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West Virginia Legislature Won’t Consider Any Bill That Could Offend Frontier, GOP Delegate Claims

frontier loveThe Republican leadership of West Virginia’s House of Delegates is alleged to have quietly placed a ban on considering any bill that could potentially offend Frontier Communications, frustrating state lawmakers attempting to introduce broadband improvement and consumer protection measures.

In a press release posted to his Facebook page, Delegate Randy Smith (R-Preston) complained that the House GOP leadership told him his two broadband-related bills waiting for consideration would “go nowhere because it would hurt Frontier.”

“Frontier has its hands in the state Capitol,” Smith said in the release obtained by the Charleston Gazette. “The company knows how to play hardball with the legislative process.”

When asked to name names of those obstructing his broadband-related measures, Smith declined, at least for now.

“It was one individual,” Smith said. “He said leadership wouldn’t support this because they feel like it’s targeting Frontier. If it comes to the point I have to, I’ll give names. I know you’re wanting names.”

Last December, Smith’s frustration with Frontier boiled over.

Smith

Smith

“For too long, West Virginia has lagged behind other states when it comes to accessible computer technology and infrastructure,” Smith said. “We’ve been offered excuses about our state being too mountainous for improving conditions here. But it’s not the state’s rugged terrain holding us back. Although a few areas of the state have a choice of service providers, most are stuck with whatever Frontier decides is enough. And not only do I receive complaints about their service, there are multiple grievances about how they bill their customers. We can, and must, do more to create competition to drive the quality of services up and drive costs down.”

“This is not a Republican or Democrat issue. This is a West Virginia issue,” Smith said. “And we need to catch up to other states in the 21st century.”

For the first time in 80 years, Republicans won a majority in the House of Delegates, pledging to transform West Virginia into a “business friendly state.” But even Smith, an assistant majority whip for the new Republican leadership, seemed stunned by the willingness to grant Frontier de facto veto power over telecom-related legislation.

Last week he learned his two broadband bills were essentially dead on arrival, because they would not be supported by Frontier.

  • HB2551, co-sponsored by 10 GOP delegates, would prohibit Internet providers from advertising broadband service as “high-speed Internet” unless the company offered a download speed of 10Mbps or higher. The majority of West Virginia experiences real world speeds far slower than that from Frontier;
  • HB2552, intended to address chronic billing problems by Frontier, would allow Internet customers to take billing disputes to Attorney General Patrick Morrisey’s office, if the state Public Service Commission refuses to review their complaints.
Speed tests on Frontier's "High-Speed Max" Internet service aren't high speed at all.

Speed tests on Frontier’s “High-Speed Max” Internet service aren’t high speed at all.

When Smith’s accusations went public in the pages of the Gazette, Republican leaders scrambled to deny his allegations.

House Majority Leader Daryl Cowles (R-Berkeley) told the Gazette House Republicans have no “blanket position” against bills that Frontier opposes.

“There’s no policy by leadership that these bills should move or shouldn’t move based on who’s supporting them or who doesn’t,” Cowles said. “It sounds like Randy is frustrated. He, like many out there, are frustrated by their Internet speeds and service.”

“I was told Friday that there’s no way those bills were going to run,” Smith countered.

Frontier won’t deny its disapproval of Smith’s bills.

“We’re the only provider that chooses to serve much of rural West Virginia, and we see the legislation as having a negative effect on further development of rural broadband services,” said Frontier spokesman Dan Page.

Frontier customers in West Virginia are among the company’s most vocal critics nationwide, complaining about unavailability of DSL, billing errors, poor service, and most common of all: selling service and speed the company cannot consistently deliver. A statewide class action lawsuit against Frontier for failing to provide advertised speeds has attracted hundreds of Frontier customers. The suit maintains Frontier has engaged in “false advertising,” a violation of the state’s Consumer Credit and Protection Act.

Smith introduced the two broadband measures partly out of his own frustration with the company.

