Frontier’s stock has reached the lowest level of the year after another disappointing earnings report.

Frontier Communications turned in lackluster numbers for the third quarter of 2017, resulting in a wide selloff of Frontier’s stock, driving it to the lowest level it has seen in a year.

Investors are reacting to news the company missed earnings estimates once again, and many are losing confidence in Frontier’s CEO Daniel McCarthy, who has promised better results for more than a year. Frontier is rare among broadband providers, losing customers in virtually every segment of its business, including in its acquired FiOS service areas.

Frontier’s stock has lost more than 80% of its marketplace value so far this year — a stunning decline for a company selling broadband service in many areas where it maintains a monopoly.

McCarthy once again made a commitment his efforts will “stabilize” customer losses, but spent most of his time trying to reassure investors on a Tuesday conference call that those stabilization efforts will primarily target areas where Frontier sells FiOS fiber to the home service. Customer churn continues to be a problem, with many customers leaving either because the company alienated them or dramatically raised their rates after a discounted promotion expires. Either way, many of those customers switch back to a cable provider. McCarthy claimed Frontier plans to adjust promotional pricing to soften the blow of a steep rate hike after a promotion expires.

McCarthy said almost nothing about Frontier’s legacy service areas, where Frontier still sells copper-based DSL service. Some of the company’s biggest losses have been in areas where it cannot compete effectively with cable broadband. McCarthy offered to enhance customer retention efforts and increase marketing to reduce losses, but there are no indications Frontier plans to spend significantly on major network upgrades in these areas anytime soon.

Frontier declared an unexpected dividend of $0.60 a share, which some analysts consider excessive and represents a “red flag atop this toxic value destroyer.”

One analyst remarked, “I’m not buying it; Frontier is a business in free fall.”

Credit challenged AT&T customers may be out hundreds of dollars if they fail to understand the difference between AT&T’s service deposit and a “credit management fee” for new customers. 

For years, postpaid customers with damaged/no credit have been asked by AT&T employees to post a significant deposit to establish service. For many U-verse and cell phone customers that amount can reach $449 or more. Customers complain AT&T sales employees rarely explain whether they are being asked to put down a refundable deposit or being billed AT&T’s novel “credit management fee,” especially after they are reassured the “deposit” will eventually be returned to customers.

In Ohio, one customer is upset that AT&T has misrepresented its $449 one time “credit management fee” as a refundable deposit and claims AT&T now wants to keep that money for itself, despite his perfect payment record.

Michael Tedesco told FOX 28 in Columbus when he signed up for cable provider AT&T, he was required to spend $449 towards a deposit to get U-verse service activated.

“I was 19 and didn’t have any established credit, so they told me I had to put down a deposit,” said Tedesco. He claims AT&T promised to return $5 of that money each month as a credit on his bill, which means Tedesco would receive his full deposit back only after approximately 7 1/2 years of staying with AT&T. Tedesco also claimed AT&T promised to immediately return the balance of any remaining deposit if he canceled service.

But that isn’t what happened.

“I’d been with them for two years, so that’s $120,” said Tedesco. “So $329 should be returned to me. But now they’re saying they changed their story. That it’s a non-refundable fee.”

AT&T’s non-refundable “Credit Management Fee” is often called a deposit by AT&T’s salespeople. But it isn’t.

A Google search about the non-refundable nature of AT&T’s “deposit” has revealed considerable controversy over AT&T’s “credit management fee” and how it is represented by AT&T employees trying to make a sale. When customers return to complain, they are told to read AT&T’s voluminous terms and conditions, which claim the fee might or might not be refundable.

Telecom companies have traditionally used refundable deposits as a way to insure themselves against a customer considered more likely to default on their bill. For decades, phone companies usually returned deposits back to customers, with interest, after 12-24 months of a satisfactory payment history.

AT&T has instead turned that insurance protection into another way to earn revenue for itself, and critics contend AT&T employees are misrepresenting the costly fee and how customers can get it back.

An AT&T spokesperson admitted shareholders come before customers.

“The credit management fee is in place to cover the upfront cost of service while protecting our shareholders against loss in the event a customer isn’t able to pay their bill,” wrote the spokesperson in a written statement. AT&T also claimed it tells customers up front it is not a deposit. “We communicate to these customers before they sign-up that this is a one-time non-refundable fee.”

