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Nevada’s Attorney General Finds Frontier Internet Lacking, Wins Refunds and Upgrades

Frontier residential customers in Nevada could receive a refund and improved service after a court filing from the Nevada Attorney General’s Bureau of Consumer Protection (BCP) found Frontier’s internet services lacking.

Since 2017, BCP has collected scores of complaints about Frontier’s internet service and its performance, mostly regarding slow service, frequent outages, and ongoing billing problems.

The BCP found Frontier liable under NRS Chapter 598 which forbids providers from misleading consumers about internet speed and service performance in marketing and advertising. An Assurance of Discontinuance filed with the court allowed Frontier to settle while avoiding admitting any wrongdoing and agreeing to correct service deficiencies.

The state found Frontier repeatedly did not disclose limitations of broadband service availability and knowingly marketed its DSL service at speeds the company could not provide customers.

According to the court document:

  • Frontier is required to “clearly and conspicuously” disclose in its print and broadcast advertising the actual internet speeds available to customers in terms of minimum and maximum speed.
  • Customers that sign up for a high-speed plan that Frontier cannot provide may switch to a lower speed plan or discontinue service incurring no penalties or early cancellation fees.
  • Existing customers that do not receive at least 90% of the highest speed their current plan advertises will receive a service credit of 50% of the internet charge for each month Frontier did not provide such speed. Credits will begin in 2020 and end three years after the date the court accepts the Assurance.
  • Frontier has also agreed to invest at least $1 million to improve internet service in Elko County.

Frontier Urgently Trying to Restructure $17 Billion Debt as Chapter 11 Looms

Frontier Communications is preparing a detailed plan for bondholders explaining how the company hopes to cut its $17 billion in debt before it faces the possibility of bankruptcy.

The Wall Street Journal reports Frontier is ready to begin formal negotiations with those holding its debt to create a new payback plan before it faces the first of several repayment deadlines for bonds running into the billions, starting in 2022. But the strategy is risky because if any of the company’s major bondholders disagree, it could put Frontier on a fast track to Chapter 11 bankruptcy reorganization.

Frontier’s debt problems are a consequence of its decision to expand its wireline footprint through acquisitions of castoff copper landline networks being sold primarily by Verizon Communications and AT&T. Critics have repeatedly called out Frontier for bungling network transitions with extended service outages, billing problems, and other customer service-related failures that left customers and some state regulators frustrated and alienated. The company is still facing regulatory review in states like Connecticut, where it failed to properly manage a customer cutover from AT&T’s systems to its own, and in Utah, West Virginia, California, and Florida where similar cutovers from Verizon Communications left more than a few customers without service and months of billing problems.

As a result, Frontier lost many of the customers it acquired, with many unwilling to consider doing business with the phone company ever again.

Although Frontier’s latest acquisitions of Verizon landline customers in California, Texas, and Florida included large Verizon FiOS fiber to the home territories, Frontier customers continue to disconnect service at a greater pace than the phone company’s chief cable competitors — Comcast and Charter Spectrum. Customer defections are even worse in large sections of Frontier’s stagnant “legacy” markets — service areas that have been managed by Frontier or its predecessor Citizens Communications for decades. That is because almost all of those legacy markets are still serviced by decades-old copper wire networks, many capable only of providing low speed DSL internet access.

Frontier’s large debt load is cited as the principal reason the company cannot embark on upgrade efforts to replace existing copper wiring with optical fiber. In fact, virtually all of Frontier’s fiber service areas have been acquired from AT&T or Verizon. Frontier executives have attempted to placate shareholders by promising to aggressively manage costs. But promises of dramatic savings have proved elusive and frequent media reports have emerged covering extensive service outages, poor network maintenance, ongoing billing and customer service issues, and inadequate staffing to address a growing number of service outages and problems. In several states, repeated 911 outages have triggered regulator investigations with the prospect of stiff fines.

Three Frontier insiders have privately shared their insights with Stop the Cap! about ongoing frustrations with the company and the most recent developments.