Cowles

Cowles

“I regularly conduct speed tests on my Internet connection and the results are laughable,” Smith told his mostly rural constituents. “I’ve had download speeds of around 0.20Mbps. No wonder they’re called Frontier. Those are the kinds of speeds you’d expect on the American frontier in the 17th century.”

Smith recognized some members of his own party will take Frontier’s side over his.

“Of course, my bills don’t go over well with some members of my own party,” Smith said. “But right is right and wrong is wrong.”

On cue, Cowles rushed to Frontier’s defense.

“Frontier has been trying to spend money to upgrade service, but it hasn’t been easy for those guys,” Cowles said. “We’re trying to expand broadband and improve the speeds everywhere we can. We try to nudge Frontier when we can, push them when we can, while we respect their investment.”

A considerable part of that “investment” came at the cost of U.S. taxpayers. Last fall, the U.S. Department of Commerce’s inspector general announced an investigation into how Frontier spent a $42 million federal stimulus grant in the state. The inspector general is reviewing thousands of pages of documents turned over by the company. Critics contend Frontier spent the stimulus funds to defray the cost of a statewide fiber network Frontier now owns and controls.

Cowles told the Gazette that despite the media attention on the issue, he remained unsure if Smith’s bills would ever reach the House floor for consideration.

At least three House members — two Republicans and one Democrat — work for Frontier.

Frontier’s Acquisition of Verizon Landline/FiOS Properties in Calif., Tex., and Fla. Called “Insane”

Frontier Communications today announced a $10.54 billion all-cash acquisition of Verizon’s wired networks, including landline and FiOS properties, in the states of Florida, California, and Texas.

Frontier will acquire Verizon’s wireline operations that offer services to residential, commercial and wholesale customers numbering 3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS video connections. The acquired territory is 54 percent served by FiOS fiber to the home service.

frontier expanded improvement

“This transaction marks a natural evolution for our company and leverages our proven skills and established track record from previous integrations,” said Maggie Wilderotter, Frontier Communications chairman and chief executive officer. “These properties are a great fit for Frontier and will strengthen our presence in competitive suburban markets and accelerate our recent market share gains. We look forward to realizing the benefits this transaction will bring to our shareholders, customers and employees.”

Dan McCarthy, Frontier’s president and chief operating officer, commented, “This transaction is an exciting opportunity for Frontier. We are well-positioned to maximize value for our shareholders and create a great experience for new customers. We have four FiOS markets today from our 2010 transaction with Verizon, and a high level of familiarity with the systems underlying these properties. We plan to flash-cut convert these properties to Frontier’s systems as we did in states including West Virginia and Connecticut.”

frontierBut Frontier’s “flash cut” conversions in West Virginia and Connecticut led to months of serious service and billing problems leading to two state-level investigations into Frontier’s performance. Problems are still ongoing in parts of Connecticut several months after Frontier transferred Connecticut territories from AT&T. Customers in West Virginia continue to criticize Frontier Communications for its underwhelming broadband performance.

Saibus Research, a Wall Street analyst, said they were “stunned” Frontier was repeating the same mistake it made back in 2010 when it acquired other former GTE service areas from Verizon.

“We remembered that its $8.7 billion wireline purchase in 2010 did not work out so well for it,” wrote the analyst. “When we consider that Frontier’s share price declined by nearly 60% from 2010-2012 after the deal closed before recovering those losses since 2012, we were shocked that Frontier’s share price increased by 10.6% in response to its announcement that it was buying assets from Verizon. Frontier’s pro forma revenue has declined by 30% since 2009, its residential consumer base declined by 33%, its operating income declined by 34% and its dividend declined by 60% since then.”

“Albert Einstein said that insanity is doing the same thing over again and expecting a different result and we think that Frontier’s CEO Maggie Wilderotter has come down with a serious case of insanity for her willingness to buy whatever Verizon is selling,” said Saibus Research. “As such, we think income-oriented telecom investors should consider accumulating shares of Verizon, and selling or shorting Frontier.”

