Stop the Cap! confirmed customers started calling Frontier about service problems early Sunday morning. Multiple customers were able to confirm the outage began around 7:30am Sunday and ended just before 10:30am Monday morning — more than 24 hours later.

Internet Service Providers are deregulated and are not required to report service outages except when they impact telephone service. The New York Public Service Commission does collect statistics about service outages, mostly as a result of customer complaints.

Customers have some recourse when an outage occurs:

  1. Request a service credit for the outage. Providers typically do not give credit unless it is requested. For each day you experience a service outage, Frontier should credit you for one day of service. Multiple outages or extended service problems often call for even larger service credits, especially in response to a complaint filed with a state regulator;
  2. File a complaint with a state regulator and/or the FCC. Providers with a poor service record could attract the attention of state or federal officials and provide useful ammunition when a company seeks to expand by buying up other providers and service areas.
  3. If service problems are frequent, change providers if you can.
http://www.phillipdampier.com/video/WROC Rochester Frontier outage frustrates customers 8-10-15.mp4

Stop the Cap! talks with WROC-TV about the major Internet outage affecting Frontier Communications DSL service in western New York. (2:36)

Frontier Tries to Force Arbitration in Class Action Case Over “No Contract” DSL

frontier wvA plea from unhappy Frontier Communications’ broadband customers in West Virginia to have their complaints about Frontier DSL heard by a judge will get a hearing before Lincoln County Circuit Judge Jay Hoke on Aug. 19.

The class action lawsuit claims Frontier deceptively advertises fast Internet service that in reality is often unreliable and delivers only 5-10 percent of the speeds advertised. Many West Virginians have no other broadband options.

In response, lawyers for Frontier Communications have fought to get the case dismissed. They want customers to take their complaints through Frontier’s binding arbitration dispute resolution process.

In 2011, Frontier changed its terms and conditions, adding a lengthy arbitration provision that forbids customers from bringing class action cases and generally limits the damages customers can receive. Frontier argues customers automatically agreed to the arbitration process by continuing to use Frontier’s broadband service after the changes were announced.

The attorneys bringing the case think Frontier’s insistence that customers are automatically bound by the company’s contractual terms and conditions is ironic.

“No contract. No signatures. No worries,” claims one Frontier ad. “There’s no contract. Yep, that’s right, no contract,” advertises another. Since 2013, Frontier has gone out of its way advertising broadband without the gotchas and hidden fees their competitors charge. “Frontier is now in the unenviable position of trying to enforce hidden terms in the very contracts they repeatedly represented did not exist,” argues the plaintiffs in a court document.

no contract

Some Frontier customers never realized they may have given up their right to bring a civil case against Frontier. The company first notified customers about this change in their terms and conditions in 2011 through a small message on Frontier invoices. Customers effectively agreed to those changes through their continued use of Frontier’s service, Frontier claimed. But the plaintiffs signed documents attesting they had never seen or heard of Frontier’s enforced arbitration policy. The lawyers bringing the case are not surprised. A copy of the changed terms and conditions obtained by Stop the Cap! shows the binding arbitration clause buried on page five of a leaflet rendered in very small print in very large paragraphs unlikely to be read or understood by many customers.

The current arbitration policy is reproduced below. Have you read it?:

As explained more fully below and in the terms and conditions document, Frontier’s terms and conditions set forth important details about your relationship with Frontier including the requirement to resolve any dispute with Frontier by binding arbitration, on an individual basis, rather than through a lawsuit, jury trial or class action.  If you do not agree to Frontier’s terms and conditions, you may not use the Frontier service and must terminate service immediately.



Frontier encourages you to contact our Customer Service department if you have concerns or complaints about your service or Frontier. Generally, customer complaints can be satisfactorily resolved in this way. In the unlikely event that you are not able to resolve your concerns through our Customer Service department, we each agree to resolve all disputes through binding arbitration or a small claims court rather than lawsuits in courts of general jurisdiction, jury trials, or class actions. Arbitration is more informal than a lawsuit. Arbitration uses a neutral arbitrator instead of a judge or jury, allows for more limited discovery than in court, and is subject to very limited review by courts. Arbitrators can award the same damages and individual relief affecting individual parties that a court can award, including an award of attorneys’ fees if the law allows. For any non-frivolous claim that does not exceed $75,000, Frontier will pay all costs of the arbitration. Moreover, in arbitration you are entitled to recover attorneys’ fees from Frontier for your own dispute to the same extent as you would be in court.

In addition, under certain circumstances (as explained below), Frontier will pay you more than the amount of the arbitrator’s award if the arbitrator awards you an amount that is greater than what Frontier has offered you to settle the dispute.