If AT&T returns a portion of its “Credit Management Fee” at its discretion, it comes in $5 increments, which means it will take over seven years to get your money back.

The Ohio Attorney General has little power over AT&T’s contracts, language, or sales practices, and offered that consumers need to protect themselves from companies like AT&T.

“It’s helpful to ask things like ‘is there a schedule of when money will be credited to my account? What happens if I leave? How long do I have to stay with the company?'” Melissa Smith, from the AG’s Consumer Division, told the Columbus FOX affiliate. “But what’s most important, no matter what that operator says, is to make sure it lines up with what’s in the contract.”

In dozens of pages of terms and conditions for AT&T’s products and services, the relevant language is found under the Billing section (emphasis ours in the language below), and it is highly confusing because it conflates a traditional deposit program with AT&T’s newer, non-refundable “credit management fee,” making it next to impossible for consumers to understand which applies  until after their first bill arrives:

Advance Payments, Deposits, Fees and Limits.

We may require you to make deposits or advance payments for Services, which we may use to satisfy your initial bill for Services, to offset against any unpaid balance on your account, or as otherwise set forth in these TOS or permitted by law. Interest will not be paid on advance payments or deposits unless required by law. We may require additional advance payments or deposits if we determine that the initial payment was inadequate. Upon determination solely by AT&T of satisfactory payment history or as required by law, AT&T may begin refunding of the deposit or advance payment through bill credits, cash payments, or as otherwise determined solely by AT&T. Based on your creditworthiness, a non-refundable fee may be required to establish service and we may require you to enroll, and remain enrolled, in an automatic payment or electronic funds transfer plan. We may establish additional limits and restrict service or features as we deem appropriate. If your account balance goes beyond the limit we set for you, we may immediately interrupt or suspend service until your balance is brought below the limit. Any charges you incur in excess of your limit become immediately due.

Many customers learn about the fee only after receiving their first bill, which usually arrives after the contract grace period deadline offered to customers who change their mind and exit the contract penalty-free.

“I recently ordered new service and I was told ‘Congratulations you don’t require a deposit,'” wrote ‘Susanja.’ “That’s great, right? Not! I just opened my first bill and there’s a $500 credit management fee for a total of $600+ for my first month’s bill.”

By the time the first bill arrived, she was already locked into a contract with a substantial cancellation penalty.

WTTE-TV in Columbus investigates AT&T’s “Credit Management Fee.” (3:29)

After months of negotiations, it all came down to a matter of control.

Softbank Group Corp., owner of Sprint Corp., has abandoned a long-expected merger between Sprint and Deutsche Telekom’s T-Mobile USA, citing concerns about which company would have effective control of the combined wireless carrier.

At the 11th hour, Softbank’s board of directors in Japan expressed concern the merger would leave Deutsche Telekom with majority control of Sprint’s assets and network, leaving Softbank effectively out of the U.S. market at a time when companies like Sprint and T-Mobile are preparing for the future launch of 5G wireless networks that will likely be a backbone for the future multi-billion dollar Internet of Things (IoT) marketplace. Multiple sources have told both Japanese and American newspapers that SoftBank’s founder and CEO Masayoshi Son had always been reluctant to give up control of Sprint, but had not made the issue a potential deal breaker until the talks were nearly complete and final decisions had to be made.

Deutsche Telekom considered the issue practically non-negotiable, because the international telecommunications company has relied heavily on the financial performance of T-Mobile USA to brighten its financial reports. Deutsche Telekom subsidiaries in Europe have struggled financially as a result of competition and other factors and international accounting rules require DT to have control of assets it wishes to include in its financial reports. Had T-Mobile ceded control of the merged company to Softbank, it could not include its U.S. business in its financial reports.

