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

7 November 2018 by Steve Blum
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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”.