Frontier Communications, its union and state regulators have reached a tentative deal that would allow the troubled telecommunications giant — a chief culprit in West Virginia’s broadband woes — to emerge from bankruptcy.
The company, currently under scrutiny for its poor telephone and internet service, will spend $200 million in West Virginia over the next three years, among other conditions. But it is unclear how much of that will come from the company’s own coffers as it works to secure hundreds of millions of dollars in federal subsidies for rural broadband expansion.
The settlement agreement, posted online Friday, paves the way for Frontier to emerge from bankruptcy and eliminate $10 billion in debt from its books. West Virginia was one of the few remaining states that had yet to approve the deal.
The “sausage making” resulted in a compromise, said Tom White, a lawyer for the state Public Service Commission’s Consumer Advocate Division and signatory to the deal.
“Nobody is happy with this,” he said.
The agreement now awaits a final sign-off by the PSC’s three commissioners.
Frontier’s failures in West Virginia are well documented. An audit, commissioned by the PSC, found the company had failed to adequately invest and maintain its network of copper telephone lines. The audit came in response to thousands of complaints of dead phones and useless internet from residents of rural West Virginia communities.
The commission is considering what to do about those issues in a separate case, which is ongoing, and could result in further sanctions on the company.
Frontier surprised regulators when it first announced substantial new investment in the state last month, including fiber-to-the-home, which can provide much faster and more reliable service than Frontier’s current technology of choice, DSL.
At the time, the company refused to offer any details. Now, it is offering a firm commitment to deploy fiber to 150,000 homes and businesses over the next seven years, and report any further mass layoffs.
Still, this isn’t the first time Frontier has made similar promises and in the past, the company has fallen far short. A decade ago, it said it would provide internet to 85% of its customers in order to win approval from the Public Service Commission to purchase Verizon’s telephone operations in the state.
The company did, initially, but didn’t do necessary maintenance. Some customers’ internet speeds slowed, and others reported being denied internet service altogether as Frontier refused to upgrade its equipment.
And, not all of that new $200 million Frontier is committing to West Virginia will necessarily be Frontier’s money. The company just won nearly $250 million in subsidies from the Federal Communications Commission to build fiber across much of rural West Virginia, which includes a commitment to bringing high-speed internet to nearly 80,000 homes and businesses across the state.
There is some doubt, however, as to whether the company will actually get those federal subsidies. State lawmakers are writing letters urging the FCC to scrutinize both the company’s finances and checkered history in the state and deny the funding.