Tag Archives: frontiercommunications

CPUC allows AT&T, Frontier to tap dance their way out of fines for bad service

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AT&T and Frontier Communications were fined $2.2 million and $823,000, respectively, by California Public Utilities Commission, for “chronic” service failure, primarily in rural California. Sorta. Kinda.

Well, not really.

At its meeting in Fresno last week, the CPUC voted unanimously to allow Frontier and AT&T to skip the fines, which were mostly for taking too long to restore telephone service for customers who experienced outages. In return, the companies promised to make “incremental” investments in improving service quality. The amount of those supposedly incremental investments are claimed to be twice the amount of the fines. Which is allowed under a baffling and irregular decision made two years ago by the commission.

The resolution regarding the AT&T fines noted the difficulty in figuring out what’s incremental and what’s money that would have been spent anyway. CPUC staff asked AT&T for list of what it planned to spend on “construction and rehabilitation projects”. AT&T responded with a list of repair work it was doing, rather than “planned projects focused on the rehabilitation of poor performing central offices”. That was because AT&T claimed not to know what it would have spent normally, because “they do not budget for specific projects; all project work is identified on a rolling basis and reprioritised based on the ability to reduce high maintenance costs”.

Translation: we can tell you anything we want and you have to believe us because you can’t prove differently.

After some back and forth, CPUC staff accepted AT&T’s story and recommended that commissioners accept AT&T’s claims and give the company two years to demonstrate “the results of their proposed projects to measurably improve service quality in its network”.

Frontier’s explanations are similarly wooly.

After the vote, which was on a consent agenda – a bunch of resolutions bundled together – commissioner Clifford Rechtscaffen said the policy of letting telephone companies fine themselves and keep the money needs a second look…

These are a set of resolutions we just approved under a new program we initiated a couple of years ago as an amendment to general order 133-D, and in particular they allow telephone companies who have been found to have violated our service quality requirements to substitute paying a penalty by making investments to improve service quality that are at least twice the amount of the penalty. I understand that this investment option was a creative way to try to address longstanding service quality deficiencies.

At the time the resolution was adopted a couple of commissioners expressed concerns and reservations about it, including commissioner Randolph, who asked the question of whether or not we would really be able to tell whether or not the investments that were made were incremental to what telephone companies would be doing in the normal course of business.

We’ve approved these three investment alternatives, but in practice we can now see that it is difficult, in fact, to determine whether or not the investments are incremental. This required a lot of staff time working with the companies to figure out what was new, what was not new and where the best places for the investments would be. I commend the staff for reaching good conclusions here. I continue to have some reservations about this option. I think we want to look carefully and see whether or not the investments really do improve service quality and whether or not this option makes sense in terms of our larger enforcement objectives.

The option doesn’t make sense. There’s no indication that either AT&T or Frontier offered any two year budgets, which is the only way to even begin determining whether their proposed spending-in-lieu-of-fines is, in truth, extra money on top of what they’d spend anyway. Or whether they’re just shifting money from one line item to another.

Letting Frontier and AT&T pay fines to themselves was a bad decision in the first place, and the details behind last week’s commission vote proves it.

Money and performance at center of CETF’s fight with Frontier

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Frontier Communications says the California Emerging Technology Fund (CETF) has to return $714,000, if it asks for it. CETF’s response on Friday was we don’t have it anymore.

When Frontier won California Public Utilities Commission approval in 2015 to buy Verizon’s landline telephone systems in California, a long list of conditions was attached. Among them was a contract that committed “up to” $3 million to achieve the “aspirational goal” of signing up 200,000 low income Californian households for broadband service – from any provider, not just Frontier. In return, CETF dropped its opposition to the Verizon deal.

A second implementation contract spelled out more detailed terms: Frontier would pay $60 to non-profit groups recruited by CETF for each new, qualified broadband subscriber. Frontier also agreed to periodically advance portions of the money, and CETF agreed to return any unused funds after the contract expired on 30 June 2018.

The non-profits only signed up 4,300 subs, while Frontier advanced CETF $1 million. By Frontier’s math, that leaves $714,000 in the bank.

CETF wants the program to continue. Frontier is willing to go along with that for another year, up to a point. Which wasn’t enough for CETF, so the dispute landed at the CPUC. CETF wants the commission to rewrite the contracts by fiat. Frontier prefers them as they are and hinted in a reply filed with the CPUC that it might come looking for its money.