Frontier will accumulate billions in new debt to fund the transaction, bad news for legacy Frontier customers still served by the company’s copper wire networks. Frontier hoped to realize $500 million in cost reductions from its 2010 acquisition of Verizon territories in the Pacific Northwest, West Virginia, and several midwestern states. Instead of savings, it ended up spending millions to rehabilitate deteriorating landlines Verizon underinvested in for years. The new unsecured debt load will likely cut into available funds to upgrade older networks, particularly in the northeast and inside New York, Ohio and Pennsylvania.

Frontier will get marginal improvements in programming costs from the greater volume discounts its larger customer base qualifies to receive. But outside of Connecticut (Frontier U-verse) and Washington, Oregon, Indiana and South Carolina (Frontier FiOS), the rest of Frontier’s customers will continue to be offered Dish Network satellite service and various flavors of DSL.

If approved by regulators, the transaction will be finalized in 2016.

California County Goes to War with Frontier Communications; Calls Company Officials ‘Liars’

Phillip Dampier January 7, 2015 Frontier, HissyFitWatch, Public Policy & Gov't 4 Comments
Greenville, Calif. is in Plumas County.

Greenville, Calif. is in Plumas County.

Frustrated officials in Plumas County, Calif. are at the end of their patience with local phone company Frontier Communications.

“You’re lying to me,” Supervisor Kevin Goss (District 2) told representatives from Frontier Communications in the latest heated exchange.

Goss and other community leaders are upset because Frontier is the company most likely to make or break the county’s beautification efforts by placing utility cables underground in Greenville.

County officials are certain they notified Frontier of their intent to transition to underground service throughout Greenville, with the full support of the area’s other utility, Pacific Gas & Electric.

But Frontier officials are now claiming they can’t find the paperwork and are unwilling to invest in the project. If Frontier will not join PG&E, the utility poles will stay in the ground and the project will be canceled.

“We did search all of our records and didn’t uncover any documentation,” said Charlie Born, the manager of government and external affairs for Frontier.

The project had been on the county’s public agenda since 2008.

Plumas_seal“It’s never going to pencil; it’s whether the company will do what’s right,” argued Board chairman Jon Kennedy.

It was the second heated meeting between Goss and Frontier’s representatives.

Frontier claims it was never notified about the extent of the project, despite sending a letter to county officials dated Oct. 1, 2014 where it acknowledged the project and indicated it was willing to talk, as long as “Frontier is not responsible for any costs.”

In November, Goss testily responded to Frontier’s sudden intransigence to cover its share of the underground project, despite being a part of a joint planning process underway for nearly seven years.

“Basically you don’t have any money?” Goss asked two Frontier representatives during a public hearing in front of the Board of Supervisors on Nov. 4.

Born complained the county was asking Frontier to pay $275,000.

“With 10 working lines, that’s about $27,000 per line,” said Born. “This chunk of money is a hard pill to swallow. We choose to put our money into improving services.”

In November, Goss publicly pondered Frontier’s refusal to invest in the project while finding plenty of money — $10 million — to spend on a high-profile campaign with its satellite partner DISH Network that claimed would “invigorate rural communities.”

The Plumas County News noted Frontier’s America’s Best Communities is a multistage, three-year contest that provides $4 million in seed money and other support to assist communities as they develop growth and revitalization plans. The top three communities will receive a total of $6 million in prize money.

Goss read from a statement written by Frontier CEO Maggie Wilderotter introducing the contest.

“Frontier is committed to the small cities and towns we serve, and one of the best ways to demonstrate that is through our new America’s Best Communities prize competition,” read Goss. “I don’t think she’s very committed when the rug is getting pulled out from under us in our small town. It’s frustrating to me; absolutely frustrating.”

The county is now hoping the California Public Utility Commission will intervene, but that has not happened yet, leaving the project in limbo.

