Frontier’s sins make a longer stay in California bankruptcy purgatory more likely

by Steve Blum • , , , ,

Purgatory

A lukewarm reply to demands that the California Public Utilities Commission take a hard look at its post-bankruptcy plans makes it a good bet that Frontier Communications won’t get a green light in California until sometime next year. Last month several organisations, including the CPUC’s own public advocates office, protested Frontier’s request for quick and painless permission to hand control of its business in California to a new set of owners. Last week, Frontier responded.

Like the protests, Frontier’s reply runs through the long list of problems that the company has experienced, if not caused, in California. Allegations of poor service quality, disinvestment in rural and low income communities and non-compliance with obligations incurred during its acquisition of Verizon’s California systems “are subjects of generalised regulatory interest or matters of compliance unrelated to the proposed transaction or which are currently being considered—or which should be considered—in a separate proceeding”.

Except.

As it must, given the plain language of California public utilities laws, Frontier concedes that the CPUC “may evaluate the impacts of the transfer of control on California consumers, utility employees, and state and local economies”. Since bankruptcy is about rebuilding a company’s capital structure and overhauling its operating costs so that it doesn’t go broke again, it’s difficult to see why the commission can’t, if it so chooses, review Frontier’s investment plans in the local communities where it has monopoly control of the telecommunications marketplace or its ability to provide adequate and reliable broadband, telephone and, in some places, video service.

Another oxymoronic argument Frontier offers is that it should get the same free pass that the CPUC gave WorldCom following its bankruptcy in 2003, but shouldn’t be subject to the same harsh conditions imposed because of WorldCom’s “severe examples of consumer fraud”. Someone should check with Washington’s attorney general, who just laid a $900,000 fine on Frontier for “unlawful deception” resulting from charging customers more than advertised and selling them Internet service at speeds it couldn’t deliver.

Frontier is concerned that the CPUC will take longer to rule on its bankruptcy settlement than the federal government or other states. That would not be unusual. But if time is so short, Frontier shouldn’t have waited more than a month after its long expected bankruptcy filing to ask the CPUC to review it.