“Upper management has no comprehension that in many of our markets, customers have choices and they abandon us when all we can sell is DSL service at speeds often less than 12 Mbps,” one senior regional executive told us. “Our retention efforts are so poor these days, representatives are not really expected to rescue accounts because in most cases there is no legitimate reason to do business with us. In some states where there are high mandated surcharges, we cost more than our cable competitors.”

Another mid-level executive in one of Frontier’s largest legacy markets — Rochester, N.Y., said morale is low and a growing number of colleagues believe the days to bankruptcy are short.

Frontier Communications debt load.

“Our loyal customers are literally dying off, as their adult children disconnect decades-old landline accounts,” said an executive who wished to remain anonymous because they were not authorized to speak with the media. “The customer numbers have been ugly for a long time and are getting worse. Our recently retired customers who have had DSL and voice service with us since the 1990s are disconnecting because some have gone with Spectrum and others are moving out of the area. Some of these customers hate Spectrum and won’t do business with them no matter the price, but we are losing their business anyway when they move out of state.”

The Rochester executive noted Frontier has an impossible job trying to sell its internet and voice products against Charter Spectrum.

“Their offers are $40 a month for 100 Mbps internet and $10 for unlimited local and long-distance calls,” the executive noted. “Ours costs nearly $30 just for the phone line after taxes and fees, and how can you sell someone DSL that delivers less than 6 Mbps to many parts of a market still served by copper trunk lines to a central office several miles away? They also find out they have to lease our modem at an additional fee and there are other fees in the contract many customers have learned to look for. Answer: you can’t.”

A Frontier executive in Ohio shared a similar story.

“We hold our own in our rural markets where we can offer a customer better than dial-up internet, and our service is very good if you live in an area where we expanded broadband thanks to FCC subsidies. Some of these new areas are even served by fiber,” the executive explained. “The problem with this is fewer people live in rural areas and these places cost a lot more to maintain when we dispatch service crews or have to run new cable. For Frontier to be truly successful, we have to get better internet service into our larger older markets, but that means pulling copper off poles and putting up fiber and there is just no interest from the higher ups to spend the money to do this. So instead the company bought new territories to keep revenue numbers up, but we are also quickly losing many of those customers to cable too. I really don’t know what we will do when wireless companies offer 5G internet.”

Some Frontier bondholders recognize Frontier must reduce its debt to have the financial resources to expand fiber service. Others want the company to shed its legacy copper service areas (while keeping FiOS/U-verse enabled markets) either to regional companies willing to invest in upgrades or to hedge funds that would likely ring whatever remaining value still exists out of these abandoned service areas. Some suspect these hedge funds would also load up the spinoff companies with even greater debt to facilitate dividend payouts and other investor-friendly rewards.

It will be up to state and federal regulators to protect Frontier’s customers as the two emerging groups of conflicting bondholders angle to protect their investments, perhaps at the risk of reliable phone and internet service.

The Wall Street Journal:

One, including Elliott Management and Franklin Resources, pushed for an exchange of their bonds at a discount to their face value for new secured debt that would be paid before unsecured debt in a potential bankruptcy.

Still, bondholders including GoldenTree Asset Management have warned the company against doing such a swap since 2018, arguing it violated the terms of their bonds.

The company this week reached out to Houlihan Lokey, which represents a group of bondholders that includes GoldenTree—as well as JPMorgan Chase & Co., Oaktree Capital Management and Brigade Capital Management—to sign up to view a confidential restructuring proposal, a person familiar with the matter said. That group has yet to gather enough holders to form a majority, people familiar with the matter said.

Californians Complained More About Telecom Companies Than Wildfire Outages Caused by PG&E

More Californians are complaining to state officials about their cable television, internet, and phone service than the energy utilities implicated in causing deadly wildfires that left customers without power for days or weeks.