CETF says it only has $294,000 left in “trust” it because it similarly advanced cash to its non-profit clients, with the expectation that they would be signing up a lot more new subscribers than they did. A sample CETF grant contract, included in one of Frontier’s CPUC filings, says that unearned money has to be paid back. That might be, um, difficult for some non-profits. Without favorable intervention by the CPUC, CETF might be on the hook for the difference. Which would be, um, inconvenient.

There’s more.

In a rhetorical back flip, CETF argues that it wasn’t the 200,000 household goal that was “aspirational” (even though the contract said it was). Instead, CETF says it was the clear contract expiration date that was a fuzzy target.

CETF then makes what ought to be Frontier’s case. It argues that because the program is a failure, Frontier needs to fix it…

Instead of 200,000 low-income broadband home adoptions, there are only 11,038, which means the shortfall is a staggering 188,962 households. This is prima facie evidence that Frontier’s approach was in need of revision to fulfill its obligations.

Only 39% of those new subscribers were signed up by CETF’s non-profit clients. The remaining 61% were directly acquired by Frontier. Even if you assume that Frontier is obliged to continue its efforts to bring more low income households into the online world, the numbers don’t suggest that the best way to do it is to continue working through CETF’s non-profit sales channel.

A hearing in front of a CPUC administrative law judge is scheduled for 28 November 2018.

CPUC tells Frontier to answer charge it’s not meeting Verizon purchase obligations

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Frontier Communications’ delivery on promises made when it received permission to buy Verizon’s Californian telephone systems in 2015 will be investigated by the California Public Utilities Commission. Earlier this year, the California Emerging Technology Fund (CETF) asked the commission to unilaterally change some of the conditions they imposed on Frontier when they approved the deal, claiming that the goals of the decision were not met.

According to the CPUC administrative law judge handling the case, last month CETF and six of its non-profit clients sent a letter to commissioners accusing Frontier of “attempting to abandon their obligations and escape their public benefit commitments”. As a result, Frontier will have to defend itself in an evidentiary hearing, maybe next week, maybe later depending on whether the ALJ agrees to postpone it, as both parties have requested.

It’s complicated. The so-called “public benefits” relate to a program Frontier contractually agreed to pay for, which is aimed at signing up low income households for broadband service. Via CETF, it would pay the non-profit organisations $60 for every new, qualified broadband subscriber – up to a total of $3 million – as well as providing free Chromebooks and setting up a relative handful of free WiFi access points. The money would have been paid regardless of whether a qualified household signed up for service from Frontier or another broadband provider.

The program has the “aspirational” goal of recruiting 200,000 low income subscribers and was supposed to run through last June. According to Frontier’s latest response to the allegations, the non-profits only managed to sign up 4,300 new broadband households over two and a half years. CETF claims that it was Frontier that failed because its low income broadband packages were poorly designed (confusingly, it has three), and it dragged its feet fixing them.

Frontier’s response says it fulfilled its contracts as written: the company provided cash and Chromebooks based on the performance of CETF and its non-profit clients; the results “reflect the difficulties of promoting broadband adoption”.

There’s also a hanging question about a balance of $715,000 that Frontier says it advanced to CETF, but wasn’t paid out to the non-profits because they didn’t generate the required sign ups. Its filing pointedly states that CETF is “obligated to return these unused funds to Frontier no later than July 30, 2018, but Frontier has not requested return of these funds”.

Yet.

CPUC refuses to reconsider waiving AT&T, Frontier fines for bad rural service

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AT&T, Frontier Communications and other telephone companies can continue to fine themselves and keep the money, if they fail to meet California’s service quality standards. The California Public Utilities Commission rejected an appeal by a group of consumer organisations, which claim that the bizarre 2016 decision allowing telcos to pay their own expenses instead of paying fines was made “without any support whatsoever in the record”.

The decision was rammed through by commission president Michael Picker, who refused to allow a vote on an alternative offered by then-commissioner Catherine Sandoval, contrary to usual procedure.

Four organisations – TURN, the Greenlining Institute the Center for Accessible Technology and the CPUC’s office of ratepayer advocates – asked commissioners to reconsider the decision, pointing out that the let telcos keep the money alternative was never on the table during the years while evidence was gathered. It first appeared in a draft decision, after the record was closed.

The commission’s response, adopted in a closed door meeting last week, was to 1. argue that vague comments and complaints made by telcos early in the proceeding were a sufficient “factual record basis”, and 2. refuse to reconsider the decision.