Arbitration Agreement:

(a) You and Frontier agree to arbitrate all disputes and claims between us. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to, all claims arising out of or relating to any aspect of our relationship, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory, that arose either before or during this or any prior Agreement, or that may arise after termination of this Agreement. It also includes claims that are currently the subject of purported class action litigation in which you are not a member of a certified class. References to “Frontier,” “you,” and “us” include our respective subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns, as well as all authorized or unauthorized users or beneficiaries of Frontier Broadband under this or prior Agreements between us.

Notwithstanding the foregoing agreement, Frontier agrees that it will not use arbitration to initiate debt collection against you except in response to claims you have made in arbitration. In addition, by agreeing to resolve disputes through arbitration, you and Frontier agree to each unconditionally waive the right to a trial by jury or to participate in a class action, representative proceeding, or private attorney general action. Instead of arbitration, either party may bring an individual action in a small claims court for disputes or claims that are within the scope of the small claims court’s authority. In addition, you may bring any issues to the attention of federal, state, or local agencies, including, for example, the Federal Communications Commission. Such agencies can, if the law allows, seek relief against us on your behalf.

This agreement evidences a transaction in interstate commerce, and thus the Federal Arbitration Act governs the interpretation and enforcement of this provision, even after the agreement is terminated.

(b) A party who intends to seek arbitration must first send to the other, by certified mail, a written Notice of Dispute (“Notice”). The Notice to Frontier should be addressed to: Frontier Communications, Legal Department – Arbitration, 3 High Ridge Park, Stamford, CT 06905 (“Notice Address”). The Notice must (1) describe the nature and basis of the claim or dispute; and (2) set for the specific relief sought (“Demand”). If Frontier and you do not reach an agreement to resolve the claim within 30 days after the Notice is received, you or Frontier may commence an arbitration proceeding. During the arbitration, the amount of any settlement offer made by Frontier or you shall not be disclosed to the arbitrator until after the arbitrator determines the amount, if any, to which you or Frontier is entitled.

(c) The arbitration will be governed by the Consumer Arbitration Rules (“AAA Rules”) of the American Arbitration Association (“AAA”), as modified by these Terms of Service, and will be administered by the AAA. Procedure, rule and fee information is available from the AAA online at http://www.adr.org, by calling the AAA at 1-800-778-7879, or by calling Frontier at 1-877-462-7320, option 3. The arbitrator is bound by the terms of this Agreement. All issues are for the arbitrator to decide, except that issues relating to the scope and enforceability of the arbitration provision, including the scope, interpretation, and enforceability of section (f) below, are for the court to decide. If your claim is for $25,000 or less, you may choose whether the arbitration will be conducted solely on the basis of documents submitted to the arbitrator, through a telephonic hearing, or by an in person hearing as established by the AAA Rules. If your claim exceeds $25,000, the right to a hearing will be determined by the AAA Rules. Unless Frontier and you agree otherwise, any in person hearings will take place at a location that the AAA selects in the state of your primary residence unless you and Frontier agree otherwise. Regardless of the manner in which the arbitration is conducted, the arbitrator shall issue a reasoned written decision sufficient to explain the essential findings and conclusions on which the award is based.

Frontier agrees to pay your AAA filing, administration, and arbitrator fees (“AAA fees”) for claims for damages of up to $75,000 and for claims for non-monetary relief up to the value of $75,000, as measured from either your or Frontier’s perspective (but excluding attorneys’ fees and expenses). After Frontier receives notice that you have commenced arbitration, it will promptly reimburse you for your payment of the filing fee, unless your claim is for greater than $75,000. (The filing fee currently is $200 but is subject to change by the AAA. If you are unable to pay this fee, Frontier will pay it directly upon receiving a written request.) In addition, Frontier will not pay your share of the AAA fees if the arbitrator finds that either your claim or the relief sought is frivolous or brought for an improper purpose, as measured by the standards of Federal Rule of Civil Procedure 11(b). In such case, the payment of AAA fees will be governed by the AAA Rules, and you agree to reimburse Frontier for all monies previously disbursed by it that are otherwise your obligation to pay under the AAA Rules. If you initiate an arbitration in which you seek relief valued at more than $75,000 (excluding attorneys’ fees and expenses), as measured from either your or Frontier’s perspective, the payment of AAA fees will be governed by the AAA Rules.

