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Frontier Faces a New Problem

Frontier recently emerged from bankruptcy and seemingly is ready to tackle some of its biggest problems. The company has been laden in heavy debt and unable to pursue an aggressive capital expansion program to build fiber. The company has been bleeding both broadband and cable customers over the last few years.

The company shed $10 billion of debt in bankruptcy and told the bankruptcy court that it intends to immediately start building fiber to kick-start the refreshed business. The industry analysts at MoffettNathanson have opined that a reinvigorated Frontier has a chance to improve performance and to achieve decent returns on capital investments. The analysts expect Frontier to stabilize its customer base by 2023 to 2024 and then begin growing customers and revenues.

However, after barely being out of bankruptcy, Frontier was hit by a lawsuit from the Federal Trade Commission and the attorney generals of Arizona, California, Indiana, Michigan, North Carolina, and Wisconsin. The lawsuit alleges that Frontier knowingly advertises speeds that it knows it can’t deliver. The FTC suit says that “Since at least January 2015, thousands of consumers complained to Frontier and government agencies that the company failed to provide DSL Internet service at the speeds they were promised.”

This lawsuit should be a warning to many other ISPs. The suit specifically attacks the practice of advertising “up to” speeds that no customer can attain. The FTC acknowledges that Frontier says that they might not be able to deliver the advertised speeds to all locations and that speeds are not guaranteed. This aligns with other recent FTC actions where the FTC believes that warnings in the fine print can’t be used to offset significantly different claims in the main body of advertising. Essentially, the FTC says Frontier can’t claim speeds up to 25/3 Mbps when it knows that no customer in a service area can get close to that speed.

The FTC is partnering with states due to a recent court ruling that said that the FTC cannot impose monetary damages. States are allowed to do so, and as partners in the suits, these states will clearly be seeking monetary damages from Frontier.

Anybody that has lived or worked in rural America knows that the FTC and state claims are valid. I’ve worked with clients in Frontier territory where the company claims 25/3 Mbps in the FCC reporting – and according to the suit also in advertising to customers. When we’ve done speed tests in some counties where Frontier is an ISP, we often haven’t seen any customer achieving speeds greater than 10/1 Mbps, with many even slower than this.

It’s worth noting that the FCC allows ISPs to report advertised speeds in the FCC mapping, so according to the FCC, as long as an ISP is advertising a speed to customers, they can report that to the FCC. What this lawsuit says is quite different – it says that ISPs shouldn’t advertise speeds that can’t be delivered. This is something that I’ve always thought the FCC should implement, but they never have. In fact, in the ‘new’ broadband mapping the FCC is planning to introduce it is still allowing ISPs to report advertised speeds instead of an estimate of actual speeds.

While this lawsuit is against Frontier, they are not the only ISP in the country that is claiming speeds to customers and to the FCC that are faster than what can be delivered. In rural areas, we’ve seen this same issue with other large telcos and from numerous WISPs. I would have to think that if Frontier loses this suit that this might be a big warning for the rest of the rural broadband industry.

When the FCC opens up the new mapping to public comments, I predict the agency will be swamped with people complaining about the actual speeds compared to what is being advertised. Oddly, if the FCC sticks with the idea that reporting advertised speeds is okay, it will ignore such complaints – which is not going to make the public very happy.

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