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Federal Trade Commission Sues Lyin’ Frontier for Deceptive Advertising: Promised Internet Speeds a Fantasy

Frontier is accused of not delivering the internet speeds it sells to consumers.

The Federal Trade Commission, along with law enforcement agencies from six states, today sued Frontier Communications, alleging that the company did not provide many consumers with internet service at the speeds it promised them, and accepted customer orders for internet speed tiers the company had no intention of actually providing.

In the complaint, the FTC and its state partners allege that Frontier advertised and sold internet service in several plans, or tiers, based on download speed. Frontier has touted these tiers using a variety of methods, including mail and online ads, and has sold them to consumers over the phone and online.

In reality, the FTC alleges, Frontier did not provide many consumers with the maximum speeds they were promised and the speeds they actually received often fell far short of what was advertised.

“When Frontier sends mail to a consumer’s residential address, or displays digital advertisements to consumers with residential addresses known to Frontier, Frontier has access to information indicating that it is unable to provide certain of its DSL Internet speed tiers to some consumers, based on factors such as the address’s distance from Frontier’s networking equipment, which Frontier can easily compute or estimate for many addresses,” the complaint stated. “In numerous instances, Frontier has sent consumers advertisements for DSL Internet service at speed tiers that Frontier could not provide to them.”

In early 2019, a management consulting firm analyzed, at Frontier’s direction and with Frontier’s participation, Frontier’s proprietary network data and internal records for nearly 1.5 million then-current DSL subscribers. This analysis found that approximately 440,000 of Frontier’s DSL subscribers, or nearly 30% of the population analyzed, were “potentially” “oversold” on speed tiers that
exceeded the actual speeds Frontier provided to them.

Frontier is also accused of violating Wisconsin state law by making demonstrably false statements about its service reliability. Frontier’s advertisements represent to consumers that they can receive uninterrupted “crystal-clear” phone service with “99.9% reliability.” But the lawsuit claims Wisconsin consumers routinely suffer from sound quality issues with their service. For example, consumers have complained that they experience a buzzing or static sound that makes hearing the other caller very difficult, if not impossible. The suit also claims that between 2018 and 2019, Wisconsin customers endured over 200,000 landline outages, with over 25,000 left unrepaired after 24 hours.

The FTC’s complaint was filed with the attorneys general from Arizona, Indiana, Michigan, North Carolina, and Wisconsin, as well as the district attorneys’ offices of Los Angeles County and Riverside County on behalf of the State of California. The plaintiffs seek court costs and restitution for consumers affected by Frontier’s allegedly deceptive behavior.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California.

House Democrats Blast Telecom Companies for Data Caps, Rate Hikes

House Energy & Commerce Committee

Democrats serving on the House Energy & Commerce Committee today blasted the nation’s largest internet service providers for price increases and data caps placed on consumer broadband services at the height of a global pandemic, questioning the industry’s commitment to keeping Americans connected.

“Over the last ten months, internet service became even more essential as many Americans were forced to transition to remote work and online school. Broadband networks seem to have largely withstood these massive shifts in usage,” wrote Democratic Reps. Frank Pallone, Jr (N.J.), Mike Doyle (Penn.) and Jerry McNerney (Calif.). “Unfortunately, what cannot be overlooked or underestimated is the extent to which families without home internet service — particularly those with school-aged children at home — have been left out and left behind.”

Pallone

The congressmen questioned nine providers after reading media coverage of rate hikes and the implementation of data caps by Comcast and the potential for Charter Spectrum to impose data caps as early as May 2021.

“This is an egregious action at a time when households and small businesses across the country need high-speed, reliable broadband more than ever but are struggling to make ends meet,” the three Democrats wrote.

In March 2020, many cable and phone companies relaxed a number of restrictions on customers in response to the emerging COVID-19 pandemic. Many volunteered to suspend data cap overlimit fees, provide affordable broadband options to the economically disadvantaged, offer free months of service, open restricted Wi-Fi hotspots, and discontinue collection efforts or service disconnects on customers falling behind on bills.

Despite the pledge, consumers filed a significant number of complaints with the Federal Communications Commission alleging the companies broke their promises, by far most often for not following through on free service offers or continuing aggressive collections of past due bills and shutting off service.