Next week, commissioners are scheduled to vote on proposals to let Frontier and AT&T off the hook for hundreds of thousands of dollars worth of fines they’ve incurred because of poor telephone service in rural California. The 2016 decision says that’s okay if they spend at least twice the amount on “a project” that “improves service quality” in the next two years. That doesn’t necessarily mean building new infrastructure. It could go toward salaries or other operating expenses too. It just has to be an “incremental expenditure”.

There’s no way to know if they would have spent that money anyway. Corporate budgets shift year to year and quarter to quarter. We won’t even know what they’re spending the money on, or what service quality improvements to expect: the CPUC plans to keep that information secret, because of its “sensitive nature”.

Frontier’s Colusa DSL subsidy request breaks rules, which is OK if everyone can play

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Frontier Communications wants $253,000 from the California Advanced Services Fund (CASF) to upgrade its copper DSL facilities in the town of Colusa, in rural Colusa County. Its existing service in and around the community relies on a mix of 1990s vintage DSL and more advanced ADSL2 and VDSL technology. It’s proposing to upgrade its central office to extend its VDSL capabilities, and run fiber to the county fairgrounds in town.

The justification for the project, as described in the public summary Frontier distributed, is 45 homes that either don’t have any broadband access at all, or the service they have delivers less than 6 Mbps download or 1 Mbps upload speeds. Which is in line with the changes incumbents lobbied for last year, when the California legislature effectively turned CASF into a piggy bank for Frontier and AT&T.

What isn’t in line with past practice, or the legislation, is Frontier’s plan to use the subsidised upgrade to improve service for 2,300 homes that do have access to that pitifully slow standard of service. Or to build what is, by some definitions, a non-essential middle mile fiber line to the fairgrounds.

All that may be a good thing, and if Frontier’s rationale – which isn’t explained in the public document – is accepted by the California Public Utilities Commission then other important projects in underserved communities might be able to move forward as well.

But Frontier’s motive is not likely to be so noble minded. It has a history of viciously contesting CASF projects proposed by independent Internet service providers in similar circumstances. Frontier’s past challenges – sometimes based on false information – have forced independent applicants to trim their grant requests on a pro-rata basis to prevent subsidisation of “served” homes, or to withdraw their proposals completely. A more plausible interpretation is that Frontier thinks it can get away with scooping up as much taxpayer money as it wants.

The CPUC is in the process of rewriting the rules for the CASF infrastructure subsidy program, and Frontier’s Colusa project might or might not fit within it. I hope the CPUC clearly states that it does. Upgrading decaying rural DSL service is worthy, even if the company involved is, in effect, overbuilding itself.

Allowing upgraded – or newly built – infrastructure to serve the dual purpose of boosting service for “served” as well as “unserved” homes would make it easier for independent competitors to develop projects that do more than offer the marginal technical improvements Frontier is proposing. Which would be a genuine step forward for rural California.

Frontier knows how to game the broadband subsidy system, and that’s OK CPUC says

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The California Public Utilities Commission has decided that broadband subsidy proposals can be challenged almost forever, instead of right up until the moment commissioners vote, as it has allowed in the past. It rejected an appeal of a 2017 grant by a wireless Internet service provider in Trinity County, Velocity Communications, ruling that once a draft decision is issued, ISPs can’t submit speed test data that purports to show that the area in question is “served” and thus ineligible for a California Advanced Services Fund (CASF) grant. That’s good news.

The bad news is that until the draft decision is issued – typically a month before the commission votes – incumbents can take all the pot shots at grant applications they want. By rejecting the appeal, commissioners put their stamp of approval on the routine practice of ignoring the deadlines they set. It’s OK, they said, for Frontier Communications to persistently lobby staff after the formal challenge period closes…

Velocity is correct that Commission staff accepted a late filed challenge from Frontier…the deadline for submitting letter challenges to a CASF application is 14 days after web posting of the CASF application by Commission staff. Historically, Commission staff has been lenient with this requirement and accepted late-filed challenges after the 14-day period out of an abundance of caution…

What Velocity fails to acknowledge, however, is the significant difference between Commission staff accepting a late filed challenge while the evidentiary record is still open compared to accepting new evidence after the proposed resolution has been issued and the evidentiary record has been closed. There is no statute, Commission decision, resolution, or rule prohibiting Commission staff from accepting a late filed challenge while the evidentiary record is still open (prior to the issuance of the draft resolution), which is what staff did in regard to Frontier’s challenge.