T-Mobile USA is regarded as the stronger of the two companies, and its German parent is very happy with its U.S. subsidiary. Most analysts argue Sprint needs the merger with T-Mobile far more than T-Mobile needs Sprint, so there was reportedly little disappointment from Deutsche Telekom over the merger talks achieving an impasse. To calm nervous investors, Softbank plans to announce it will step up its investment in Sprint to improve its network and coverage. Sprint customers have heard such promises before, but the fourth largest wireless carrier has continued to lose market share, mostly to the benefit of T-Mobile. Independent tests have shown Sprint’s network often performs worse than its three major competitors in many areas.

In an effort to keep things ‘organized,’ Charter Communications is ‘normalizing’ rates in its acquired service areas to match amounts paid by legacy Charter Communications customers for years. Charter will not lose any money from this process, effectively “rounding up” the rates it charges, causing bill shock for some former customers of Bright House Networks enrolled in grandfathered and/or promotional pricing plans.

Harry Johnson, who has been a Bright House customer in Florida for over 20 years, was unpleasantly surprised when he was notified in a letter his rates were going up approximately $20 a month.

“Charter wrote me telling me my promotion was expiring and they were raising my rates, except I am not on a promotion and have been paying the same price for internet service for a few years now,” Johnson tells Stop the Cap! “It was either the longest promotion ever or Charter was lying.”

Johnson was paying around $45 for his Bright House internet plan. Effective this month, he is being asked to pay $65 — a $20 increase.

“After they refused to negotiate or give me even a semblance of an explanation that made sense, I told them they just lost a multi-decade customer,” Johnson said, signing up for Frontier FiOS instead. “It is amazing to me just how nonsensical these giant cable companies are sending letters like that and then be non-responsive to complaining customers, hoping we will just swallow it.”

In a letter sent by Charter to a subscriber in Texas, signed by Sam Araji, Charter’s vice president of billing, the cable company explains the customer was enrolled in promotion that was now ending and billing would continue at standard rates.

(Courtesy: ‘etaadmin’)

A DSL Reports reader encountered almost the same situation when he discovered his internet bill was $20 higher than the month before.

“I found this curious because I wasn’t on any promotional offering and just have internet only service,” wrote ‘Chuch.’ “When I called customer service, I was told that I was under an old Bright House plan and that Spectrum was adjusting pricing to be more ‘in-line’ with their national plans and that she wasn’t going to budge on the price, even though I was never under a promotion. All I got from her was lip service about how I should be paying more for the same service I’ve had for some time, even though there have been no service improvements over that time.”

Like Johnson, ‘Chuch’ is dropping his Charter Spectrum service and switching to Frontier FiOS.

Former Bright House customers in Florida have been hit twice with rate hikes, first in March when some customers saw their bills literally double. Charter admitted it would raise rates for the majority of customers $20-30 a month this year alone.

WFTS in Tampa reported some customers in the Tampa area saw their bills double after Charter/Spectrum took over from Bright House. (3:21)

Rep. Michele Hoitenga (R-Manton) doesn’t care much for community broadband, so she introduced a bill in the Michigan legislature that is as stark as it is short:

House Bill 5099:

The bill is remarkable for its brevity — most proposed community broadband ban bills avoid outright bans, preferring to use forced complicated referendums or operational limitations that usually make municipal broadband projects untenable. But Rep. Hoitenga’s bill leaves no doubt she wants private cable and phone companies left unmolested by publicly funded alternatives. Although the Michigan Republican chairs the House’s Communications and Technology committee, she appears confused about the difference between upload and download speeds. Her bill would define a “qualified” internet service as one offering at least 1/10Mbps service. Yes — 1Mbps download speed and 10Mbps upload speed.

Ars Technica’s Jon Brodkin asked Rep. Hoitenga about the oddity of the language in her bill:

When asked about this on Twitter, Hoitenga said she would have to “speak with the attorneys who wrote the bill” to determine whether the listed speed was a mistake. “I will speak with the attorneys who wrote the bill. They changed the language I submitted but will ask why they changed it,” Hoitenga wrote.

Rep. Hoitenga

Rep. Hoitenga used her Twitter account to promote and defend her bill, pointing out the district she represents had “37 providers” to choose from — a fact she gleaned from an online AT&T Yellow Pages directory. Stop the Cap! investigated that claim and found the majority of the providers cited did not offer internet access to members of her district, provided service only in adjacent communities, or sold commercial internet services to businesses only. In fact, for the overwhelming majority of her constituents, there are only two providers to choose from — AT&T or Comcast. Both are top donors to Rep. Hoitenga’s campaign, but more on that later.