Consumer complaints filed with the FCC regarding the “Keep America Connected” pledge, received from March-November 2020. (Source: FCC)

The Energy and Commerce Committee has now sent letters to the CEOs of many providers, seeking answers to these questions as part of ongoing oversight of the industry:

  • Did the company participate in the FCC’s “Keep Americans Connected” pledge?
  • Has the company increased prices for fixed or mobile consumer internet and fixed or phone service since the start of the pandemic, or do they plan to raise prices on such plans within the next six months?
  • Prior to March 2020, did any of the company’s service plans impose a maximum data consumption threshold on its subscribers?
  • Since March 2020, has the company modified or imposed any new maximum data consumption thresholds on service plans, or do they plan to do so within the next six months?
  • Did the company stop disconnecting customers’ internet or telephone service due to their inability to pay during the pandemic?
  • Does the company offer a plan designed for low-income households, or a plan established in March or later to help students and families with connectivity during the pandemic?
  • Beyond service offerings for low-income customers, what steps is the company currently taking to assist individuals and families facing financial hardship due to circumstances related to COVID-19?

The full letters are available below:

Altice USA

AT&T

CenturyLink/Lumen

Charter Communications

Comcast Cable Communications

Cox Communications

Frontier Communications

T-Mobile US

Verizon Communications

Frontier Announces “Holistic Transformation” Starting With Another New CEO; 2.9 Million Fiber Builds Over 10 Years

Phillip Dampier December 15, 2020 Broadband Speed, Consumer News, Frontier, Rural Broadband 8 Comments


Nick Jeffery will be appointed president and CEO of Frontier Communications effective March 1, 2021, succeeding Bernie Han.

Frontier Communications today announced a “holistic transformation” of its business from a copper-based landline company to a fiber to the home internet service provider, with plans to eventually offer fiber to the home service to nearly six million residential customers, approximately three million already served by fiber networks acquired from Verizon and AT&T.

As part of that transformation, Frontier today announced yet another new CEO, Nick Jeffery, will take over from current CEO Bernie Han in March 2021. Jeffery was CEO of Vodafone UK, one of Great Britain’s largest mobile operators. Jeffery agreed to replace Han, who became CEO and president only a year ago, in return for a $3.75 million signing bonus, a $1.3 million annual salary, and eligibility for more than $8 million in annual bonuses and equity awards.

“I am honored to be appointed Frontier’s next CEO, and I am excited to lead the company in its next phase,” Jeffery said in a statement. “Frontier owns a unique set of assets and maintains a competitive market position. My immediate focus will be on serving our customers as we enhance the network through investments in our existing footprint and in adjacent markets while building operational excellence across the organization.”

Frontier has been in Chapter 11 bankruptcy since April 2020 and is being reorganized to eliminate about $10 billion in debt and another billion annually in debt-servicing interest payments. Frontier’s bankruptcy plan will give four investment firms — Elliott Management, Franklin Mutual, Golden Tree Asset Management, and HG Vora, effective control over Frontier. The four are reportedly behind the decision to install Jeffery as Frontier’s new CEO to protect their financial interests. He has a reputation of repairing damaged customer relationships and improving sales, while also being willing to cut costs and simplify services sold to customers. Jeffery will also be joined by former Verizon executive John Stratton, who has accepted a position of executive chairman of the board. Jeffery is expected to lead the company out of bankruptcy sometime in early 2021.

Frontier has repeatedly promised to retire significant parts of its copper wire network and expand fiber to the home service, but over the last decade most of Frontier’s fiber footprint has been acquired from other phone companies, notably Verizon and AT&T. Most of Frontier’s own fiber expansion has come from installing service in new housing developments and in rural areas where it received taxpayer or ratepayer-funded subsidies to expand service to unserved areas.

In a conference call held earlier today, Frontier executives signaled the company will not hurry to deliver fiber upgrades to Frontier customers. In some of the most opaque language ever uttered in a Frontier conference call, company officials warned some Frontier customers may actually find themselves sold to another service provider. The company plans to divide its copper customers into two categories: those destined to be a part of Frontier’s fiber future and those left stuck on copper or sold off after Frontier “strategically reevaluates individual state operating performance employing a virtual separation framework” — all to “optimize our returns on invested capital.”