Allowing ISPs to file perpetual challenges to broadband infrastructure projects wouldn’t be a huge barrier if the CPUC otherwise stuck to its schedule, which calls for a final decision on proposals within three and a half months. But abuse of its open door policy – Frontier is a major offender – creates delays that can drag on for years and effectively kill independent projects that incumbents find inconvenient.

Slow decisions lead to slow broadband service, and that suits Frontier’s and ATT’s business model perfectly.

CPUC and Frontier must put broadband upgrade cards on the table

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When the California Public Utilities Commission allowed Frontier Communications to buy Verizon’s wireline systems in California, it imposed a long list of conditions, including commitments made as part of settlements reached with organisations that objected to the deal. Some of those obligations required Frontier to upgrade broadband service to more than 800,000 homes.

One of those organisations is the California Emerging Technology Fund, which is embroiled in a dispute with Frontier over nearly every aspect of that settlement. CETF claimed in a complaint filed with the CPUC that Frontier “does not intend to honor” its commitments, including, among other things, the upgrade schedule it offered in 2016.

In its formal response to CETF’s allegations, Frontier never actually says that it kept to that timetable. All it says is that “Frontier sent a letter to the Communication Division dated March 8, 2018 on its commitments that includes a confidential attachment reflecting completed locations through December 31, 2017”. It sent a letter, but doesn’t say what’s in the letter or even claim that the letter documents fulfillment of its obligations.

It did include a table, shown above, which gives an overview of what it believes its obligations to be. It’s not a revelation. It simply repeats what’s in a similar table included in its 2016 settlement with consumer groups, plus a much smaller promise of 7,000 upgraded homes in northeastern California made to CETF, plus the households that the Federal Communications Commission is paying Frontier $228 million to upgrade via its Connect America Fund program.

One striking omission is how Frontier plans to meet its promises. In the course of winning the CPUC’s approval for the Verizon deal, Frontier promised specifically to upgrade wireline service, and claimed it “focused solely on wireline telecommunications”. Since then, it has publicly backtracked on that pledge.

Frontier’s obligations are to the people who live in the communities where it intends to upgrade broadband service. Both the CPUC and Frontier have a duty to let them know where, when and – particularly – how those upgrades will be made.

CPUC tags Frontier’s service as “chronic failure”, proposes to let it slap itself on the wrist

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Frontier Communications failed to meet California phone service repair standards in 2017. It’s supposed to restore service within a certain amount of time 90% of the time in any given month, in every one of its Californian service territories. According to two draft resolutions on the table at the California Public Utilities Commission, two of Frontier’s three subsidiaries missed the mark every single month.

Of the 24 reports, the worst performance was 22% in January 2017, the best was 87% in December 2017. The company does show significant improvement over the course of the year, but not enough to escape a “chronic failure status” finding, and nominally face fines totalling $823,000.

Now, the CPUC is proposing to let Frontier keep the money. Under the terms of a 2016 decision rammed through by commission president Michael Picker, if Frontier agrees to pay for “incremental actions directed at improving compliance with the service quality standard that led to the fine in an amount that is no less than two times the incurred fine”, then it doesn’t have to pay it.

Frontier convinced CPUC staff that it’ll spend $2.1 million on service improvements over the next two years, that it wasn’t planning to make. Given the obligations that Frontier has to improve or extend service for more than 800,000 Californian homes – obligations imposed on it by the CPUC when it purchased Verizon’s systems in 2015 – and the company’s reluctance to offer details about its plans, there’s good reason to be skeptical about its latest promise.

There will be no opportunity to see what improvements Frontier proposes. It convinced the CPUC to keep the details of its plea bargain secret, because of its “sensitive nature”.

At the time, I described the CPUC’s 2016 vote as “the most cynical decision I’ve ever seen” it make, and pointed out that “concocting an ‘incremental expenditure’ two years down the road, based on last year’s budget, is a trivial accounting exercise”.

QED.

Frontier, CETF broadband adoption deal crashes and burns

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A forced partnership between Frontier Communications and the California Emerging Technology Fund (CETF) to enroll low income broadband users fell far short of its 200,000 household goal, gaining only 9,173 subscribers over its two and a half year lifespan. That number is one of the few things that Frontier and CETF agree on. Who’s to blame and what comes next are hotly disputed.

