After Report Suggests It Ripped Off Taxpayers, Frontier Communications Shrugs When Asked For Subsidies Back

from the graft-ahoy dept

For years we’ve noted how if you want to really understand the dysfunction at the heart of the U.S. broadband industry, you should take a closer look at West Virginia. Like most states, West Virginia’s state legislature is so awash in ISP campaign contributions it literally lets incumbent ISPs write state law, only amplifying the existing lack of broadband competition in the state. So when the state received $126.3 million in broadband stimulus funds, it’s not particularly surprising that a report by the US Commerce Department’s Office of Inspector General (pdf) found more than a few examples of fraud and waste.

More specifically, Frontier was accused of buying and storing miles of unused fiber to drive up costs, as well as the use of various “loading” and “invoice processing” fees to milk taxpayers for an additional $5 million. The report’s findings come on the heels of previous reports that found Frontier and the state used taxpayer money on unused, overpowered routers and overpaid, redundant, and seemingly purposeless consultants. As is often the case with regulatory capture, efforts to hold anybody accountable for any of this have so far gone nowhere.

But after the Inspector General’s report, the federal government decided it might be a good idea to at least ask for some of this misspent money back from Frontier and the State. According to the Charleston Gazette Mail, of particular interest were these additional “loading” surcharges, and the fact Frontier stockpiled 49 miles of unused fiber to drive up build costs:

“The Commerce Department letter cites findings that Frontier misled the public about the amount of unused fiber cable ? called ?maintenance coil? ? the company installed across the state. The extra fiber, which is stored at public buildings and used for repairs, drove up the broadband expansion project?s cost. Frontier placed 49 miles of spooled-up, unused fiber in West Virginia, four times the amount the company had disclosed to state officials.The feds have ordered state officials to disclose whether the extra coil was included in the total miles of fiber the state claimed Frontier built with stimulus funds. The state also must get an ?explanation from Frontier for the reason it misrepresented the maintenance coil mileage to the public,? according to the Commerce Department?s Aug. 21 letter.

This sort of stuff happens pretty much constantly in telecom as companies pay empty lip service to “bridging the digital divide.” But whereas giants like Comcast, AT&T and Verizon have the lobbying and policy chops to obfuscate such graft, West Virginia is so dysfunctional Frontier doesn’t even have to try. Case in point: a Frontier executive has spent years also employed as State Senate leader — without anybody raising much of an eyebrow. That employee was only recently fired — but only because he finally failed to oppose a bill Frontier wanted killed.

With that kind of support, it’s not too surprising that Frontier executives say they won’t be returning the misspent taxpayer money anytime soon:

“In a letter to West Virginia Chief Technology Officer John Dunlap this week, Frontier asserted that any funds the state might return to the federal government ?are, of course, not recoverable from Frontier.?…Frontier also disputed the federal government?s determination that the state must return $4.7 million, urging the state to file an appeal. “To avoid the waste of millions of West Virginia taxpayer dollars, the [state] should appeal,? wrote Mark McKenzie, a Frontier engineer who oversaw the company?s role in the project.

Again, if you’ve tracked the similar reports bubbling out of the state for years, the $4.7 million the feds want returned is likely only the tip of the iceberg. But because state legislatures are often little more than glorified rubber stamps for the interests of giant telecom operators, it’s less than likely that these inquiries result in anything vaguely resembling genuine accountability. As a result, West Virginia remains one of the least broadband-connected states in the union, a story of graft and regulatory capture that plays out in countless states across the country on a daily basis. This is, as they say, why we can’t have nice things.

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Companies: frontier communications

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Comments on “After Report Suggests It Ripped Off Taxpayers, Frontier Communications Shrugs When Asked For Subsidies Back”

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That Anonymous Coward (profile) says:


“To avoid the waste of millions of West Virginia taxpayer dollars, the [state] should recover from Frontier.”

Misusing state funds, sounds like there are laws against that.
Perhaps Frontier might be more forthcoming if they were on trial.
And of course people who violate the law & public trust should not have a monopoly over the citizens of WV.
Perhaps running them out on a rail & using civil asset forfeiture on their entire network would allow them to get a better carrier to come in.

Anonymous Coward says:

If you can't find anything of interest, at least try for more intricate.

You’re shocked that a cable co would stockpile fiber? Seems to me might be wise to beat price increases. I gather — painfully from your lousy re-write in which your huge bias blocks the topic — that it’s thought Frontier got it by exaggemerating how much installed and/or taking advantage of a subsidy (to stockpile). In any case, 4.7M? While you ignore, oh, among many others, the trillion-plus non-performing F-35 scandal?

More than usual dullness at Techdirt of late. Was a noticeable drop in number of pieces and aggressiveness right after supposedly clear of the lawsuit. But instead of bold in victory, TD has turned cautious as a mouse in Ceiling Cat’s church. My guess is that suit is still far from settled. In any event, you’re just mousing around. Or are at last grasping that all your piratey notions have been stomped into the ground.

Will B. says:

Re: If you can't find anything of interest, at least try for more intricate.

So, let’s see here… you’ve written off the company lying to the state about how much reserve fiber they stockpiled vs. fiber installed, tried to play off factual reporting as bias, and tried to divert attention via relative privation fallacy (“X is bad so we should not talk about Y”).
More than usual dullness from ACs of late.

J.R. says:

Until CEOs, CFOs and the rest of the C-level executives (Looking at you, Chief Legal Officers) face criminal penalties resulting in lengthy stays in prisons for hardened criminals–which is where they belong–plus the forfeiture of their entire estates, they will continue to steal from the public coffers and worry not at all.

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