(d) If Frontier offers to settle your dispute prior to appointment of the arbitrator and you do not accept the offer, and the arbitrator awards you an amount of money that is more than Frontier’s last written settlement offer, then Frontier will pay you the amount of the award or $5,000 (“the alternative payment”), whichever is greater.
If Frontier does not offer to settle your dispute prior to appointment of the arbitrator, and the arbitrator awards you any relief on the merits, then Frontier agrees to pay you the amount of the award or the alternative payment, whichever is greater. The arbitrator may make rulings and resolve disputes as to the payment and reimbursement of fees, expenses, and the alternative payment at any time during the proceeding and upon request from either party made within fourteen (14) days of the arbitrator’s ruling on the merits.

(e)  Although Frontier may have a right to an award of attorneys’ fees and expenses if it prevails, Frontier agrees that it will not seek such an award.

(f) You and Frontier agree to seek, and further agree that the arbitrator may award, only such relief—whether in the form of damages, an injunction, or other non-monetary relief—as is necessary to resolve any individual injury that either you or Frontier have suffered or may suffer. In particular, if either you or Frontier seek any non-monetary relief, including injunctive or declaratory relief, the arbitrator may award relief on an individual basis only, and may not award relief that affects individuals or entities other than you or Frontier. You and Frontier agree that we each may bring claims against the other only in an individual capacity and not as a plaintiff or class member in any purported class, representative, or private attorney general proceeding. Furthermore, unless both you and Frontier agree otherwise in writing, the arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of a class, representative, or private attorney general proceeding. If a court decides that applicable law precludes enforcement of any of this paragraph (f)’s limitations as to a particular claim for relief, then that claim (and only that claim) must be severed from the arbitration and may be brought in court. Further, an arbitrator’s award and any judgment confirming it shall apply only to that specific case and cannot be used in any other case except to enforce the award itself.

(g) Notwithstanding any provision in these Terms to the contrary, you and Frontier agree that if Frontier makes any change to this arbitration provision during the period of time that you are receiving Frontier services, you may reject that change by providing Frontier with written notice within 30 days of the change to the Notice Address provided above and require Frontier to adhere to the language in this provision. By rejecting any future change, you are agreeing that you will arbitrate any dispute between us in accordance with the language of this provision.

arbitration pros consCorporations began to favor private arbitration over the civil courts several years ago, arguing arbitration would save money and lead to faster resolutions of customer complaints. Many customers and trial lawyers disagree, arguing arbitration favors the corporations that pay for arbitration programs, shields bad acts from public disclosure with confidentiality agreements, limits damage awards and prevents class action cases seeking relatively small amounts of damages for a large number of customers who would otherwise never bring a case to court. Early attempts by some companies to offer voluntary arbitration programs as an alternative to civil actions offered more limited benefits and many companies have since moved to mandatory, binding arbitration instead. Disputes subject to mandatory arbitration usually must be resolved through arbitration. The parties give up their right to sue in court, participate in a class action lawsuit, or appeal the arbitration decision.

The law firms handling the case against Frontier — Bailey Glasser in Charleston and Klein, Sheridan & Glazer in Huntington, are arguing Frontier customers cannot be bound by mandatory arbitration policies without evidence Frontier informed them of the program and can show evidence of their consent. In a lengthy argument to the judge, the attorneys argue Frontier can show neither. They point to Frontier’s website, which “buries” the terms and conditions as a tiny link at the bottom of their main web page. Customers must click that link, then find the link for the arbitration provision, then read and understand it. Notice about the arbitration policy originally came in occasional billing notices. Since the lawsuit was filed, Frontier has given more prominent mention of its terms and conditions, including its arbitration policy, on monthly billing statements.

Frontier’s defense is that the plaintiffs are misrepresenting the meaning of “no contract.” The company argues customers commonly understand that term to mean they will not be asked to sign a term contract for one, two, or three years, facing an early termination penalty if they seek to end the contract early. The fact Frontier advertises “no contract” does not mean there are no terms and conditions, the company’s attorneys argued.

A potentially weaker defense is Frontier’s claim that customers can be bound by a contract once they continue to use the service after a change in terms is published. Frontier admitted it could not prove the customers read and understood the change of terms notification or the new terms and conditions. It also never asked customers to directly consent, either in writing or by checking a box on a website, to the new terms and conditions. The plaintiffs also question the legality of Frontier reserving the right to unilaterally change any terms and conditions after a brief notification period and win consent of those changes if subscribers do not cancel service or, in some cases, opt out.

The attorneys call that “take it or leave it” Internet access from Frontier, often the only provider in large parts of rural West Virginia.

Find the terms and conditions link on the bottom of Frontier.com.

Find the terms and conditions link on the bottom of Frontier.com.

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