California’s Office of Senate Floor Analyses prepared a report for elected officials contemplating extending deregulation of the state’s top telecommunications companies. It found deregulation has not always benefited California consumers, noting that several companies have been fined for allowing traditional phone service to fall below required service quality standards. As service deteriorates, lawmakers have tied the hands of state officials trying to enforce what service standards still exist. The report found that the telecom industry has been especially good at covering itself through lobbying and litigation to isolate and disempower consumers seeking redress.

“Many companies, including telecommunications providers, include arbitration clauses in their contracts that limit a consumer’s ability to form a class with other consumers to seek remedies for unfair business practices related to contracts,” the report notes. “These clauses frequently limit consumers to a specified arbitration process that limits the types of remedies consumers can obtain for unfair business practices.”

Customers with unreliable phone service pursuing complaints on the federal level with the Federal Communications Commission have also been dealt a blow by the Trump Administration and its Republican majority control of the FCC.

“It is unclear what kind of remedies consumers can obtain since the FCC has adopted an order limiting its own ability to establish requirements for these services,” the report found.

Deregulation has not stopped Californians from trying to get help from the California Public Utility Commission (CPUC), however. The CPUC’s Customer Affairs Branch recorded 1,087 complaints about the state’s phone and cable companies in January 2019, compared with 677 complaints against the state’s energy utilities and 53 lodged against water utilities.

The CPUC’s Customer Affairs Branch reported communications-related complaints were significantly higher than other utilities. (Image: California Office of Senate Floor Analyses)

“Despite the occurrence of wildfires in which utility infrastructure was implicated, complaints regarding energy utilities remained largely consistent between November 2018 and January 2019,” the report found. “The data indicates that the communications sector generates a greater number of complaints to the CPUC than other utility sectors on average, and a much greater percentage of those complaints are for customer issues over which the CPUC has no regulatory jurisdiction.”

Earlier this year, California’s largest investor-owned utility, Pacific Gas & Electric (PG&E), filed for bankruptcy protection after estimating it was liable for more than $30 billion in damages from recent wildfires. An investigation found equipment owned by PG&E was responsible for starting the worst wildfire in California history. The November 2018 Camp Fire killed 85 people and destroyed the town of Paradise. Yet the Customer Affairs Branch received fewer complaints about PG&E than it received regarding AT&T, Charter Spectrum, Frontier, Cox, and Comcast XFINITY.

Unintended consequences of deregulation have also caused several high profile scandals among telecom companies in the state. Some of the worst offenses were committed by cable and phone companies that further traumatized victims of catastrophic wildfires. An effort to implement new consumer protections for fire victims forced to relocate met fierce resistance from cable and telephone industry lobbyists. Some of those same telecom companies continued to bill wildfire victims for months for service at addresses that no longer existed. AT&T even billed customers that died in the fires.

A recent San Francisco Superior Court decision (Gruber v. Yelp) also found another consequence of deregulation. A judge ruled The California Invasion of Privacy Act (CIPA) does not apply to calls made or received on “digital” phone lines better known as Voice over IP (VoIP). The judge found that since the CPUC does not regulate VoIP calls, and such calls are not legally defined as a traditional phone call, CIPA cannot apply.

More than six months after devastating wildfires swept across the North Bay in 2017, AT&T was still billing customers that died in that fire. KGO-TV reports. (3:31)

After promising to never again erroneously bill wildfire victims, AT&T did it again to those traumatized by the 2018 Camp Fire that killed 85 people and wiped the town of Paradise off the map. KOVR in Sacramento reports on one family pleading with AT&T to stop billing them for landline service at an address that no longer exists. (2:15)

Ohio Files Formal Complaint Citing Frontier’s “Troubling” Deterioration

A broken Frontier telephone pole (left). Frontier phone cables left stretched against a tree (right) Images: PUCO

The Public Utilties Commission of Ohio (PUCO) has filed a formal complaint against Frontier North, Inc. (d/b/a Frontier Communications), citing a spike in customer complaints and evidence the company’s landline services have dramatically deteriorated in the state.

The PUCO is concerned Frontier’s alleged poor service may result in safety concerns, such as a customers’ inability to contact emergency services, doctors, and family and friends.