Frontier emphasizes its planned total of “nearly 6 million fiber-enabled households” will come to fruition “over the long term.” In 2020, the company plans to bring fiber service to approximately 60,000 new households in six states, many in new housing developments Frontier was already expected to serve.

Frontier’s modernization plan will likely sell unprofitable service areas and selectively upgrade many customers over a ten-year period to fiber optics. (Source: Frontier Communications)

“We have completed construction of about 60% of our target locations and continue to ramp quickly and remain on target to reach our year-end goals,” said Han. “Although, it is still very early in the process, our offer is very appealing to customers. While we are successfully converting existing copper customers to fiber, most of our early gains are coming from winning net new customers. Early penetration and ARPUs are performing at or above targets.”

In 2021, the company announced it had “planning and engineering” underway for unspecified fiber to the home service upgrades in copper service areas “in select regions.” But most of Frontier’s fiber upgrades will take place over the next decade. Specifically, Frontier plans to wire up to 2.9 million homes with fiber using a combination of its own money and subsidy funds provided by the FCC. Frontier’s new owners have signaled they will not go out on a limb to finance rapid fiber upgrades, and you better live in a state where fiber upgrades are being given priority.

“Of the 2.9 million new fiber homes passed for the modernization plan, roughly 2.6 million of them are in […] California, Texas, Florida and Connecticut and […] West Virginia, Illinois, New York and Ohio,” Han noted.

“The modernization plan is expected to be completely self-funding […] and has been developed with strict return on capital hurdles, allowing for very attractive returns,” said Robert A. Schriesheim, chairman of the Frontier’s Finance Committee of the Board. “The expected shift in the subscriber base from the modernization plan will increase the percent of fiber subs from 45% today to 87% over the plan horizon and will drive a transformation of business mix that is expected to result in 75% of revenue coming from fiber products in the long-term as compared to about one-third today.”

W.V. Orders Frontier to Improve Service to Address Over 1,300 Complaints in Last 12 Months

Phillip Dampier September 30, 2020 Consumer News, Frontier, Public Policy & Gov't, Rural Broadband 1 Comment

Frontier is the dominant phone company in West Virginia.

The West Virginia Public Service Commission has ordered Frontier Communications to make significant improvements in its aging copper wire telephone network after a comprehensive investigation found the company’s landline phone service and broadband to be lacking.

The order comes two years after the state began investigating the phone company and six months after a service audit was completed. In the last year, 1,342 complaints about poor service were filed with the state’s Public Service Commission.

“Frontier customers in this state remain plagued with service problems even as the customer base – and the corresponding revenue – declines. The Focused Management Audit was designed to find the underlying service quality problems, and possible solutions, in the hopes of placing Frontier on a better path,” the report concluded.

Over the past two years, Frontier gradually implemented some of the recommendations made by the state, particularly a more robust tree-trimming program to pre-emptively reduce tree-related outages and an automated system that can detect service issues and outages before customers call to complain. But Frontier’s larger problem is its lack of investment in network upgrades, particularly related to replacing old copper wire infrastructure with fiber optics. The study identified the 25 worst exchanges in the state most plagued by service outages and complaints and demanded that Frontier rehabilitate or upgrade those areas to improve service. But the company has refused the Commission’s request to deploy fiber optic connections to every cross-box in the state, which connects Frontier’s network to neighborhood phone lines. Such an upgrade would dramatically reduce Frontier’s reliance on copper wiring and improve phone and internet service.

Frontier rejected the idea as “unfeasible,” claiming it would cost $100 million to complete fiber connections to each of Frontier’s 3,255 existing cross box locations. If the company moved to digital phone service across those fiber lines, the cost would rise to $200 million, according to Frontier, adding it would have no choice but to pass these costs onto customers in the state.

“Given the exorbitant expense associated with such a comprehensive endeavor, the cost of voice service would consequently increase to unsustainable levels,” the company claimed.

Yet earlier this spring, at the height of the pandemic and after declaring bankruptcy, Frontier paid out $38 million in retention bonuses to its top executives, urging the same people who presided over the company as it went bankrupt to remain on the payroll at least until the bankruptcy was discharged.

The state was given an early warning about Frontier’s decreasing performance in July 2019 after an auditing firm found the company financially troubled and had cut back dramatically on ongoing maintenance spending. The auditor also reported Frontier was likely losing customers fast and would soon feel the financial pressure of lost revenue. Just as bad, the auditor reported Frontier’s ability to stay ahead of its service problems could be compromised further by the likely retirement of more than half of the company’s most experienced service technicians in the next five years.