It’s uncertain how many of those households were enrolled by CETF. Frontier independently acquired some, if not most, of those new subs through its normal sales channels.

One of the conditions the California Public Utilities Commission imposed when Frontier bought Verizon’s wireline telephone systems in California was an “aspirational” – delusional would be a better description – pledge to bring 200,000 low income households into the digital world in less than three years. To do that, Frontier promised to distribute “up to” $3 million to community organisations, via CETF. It’s a non-profit corporation tasked with managing tens of millions of dollars worth of so called “public benefit” obligations that were likewise extracted from telecoms mergers in California.

(It’s completely separate from the California Advanced Services Fund – that money comes from taxpayers and is directly administered by the CPUC).

In May, a month before the agreements that created the program expired, CETF asked the CPUC to amend its original decision and, in effect, extend the two contracts between CETF and Frontier by decree. And, as a kicker, fine Frontier $35 million. Frontier’s response amounts to a deal is a deal.

There are other issues. One involves Frontier’s promise to give 50,000 Chromebooks to low income households – it’s unclear how many were distributed. Frontier says it will continue to give away the devices, but only to its own subscribers. Another is Frontier’s $13.99 low income broadband package, which has morphed into a confusing and hard to find array of three packages with different rules and price points. Then there’s the 50 free WiFi hotspots Frontier pledged to fire up. It apparently managed to get 17 in operation, and is working on the rest.

There’s more to the dispute. The documents published so far are linked below, and I’ll be writing about it in the weeks ahead.

On the face of it, Frontier is more or less doing what it promised. The contracts that CETF signed are vague and larded with weasel words, like “aspirational” and “up to”. The $3 million figure was a cap, with the amounts paid determined by the performance of CETF and its partners – $60 per new broadband sub they signed up (whether for Frontier’s service or someone else’s) and $50,000 for workshops. The only significant hard deadline was the expiration of the second, implementation contract at the end of last month (the initial settlement contract set the goals and outlined the program, the second one filled in the details).

On the other hand, there’s the question of what the CPUC thought it was getting when it gave Frontier permission to buy Verizon’s Californian systems. The CPUC’s formal decision was bundled up with all the settlement contracts Frontier signed with CETF, and several other groups that “intervened” in the case. Commissioners will have to decide whether to reopen that review.

Commonly, the CPUC either rejects this sort of request – a “petition to modify” a decision – or just makes technical corrections. I’m not going to hazard a guess as to what they’re going to do with this one. It’s worth noting, though, that three of the other “intervenors” – the CPUC’s office of ratepayer advocates, TURN and the Center for Accessible Technology – filed an ambivalent joint response. They “take no position regarding…CETF’s request for commission action”, but instead “urge the commission to investigate the allegations”.

Translation: it’s a mess.

Documents published to date:

CPUC approves FTTH grants, but says Frontier needs skin in the game

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Frontier Communications will get $2.7 million from the California Advanced Services Fund (CASF) for two fiber to the home projects. One is in the Imperial County towns of Desert Shores and Salton Sea Beach, and the other in Lytle Creek, in the mountains of San Bernardino County. The California Public Utilities Commission unanimously approved the subsidies at its meeting yesterday, and declined to add another $600,000 as demanded by Frontier.

At least for now.

The commission is in the middle of rebooting the CASF program, following the California legislature’s rewrite of the law that governs it. Lawmakers effectively transformed CASF from a source of independent and, to a degree, competitive broadband infrastructure financing, into a piggy bank for Frontier and AT&T. The language in the new law allows for 100% funding of broadband projects, but doesn’t require it. Commissioner Martha Guzman Aceves is in charge of making the changes, and she held out hope that Frontier could come back later and get the rest of the money. Commissioner Liane Randolph said that would be something to consider, but companies should share at least some of the costs…

I am supportive of both of these projects at the level currently recommended by staff. I’m open to – if there’s an opportunity in the future, if the criteria changes and there’s a procedural way that they can apply for more funds, but we would be approving these projects with the understanding that we would be approving them at 80 and 90 [percent] at this time. I think it’s important for the companies to have a financial participation in the project. They will eventually be able to earn a profit on this infrastructure.

As it stands, taxpayers will pick up the tab for 80% of the Lytle Creek project and 90% of the Desert Shores project. At that level, both projects will be turning a profit for Frontier within a handful of years, according to CPUC staff estimates. On the other hand, Frontier has threatened to not build anything at all if it has to invest its own money.