“Customer complaints indicating extensive telecommunication outages are troubling and deserve to be examined,” stated PUCO Chairman Sam Randazzo. “Today the PUCO is taking steps to investigate allegations of poor service quality.”

This is only the latest in a series of actions the state regulator has taken against Frontier for poor performance. The company previously promised to prioritize service outage repairs over new installations, but the regulator reports it received an unprecedented 2,802 consumer contacts regarding Frontier between January 1, 2018 and July 31, 2019.

Most of the problems are occurring in service areas that Frontier acquired from Verizon Communications in 2010, primarily in southern and eastern Ohio. The regulator’s complaint includes 33 citations against Frontier for extended service outages, some that have lasted for months, as well as allegations the company has failed to provide adequate and reliable phone service in its Ohio service areas. The complaint recommends the Commission “conduct a thorough investigation” on the matter.

The complaint:

Frontier’s alleged efforts to repair [reported issues] within 24 hours or Frontier reporting that the issue had been repaired within 72 hours, often times customers’ service would not work within days of Frontier reporting it has repaired the issue.

For example, a [residential] consumer contacted the PUCO Call Center on March 4, 2019 stating her telephone line had been out of service since January 20, 2019. The consumer stated that she contacted Frontier on February 7 or 8, 2019 and that Frontier had committed to making repairs no later than February 26, 2019. When repairs did not occur by February 26, 2019, the consumer stated that she contacted Frontier again and was informed the repairs would occur by March 19, 2019. During Staff’s investigation, Frontier informed Staff that it was notified of the service issue regarding no dial tone on this [residential] account on February 14, 2019 and that service was repaired on March 7, 2019. Repairing an issue on March 7, 2019 is 21 days after it was reported on February 14, 2019, thus 18 days in violation of the 72-hour repair requirement times for instances of failure.

Damaged pedestal (left); Large tree limb left on Frontier phone cables (right). Images: PUCO

From July 11, 2019 to July 23, 2019, PUCO staff conducted field inspections which revealed facilities that appear to lack the proper maintenance, including damaged aerial terminals and splice cases, excessive vegetation, damaged pedestals, and unstable and damaged poles.

The PUCO telephone service areas map shows that Frontier North covers parts of 64 of Ohio’s 88 counties, including Marion, Crawford, Richland, Ashland, Morrow, Sandusky, Ottawa, Coshocton, Muskingum, Fairfield, Pike, and Ross. Verizon itself acquired those service areas from GTE (General Telephone) in 2000.

Nationally, Frontier Communications is in financial distress. The company now serves 4.3 million customers, down 200,000 from the same time last year. Across all divisions, Frontier is losing customers, particularly those subscribed to residential and commercial landline service and its resold satellite TV service. Frontier is also losing large numbers of TV customers in its FiOS fiber to the home service areas. The company has accumulated $17 billion in debt with a decreasing likelihood it will repay that debt on time.

Pedestal Damage. Images: PUCO

Despite the financial difficulties, Frontier is still obligated by law to meet basic service standards. Utility regulators in multiple states are now questioning whether Frontier is still achieving this. For a second time, Frontier spokesman Javier Mendoza signaled the company is burdened with an uncompetitive, high cost business model.

“Frontier takes service quality very seriously. While we disagree with the report’s assertions, we look forward to respectfully and directly addressing the issues raised by staff with the Public Utilities Commission,” Mendoza wrote in an email to the Marion Star. “Issues raised in the report focus on complaints in rural and high cost service areas; yet while Frontier only serves some 10% of Ohio’s wireline phone lines, Frontier bears 100% of the obligation to provide phone service to customers in the most rural, remote, and high-cost parts of its service area. This model creates costly operational burdens that Frontier’s competitors do not bear and is inconsistent with a competitive market.”

“Providing reliable telecommunications and broadband service to our customers is our highest priority. Frontier is dedicated to safety and takes seriously its commitment to serve Ohio customers and support 911 services,” Mendoza added.

