A Republican US Senator from West Virginia has asked the government to block broadband funding for Frontier Communications, saying the ISP is unable to provide gigabit-speed Internet services to all required locations.
Senator Shelley Moore Capito (RW.Va.) outlined her concerns in a letter to Federal Communications Commission Chairman Ajit Pai last week. Capito told Pai that Frontier has mismanaged previous government funding and appears to lack both the technological capabilities and the financial capability to meet his new commitments.
Frontier, which filed for bankruptcy in April, is one of 180 ISPs to win funding in the results of the reverse auction of the FCC’s Rural Digital Opportunity Fund (RDOF) announced last week. Frontier will receive $ 370.9 million over 10 years to bring broadband to 127,188 homes and businesses in eight states. Frontier’s largest payout will take place in West Virginia, where it will receive $ 247.6 million in 10 years to expand its broadband network to 79,391 locations.
Frontier won more than two-thirds of the funding the FCC allocated to West Virginia, despite failing to meet FCC deadlines for a previous round of subsidized broadband deployment in West Virginia and other states. Under previous funding allocated through the FCC’s Connect America Fund in 2015, Frontier was originally required to meet construction deadlines by the end of 2020. Frontier told Ars today that it will now meet that deadline “by the end of 2021”.
“Pattern” of missing deadlines
Capito urged Pai to block Frontier’s new funding by declining the ISP’s lengthy application, which must be completed by winning bidders, to receive the allotted money. “The stakes are simply too high to give nearly $ 250 million to a company that is unable to deliver on its commitments to the FCC,” she wrote.
Under FCC rules, winning bidders must bet broadband within three calendar years in 40 percent of required locations in each state, up to 60 percent within four years, 80 percent within five years, and 100 percent within six years. Since Frontier has won funding in the gigabit tier, it is required to provide download speeds of 1 Gbps and upload speeds of 500 Mbps, along with monthly usage limits of at least 2 TB.
Capito described her reasons for concern about Frontier’s ability to meet the requirements as follows:
Frontier’s mismanagement of previous federal funding through the Broadband Technology Opportunity Fund program, resulting in $ 4.7 million in funds returned to the federal government for improper use, raises important questions about their ability to manage federal funds of this magnitude . In addition, Frontier has a documented historical pattern showing an inability to meet FCC deadlines for completion of Connect America Fund Phase II support in West Virginia. The inability to deploy federal funds in a timely manner to make improvements to a network that provides broadband services at speeds of 10/1 Mbps or higher should raise serious concern about their capacity to build a network that is 100 times more that level delivers.
Specifically with regard to the performance level assigned to Frontier, I urge you to exercise the utmost control to ensure they have the technological capability to provide gigabit-level service in West Virginia. As stated in the federal register dated June 18, 2020, the FCC reserves the right to decline a candidate’s long application if they fail to meet the technical qualifications for the level of performance in which they were allowed to bid. Based on Frontier’s current and past performance, I am concerned that they lack the technology capabilities in West Virginia to move from a provider struggling to deliver the FCC minimum standard of 25 / 3Mbps to one capable of is to provide gigabit-level service to 95 percent of the required number of locations in the state.
In April, we wrote about an audit report ordered by the West Virginia Public Service Commission, which found that Frontier’s copper network has at least 952,163 connection points that are sensitive to moisture, corrosion, loose connections, etc. that could lead to interruption of the services. to customers. ”The report also found that Frontier repeatedly failed to meet the standard of service quality, which is that 85 percent of outages must be resolved within 48 hours. Frontier has approximately 300,000 customers in West Virginia, most of whom have DSL have internet service.
When Ars reached out to him today, a Frontier spokesperson said that “the company” is “unable to comment on what has been made publicly available by the FCC” due to its quiet period rules. Frontier told the FCC it would use fiber-to-the-home to provide gigabit speeds and that it will need to provide more details about its network and funding plans in the lengthy filing.
We contacted the FCC today about Capito’s letter and will update this article if we get a response.
Frontier’s bankruptcy also worries Capito. Since the FCC grants apparently do not cover the full cost of the implementation, she wrote that Frontier “would need to raise more than $ 250 million in private capital to fund the construction of a gigabit network in West Virginia.”
Across the country, the FCC allocated $ 9.2 billion to ISPs, although it initially made $ 16 billion available. The reverse auction format resulted in lower payouts as ISPs compete for funding. Capito wrote to Pai:
I urge you to scrutinize Frontier’s financial capabilities to fund these investments, especially as they result from a Chapter 11 financial restructuring. Due to the nature of a reverse auction, it is quite possible, if not likely, that a bidder must invest its own resources to cover costs that go beyond the subsidy provided by RDOF. Getting out of a financial restructuring requires significant private capital and I am concerned about Frontier’s ability to raise enough capital to both complete their financial restructuring and fund the construction of a network that will provide the required gigabit service deliver to the locations where they bid successfully. the RDOF auction. The cost of building a network capable of delivering gigabit services is an expensive and daunting feat for a company in a strong financial position, let alone a company in financial turmoil.
At the time of his bankruptcy, Frontier acknowledged to investors that his “significant underinvestment in fiber rollout” was a major contributor to the company’s decline. Frontier has also dealt with investigations and complaints of chronic dropout in New York, Minnesota and Ohio.
Derek Turner, research director at advocacy group Free Press, is skeptical about Frontier’s ability to deploy fiber-to-the-premises (FTTP) in remote areas. “Can Frontier handle FTTP deployment on this scale in rural areas? I can’t say; what I can say is they bought most of their existing FTTP assets from Verizon, so their track record in implementation is limited. Turner told Ars today. Turner has also criticized the FCC for allocating much of the RDOF funding to various ISPs in rich urban areas.
“I think the state is going to be screwed”
Capito isn’t the only West Virginia official who has objected to Frontier getting federal money, as revealed in a report from West Virginia Public Broadcasting last week. Mike Holstine, secretary-treasurer of the West Virginia Broadband Enhancement Council, called Frontier’s new funding “ incredible. ”
“‘I think the state is in trouble again’, [Holstine] said, referring to the Broadband Technology Opportunities Program scandal in which West Virginia was forced to repay nearly $ 5 million in federal funds in 2017 after regulators discovered Frontier had wasted it, ”the news report said.
Frontier has said it expects to emerge from Chapter 11 bankruptcy in early 2021. In addition to West Virginia, Frontier also won FCC funding in California, Connecticut, Florida, Illinois, New York, Pennsylvania, and Texas.
In May, Frontier completed the sale of its Northwestern US business to a newly formed ISP called Ziply Fiber. Named Frontier Communications Northwest in FCC filings, Ziply entered the RDOF auction and won funding in the state of Idaho, Montana, Oregon and Washington.