“We’ve had no feedback from the California PUC in regard to our concerns with Frontier not financing,” said Public Works director Bob Perreault. “PG&E is in a holding situation and is supportive of the county.”

Cuomo: 100% of New York State Should Have Access to 100Mbps Broadband by 2018

ny broadbandNew York Gov. Andrew Cuomo has set a goal that every resident of New York State should have access to at least 100Mbps broadband no later than 2018.

The governor will kick off his latest broadband expansion effort with the launch of his $500 million broadband expansion program, dubbed the New New York Broadband Fund, a follow-up to the state’s $70 million public-private effort to expand broadband that began in 2012.

Much of the money awarded in the 2012 broadband expansion effort went to Wireless Internet Service Providers, institutional broadband networks, middle-mile fiber projects not accessible to the public, and emergency service network upgrades. Another $5.2 million was awarded to Time Warner Cable to expand broadband service to 4,114 households in the Capital, Central, Finger Lakes, Mid-Hudson, Mohawk Valley, NYC, North Country, Southern Tier and Western regions of New York State. In June, many of the top funding recipients also received honors from the governor’s office in the first annual New York State Broadband Champion Awards.

Gov. Cuomo

Gov. Cuomo

Despite the money, the 2012 effort did not make a significant dent in the pervasive problem of broadband availability in upstate New York.

While Gov. Cuomo is committed to a target speed of 100Mbps within the next four years, more than one million New York households still cannot access broadband that achieves the state minimum — 6.5Mbps. That includes 113,000 businesses.

The governor’s solution is to subsidize private businesses with more tax dollars to resolve the broadband problem, with a significant part of the next round of funding likely to reach more institutional and public safety networks off-limits to the public, middle mile network expansion that can build state-of-the-art fiber rings that do not connect to end users, and an even bigger amount handed to Time Warner Cable (or Comcast if the state approves a merger with Time Warner Cable) and rural phone companies like Frontier Communications. Much of the money awarded to last mile providers like cable and phone companies will placate those that have stubbornly refused to expand further into rural areas unless taxpayers pick up some of the expense.

“In some of these areas, there’s just not a business case for these [service] providers to build out,” said David Salway, director of the New York State Broadband Program office. “The cost far exceeds what the revenue might be for that area.”

An unintended consequence of the broadband funding effort could be taxpayers subsidizing the establishment of for-profit monopolies in rural corners of the state. Although Salway told Capital NY he wanted to make sure New Yorkers had a choice, he clarified he was referring to a choice in technology, not service providers.

twcGreenThat must come as a relief for Verizon. The state’s largest phone company has petitioned state officials in the past for a gradual mothballing of New York’s rural landline network in favor of switching customers to wireless voice and broadband over Verizon’s cellular network. Theoretically, taxpayers could end up subsidizing the demise of rural New York landlines and DSL if Verizon seeks money from the rural broadband fund to expand its wireless tower network in rural New York. Time Warner Cable almost certainly will also seek more funding, probably in excess of the average $1,264 paid to the cable company for each of the 4,114 additional connections it agreed to complete during an earlier round of funding.

While rural broadband remains an important issue in New York, the merger of Comcast and Time Warner Cable is on the front burner and Salway, like the governor, had little to say. But Salway did offer that he did not believe the merger “would reduce [access] as much as further our goal” for expansion.

Guidelines for grant recipients are expected to become available just after the governor’s State of the State presentation in January, with ground-breaking on projects likely to start by mid-summer of 2015.

Frontier Faces Lawsuit in West Virginia Alleging False Advertising, Undisclosed DSL Speed Throttling

The slow lane

The slow lane

Frontier Communications customers in West Virginia are part of a filed class-action lawsuit alleging the phone company has violated the state’s Consumer Credit and Protection Act for failing to deliver the high-speed Internet service it promises.