Frontier is Experiencing Multiple Service Outages in Western New York Today

Phillip Dampier August 14, 2019 Consumer News, Frontier, Public Policy & Gov't, Video 2 Comments

Some Frontier Communications customers in Rochester were left without service early today in a “widespread” outage that impacted local governments, commercial customers, and medical care facilities.

Medical facilities are relying on backup plans to maintain communications after service failed this morning, just days after the New York Public Service Commission warned Frontier Communications it must improve service after receiving a growing number of service complaints impacting service across the state.

The outage is just the latest in a growing series of outages that have left some customers without service for as long as five weeks. Last week, state regulators released results of their 2018 survey on the service quality of telephone companies serving New York and found service from four Frontier-owned affiliates lacking:

  • Citizens Telecommunications Company of New York, Inc. (Citizens)
  • Frontier Telephone of Rochester, Inc. (Frontier Rochester)
  • Frontier Communications of New York, Inc. (Frontier New York)
  • Frontier Communications of Ausable Valley, Inc. (Ausable Valley)

“The rate of consumer complaints received by the Department of Public Service (PSC Complaints) has significantly increased in the last several years for these companies,” the PSC report concludes. “In addition, a review of company-provided initial data shows poor performance regarding repair duration for customers who lose service. Further, Staff has received an increasing number of complaints from local, county, and State government representatives and officials from first-responder organizations regarding network reliability and timeliness of repairs in the service areas of these companies.”

Frontier was a clear standout among problematic service providers serving New York. The company currently serves 221,000 access lines from 211 central offices and is the largest independent telephone company in New York outside of Verizon. Frontier is the incumbent landline provider for 7.9% of the state’s total access lines, with its largest service area centered on Rochester and the 585 area code. The PSC notes Frontier has been rapidly losing customers, with 30,000 access lines disconnected in 2018 alone.

But not every Frontier division in New York has operated below the PSC’s standards. Former Rochester Telephone-owned entities including Frontier Ogden Telephone Company and Frontier Communications of Seneca-Gorham, as well as Frontier Communications of Sylvan Lake experienced no significant outages or complaints in 2018. Frontier often allows its divisions to be managed somewhat autonomously, with local managers keeping watch over operations in their area. Frontier offers little residential fiber optic service in its New York markets, except in selected new housing developments and in areas where the existing copper network has deteriorated or been damaged beyond practical repair. Most customers are offered copper-based DSL service over telephone lines installed decades ago.

Frontier’s ongoing and increasing financial problems may be responsible for the spike in service complaints and lengthening repair times. Employees have repeatedly told Stop the Cap! resources to deal with service issues are increasingly scarce and cost management is among the highest priorities inside the company. Frontier’s service repairs often take days, if not weeks. Company officials have told employees that since most people have cell phones, landline repairs are no longer as critical as they once were years ago. But spotty internet service can significantly damage local businesses, and outages are becoming more frequent and taking longer to repair.

“The PSC Complaint rate has significantly increased in the last several years for these Frontier companies,” the PSC found. “In addition, Staff has responded to a significant number of network reliability complaints and inquiries from local, county, and State government representatives, including emergency response entities. These complaints include long repair durations and repeated out-of-service conditions, as well as internet access and speed issues.”

Stop the Cap! has learned the New York State Attorney General’s office has also opened an informal inquiry into the increasing number of internet service complaints filed with the AG’s office.

To learn why Frontier is experiencing an increasing number of problems, the PSC has requested more granular trouble reports and will interview Frontier’s local supervisors and technicians to get a candid assessment of Frontier’s wireline facilities and what exactly is contributing to a deterioration of service. If Frontier is unwilling or unable to improve service, the PSC has warned it may take formal action against the company.

WHAM-TV in Rochester reports some Frontier customers in Mount Morris, N.Y., south of Rochester, have been without internet service for five weeks, causing frustration. (2:05)

WROC-TV in Rochester reports on another multi-day Frontier service outage, this one affecting residential and business customers in the Sea Breeze and Point Pleasant areas along Lake Ontario. (1:58)

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