The auditor correctly predicted Frontier’s financial health. The company declared Chapter 11 bankruptcy in April and is reorganizing. The company claims it will exit bankruptcy in much better financial shape, with much of its debt discharged or renegotiated by creditors. In turn, Frontier has promised to boost investment in network fiber upgrades, but has not been specific about what areas it will target. A hearing to discuss some of these matters is scheduled for Oct. 28.

Even with Frontier’s imminent exit from bankruptcy, West Virginia officials remain concerned about the phone company’s commitments and whether the new management will continue to honor earlier agreements with state officials.

 

Tropical Storm Isaias Brings Frontier’s Network to Its Knees in the Hudson Valley of N.Y.

Phillip Dampier August 5, 2020 Consumer News, Frontier, Public Policy & Gov't 2 Comments

A tropical storm that swept up the east coast of the United States took out Frontier Communications’ landline network, its backups, and 911 service for residents of Orange and Sullivan Counties, N.Y. for 13 hours last night, requiring a response from local fire officials after Frontier’s backup equipment also failed.

Tropical Storm Isaias brought significant, but not unprecedented wind and rain to the Hudson Valley of New York on Tuesday. While most of the damage and service outages were further east in the New York City, Long Island, and New Jersey areas, a general power failure in the City of Middletown started a chain of events that left two counties without Frontier phone, internet, or 911 service from 7:30 pm Tuesday night until 8:30 am Wednesday morning.

When the power failure began, Frontier’s switching network went down. Calls to 911 failed to connect, and customers reported no dial tone or internet access. Frontier’s backup battery system, designed to operate in the event of a power failure, itself failed and literally melted under the pressure, spilling enough toxic chemicals to force Frontier to request assistance from the Middletown Fire Department and Orange County Hazmat, which responded to contain the toxic material. Frontier had to drive in a replacement backup solution from another service area to get its network up and running again.

“There were several equipment failures there related to the power outage,” Brendan Casey, commissioner of emergency services told the Times Herald-Record. “Their backup system failed, their switch failed, battery issues that resulted in a minor hazmat issue. It was like everything just failed up there.”

After dealing with the failed battery equipment, county officials, firefighters, and Frontier technicians were left in the building’s parking lot cooling their heels until 2 am trying to figure out how to restore 911 service to the area, without success. Casey reported Frontier successfully restored 911 service later Wednesday morning.

Orange County, N.Y.

As Frontier technicians gradually restore service to individual customers affected by the storm, county officials are calling on the New York Public Service Commission to conduct a review of the incident and investigate if Frontier was adequately prepared to deal with the storm. Frontier will not be alone. Gov. Andrew Cuomo blasted utility companies across downstate New York, accusing them of being ill-prepared to handle the storm. Some customers are expected to be without power, phone, and internet service for up to a week.

“We know that severe weather is our new reality and the reckless disregard by utility companies to adequately plan for tropical storm Isaias left tens of thousands of customers in the dark, literally and figuratively. Their performance was unacceptable,” Cuomo said. Cuomo ordered the PSC to “launch an investigation into Verizon, PSEG Long Island, Con Edison, Central Hudson Gas & Electric, Orange and Rockland Utilities, and New York State Electric & Gas to understand how such a failure could have taken place. New Yorkers deserve answers and they deserve better. The large volume of outages and the utilities’ failure to communicate with customers in real-time proves they did not live up to their legal obligations. The fact that many customers still do not know when their power will be restored makes it even more unacceptable. The worst of this situation was avoidable, and it cannot happen again.”

Frontier was not the only telecommunications company embarrassed by the tropical storm. Along the Westchester-Putnam border, power outages knocked out cell service. At one location, a backup generator designed to provide backup power to the cell tower immediately caught fire, causing damage to the building at the base of the tower.

“While there was a fire at the cell tower in question, I have no information if all carriers on that tower are down or just one. What we do know is that cell services across the county are negatively impacted for all carriers. We had reports that cell towers in this region (Putnam, Orange, Rockland, Passaic) were damaged during the storms,” said Thomas Lannon, director of Putnam County’s technology office.

Frontier filed for bankruptcy protection in April 2020.

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