The lawsuit, filed in Lincoln County Circuit Court, claims Frontier is advertising fast Internet speeds up to 12Mbps, but often delivers far less than that, especially in rural areas where the company is accused of throttling broadband speeds to less than 1Mbps. The suit also alleges Frontier’s broadband service is highly unreliable.

“The Internet service provided by Frontier does not come anywhere close to the speeds advertised,” wrote Benjamin Sheridan, the Hurricane lawyer filing the lawsuit on behalf of three Frontier customers. The attorney is seeking to have the case designated a class action lawsuit that would cover Frontier customers across the state.

“Although we cannot guarantee Internet speeds due to numerous factors, such as traffic on the Internet and the capabilities of a customer’s computer, Frontier tested each plaintiff’s line and found that in all cases the service met or exceeded the ‘up to’ broadband speeds to which they subscribed,” Frontier spokesperson Dan Page told the Charleston Gazette. “Nonetheless, the plaintiffs filed their case in Lincoln County, where none of them lives. If necessary, we are prepared to defend ourselves in court and bring the facts to light.”

Frontier’s general manager in West Virginia, Dana Waldo, may have helped the plaintiffs when he seemed to admit Frontier was purposely throttling the Internet speeds of its customers, a move Sheridan claims saves Frontier “a fortune” in connectivity costs with wholesale broadband providers like Sprint and AT&T.

Sheridan

Sheridan

“If as you suggest, we ‘opened up the throttle’ for every served customer, it could create congestion problems resulting in degradation of speed for all customers,” according to Waldo as part of an email exchange with one of the class members cited in the lawsuit.

The lawsuit also cites a state report issued over the summer that found just 12 percent of Frontier customers receive Internet speeds that actually qualify as “broadband” under federal and state standards. Frontier’s speed ranking is the slowest of any provider in the state. That is especially significant because Frontier is the largest ISP in West Virginia, and is often the only choice rural residents have for broadband service.

Frontier dismissed the state’s report claiming it was based on voluntary speed tests performed by disgruntled customers.

“As we’ve said before, the speed tests are the result of self-selected, self-reported samples,” Page said. “People who take speed tests tend to be those with speed problems or low speeds.”

“Even if that were true, it doesn’t account for Frontier’s poor performance,” said Frontier customer William Henley. “If every person that ran a speed test in West Virginia was annoyed with their provider, Frontier still came in last place.”

Frontier’s competitors scored better:

  • lincoln countyComcast: 88% of customers met or exceeded state and federal standards;
  • Suddenlink Communications: 80%
  • Time Warner Cable: 77%
  • Shentel: 71%
  • Armstrong Cable: 67%
  • LUMOS Networks: 44%

“…Frontier’s practice of overcharging and failing to provide the high-speed, broadband-level of service it advertises has created high profits for Frontier but left Internet users in the digital Dark Age,” Sheridan wrote. “As a result, students are prevented from being able to do their homework, and rural consumers are unable to utilize the Internet in a way that gives them equal footing with those in an urban environment.”

Sheridan also accused Frontier of delivering its fastest speeds only in areas where it faces competition. Where there is none, Frontier can afford to go slow.

But slow speed is not the only issue. One plaintiff — April Morgan in Marion County — says she has to reset her modem up to 10 times a day to stay connected to the Internet. Her modem has been replaced several times by Frontier, but that has done little to solve her problem.

Frontier customers who check the company’s terms of service agreement may question whether Sheridan can get very far suing the company. A clause in the contract states customers must settle disputes only through binding arbitration or small claims court. Individual lawsuits, jury trials, and class-action cases are prohibited.

Sheridan points out customers have to go online to read the agreement – it is not provided to customers signing up for Internet service. A contract that forces customers to agree to its terms without getting informed consent may turn out not very binding under West Virginia law.

Lincoln County Judge Jay Hoke, assigned to hear the case, will likely face that matter in pre-trial motions.

West Virginia residents interested in the class action case can register here for updates.

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