California must take Frontier’s bankruptcy as seriously as PG&E’s

by Steve Blum • , , , ,

Frontier Communications filed for bankruptcy protection last night. In a statement posted on its website, the company said it was washing away $11 billion in debt, out of a total of $22 billion owed to creditors, much of it the result of its purchase of Verizon’s legacy wireline telephone systems in California. The statement has the usual blah-blah-blah about its hope to “continue providing quality service”, but according to a story on Bloomberg by Allison McNeely, Frontier will “hand control to its unsecured creditors, according to people with knowledge of the matter”.

That, along with a number of immediate steps such as securing additional financing, is now up to a federal judge in New York, where the company filed its Chapter 11 petition.

Frontier has more than two million wireline customers in California, most of whom were acquired from Verizon in 2015. At the time, Frontier was seen as the better alternative, particularly in rural California where Verizon had allowed legacy copper systems to rot on the poles. Some had never been upgraded to the point where they could provide any kind of broadband service. The California Public Utilities Commission approved the deal, with conditions that included broadband upgrades and the expectation that Frontier would fulfil its promises to focus on improving wireline infrastructure throughout the state.

That didn’t happen. A CPUC study last year found that Frontier (and AT&T) was “in effect, disinvesting in infrastructure overall, and [the disinvestment is] most pronounced in the more rural and low-income service areas”. The neglect was charitably attributed to Frontier’s financial condition, which was dire enough then, but the company had already established a pattern of broken promises, ranging from a botched Verizon cutover to a wireless bait and switch. The CPUC opened an investigation into some of Frontier’s shortcomings late last year, but fining the company for its bad conduct four years ago will do little to keep broadband and phone service running in California, let alone upgrade its decaying rural systems.

When PG&E filed for bankruptcy last year, the CPUC rightly went into emergency mode and, along with governor Gavin Newsom and the California legislature, has been an active player in the complex process of remaking the state’s largest energy utility and protecting its customers. Frontier’s final crash warrants the same level of attention, and rural Californians deserve the same level of protection and respect.