Michigan has never been a hotbed of community broadband initiatives, despite having uneven broadband service in suburban and rural areas across the state. Michigan law already includes several significant roadblocks for public broadband projects, notes Lisa Gonzalez from the Institute for Local Self-Reliance:

“Michigan already has a significant state barrier in place; municipalities that wish to improve connectivity must first appeal to the private sector and can only invest in a network if they receive fewer than three qualifying bids. If a local community then goes on to build a publicly owned network, they must comply with the terms of the RFP, even though terms for a private sector vendor may not be ideal for a public entity.

“Nevertheless, several communities in Michigan have dealt with the restrictions in recent years as a way to ameliorate poor connectivity. They’ve come to realize that their local economies and the livelihood of their towns depend on improving Internet access for businesses, institutions, and residents.”

Although Rep. Hoitenga’s bill offers the possibility for “public-private” partnerships, her bill would bring a significant chilling effect because the proposed law fails to define how such partnerships should be structured.

Rep. Hoitenga told Stop the Cap! the bill would put a stop to tax dollars being spent on broadband service, something she felt was unwarranted. We asked the Michigan representative, “Did you know the phone and cable companies receive taxpayer subsidies already in the form of PILOT agreements, and other incentives?” which received the non-sequitur response that her office’s phones were ringing constantly with callers praising her new bill.

But that isn’t what Rep. Hoitenga told her Facebook fans.

“Many individuals have reached out to my office in regards to HB5099; with the belief that I am attempting to limit broadband expansion,” Hoitenga wrote. “This could not be further from the truth. One of my main goals as the Chair of the House Communications and Technology committee is to make internet access more easily obtainable. This legislation does indeed prevent cities from using tax dollars to subsidize ISPs; especially without a vote of the people. While at first glance government operated networks may sound like a good idea, the argument in support of them crumbles with an in depth look into the financial and long-term investment side of implementing such a network.”

So we remain unsure if the wave of phone calls Hoitenga referenced were in support of her proposed bill or opposed to it. Either way, the Michigan representative mischaracterized her own three-paragraph bill by claiming it would prevent cities from using tax dollars for internet service, “without a vote of the people.” But no provision for such a vote exists or would be allowed by her existing bill. Hoitenga’s bill also clearly makes internet access less obtainable, especially in communities where a for profit provider does not exist and a community is seeking to provide an alternative.

Hoitenga later states communities may not need to worry about internet accessibility because, “there is also a package of bills in the senate regarding Small Cell Technology (which also attempts to reduce barriers),” she wrote. That provision is backed by AT&T, which is currently one of the two ISPs serving her district.

She then picks up familiar talking points distributed by public broadband opponents:

“There are examples throughout the state and nation of taxpayers being on the hook for failed networks. There is also concern that some of these networks are in towns where employee pensions are severely underfunded, causing layoffs and cutting services, yet there seems to be money for high risk broadband investments. It’s time to address these issues.

She also cited a 2017 study critical of municipal broadband networks authored by University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger. Neither author or Rep. Hoitenga disclosed the group that produced the study is funded by AT&T and Comcast, among other large telecom companies and their respective lobbying organizations.

After opening a dialogue with the Michigan representative, she did not take kindly to questions or criticism about her bill, and summarily blocked Stop the Cap! from seeing her Tweets or communicating with her further — the first time anyone has blocked our group on Twitter. Shortly after that, she changed her Twitter channel to be viewable by invitation only, limiting her potential audience to her 284 current followers. At the moment, the only social media outlet that seems to be still open to communicating with Rep. Hoitenga is Facebook, where she is taking heat from her constituents about her bill.

The Michigan representative has been behind several controversial bills introduced in the current session of the Michigan House, including a proposal to allow concealed pistols to be carried in public and a ban on Sharia law being practiced in the United States.

Her top donors for the current legislative session include:

#2 – Telecommunications Association of Michigan PAC, $3,000
#4 – AT&T Michigan, $1,500
#11 – Comcast Corp. & NBC Universal, $500