West Virginia's Biggest Telco Says Broadband Business 'Unsustainable'

from the ill-communication dept

For years we've explored how the nation's phone companies no longer really want to be in the broadband business. They routinely refuse to upgrade their networks, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. Telcos in particular have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising then that many telco DSL customers are fleeing to cable, assuming they even have a second option for broadband.

This scenario has been particularly true in West Virginia, which has become the poster child for telecom sector graft and corruption. For years, incumbent phone provider Frontier Communications (which bought most of the state assets from Verizon), has seen zero competitive pressure to improve service. At the same time, they've enjoyed rampant regulatory capture, to the point where company executives have simultaneously acted as state senator, without a single question raised. The company has also been routinely under fire for bilking the government (read: you) out of millions of dollars intended to shore up coverage gaps.

Frontier in West Virginia is the picture perfect example of why we can't have nice things. Coddled natural monopolies, free from competition and meaningful oversight, always double down on bad behavior. Yet as customers in the state routinely complain about lengthy outages and terrible service, Frontier executives are blaming everybody but themselves, to the point where the company is now proclaiming that its entire business model in the state is "unsustainable":

"Frontier serves only about ten percent of the state voice lines in its service area—and falling—but has 100 percent of the universal service obligation to serve the most rural and high-cost areas,” Mendoza said in a statement. “Our customer base continues to decline, while the cost of service per line has increased dramatically. This has resulted in an unsustainable model for providing service in rural and high-cost areas, manifesting in increased numbers of service complaints. We plan to reach out to the state’s leaders to collaboratively find solutions to this difficult challenge."

Of course Frontier put itself in this business by gobbling up Verizon's unwanted assets in a bid to grow bigger for bigger's sake and thrill its investors. While some of the company's decline is due to copper phone users switching to wireless, much of it is because the company's still offering broadband speeds to most of its customers that don't even meet the FCC's modern definition of "broadband." Don't upgrade your network? Customers leave. The real "unsustainable" model is throwing millions of dollars at apathetic natural monopolies but never holding them accountable for failure.

When Frontier executives talk about finding "solutions" with state lawmakers, they usually mean "throw even more taxpayer money at us that may or may not actually be spent to fix the problem." Frontier has been lavished with subsidies and tax breaks for years, only to face accusations it not only defrauded the government, but used much of that money on projects that didn't actually help improve last mile connectivity. A monumental portion of Frontier's problems are very much of its own design.

This is US broadband in a nutshell. Regional telecom monopolies, which all but own state and federal lawmakers, face zero regulatory or competitive pressure to actually do their jobs. As a result, in state after state, DSL networks are being allowed to literally fall apart so telcos can shift their focus to sexier objectives (usually business service or wireless video advertising). And when the government does act, it usually involves throwing even more money at a broken market, then failing to adequately ensure that money is spent properly.

Cable giants like Comcast and Spectrum then rush in to dominate the market, raising rates, neglecting customer service, and making everything worse across the board. Rinse, wash, repeat. In state, after state, after state. And while fifth-generation wireless is often painted as some kind of panacea for this problem, that's simply not the case. Nothing in this equation changes until one thing happens: apathetic voters wake up and stop electing politicians who prioritize monopoly profits over the public welfare.

Filed Under: broadband, competition, monopolies, oversight, profits, west virginia
Companies: frontier


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  • identicon
    Anonymous Coward, 15 Jul 2019 @ 6:53am

    But I thought the removal of Title II was supposed to improve business!

    You mean Richard Bennett was lying?

    I'm shocked, shocked I tell you!

    reply to this | link to this | view in chronology ]

  • identicon
    Ponied on a cats yap, 15 Jul 2019 @ 7:18am

    Pokey small wires

    Get rid of all the politicians and elect Finland people to be your rulers to fix your mess of billionaire mega corps making out like bandits and making you subservient to unentitled spoilt adult kids. Pooh bah.

    reply to this | link to this | view in chronology ]

  • icon
    TheResidentSkeptic (profile), 15 Jul 2019 @ 7:24am

    Fishing For Dollars...

    Digital Subscriber Line (DSL) is high-speed service delivered over PHONE lines. So, what the PHONE company is saying is that they are no longer qualified to deliver PHONE service.

    What they are trying to say is that with the cut in Universal Service Fees and the end of prior Tax Subsidies, they can't afford to keep doing it at the high profits they desire.

    Wasn't the USF designed to support those remote and sparsely populated areas? To subsidize companies (not fully pay them - just an added subsidy for those lines to be supported) to deliver service was the whole intent.

    So, if you are saying you can't do it, then let's just repeal all those laws you got written that prevent communities from doing so. You are welcome to close shop and go away. Seems like most of the community efforts have far exceeded what you were able to deliver anyway.

    reply to this | link to this | view in chronology ]

  • identicon
    Iggy, 15 Jul 2019 @ 7:50am

    "We plan to reach out to the state’s leaders to collaboratively find solutions to this difficult challenge"

    What would the state have to gain from collaboration with a telecom? Shouldn't legislators collaborate with the people?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2019 @ 8:17am

      Re:

      Shouldn't legislators collaborate with the people?

      Now there is a novel idea, legislators representing the people who elected them, rather that the people who fund their campaigns.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2019 @ 9:09am

      Re:

      Yeah, we don't really do that.

      reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 15 Jul 2019 @ 3:11pm

      Re:

      What would the state have to gain from collaboration with a telecom?

      The state? Very little. The politicians? Extensive kickbacks in the form of 'campaign contributions'.

      Shouldn't legislators collaborate with the people?

      That's crazy talk that is, everyone knows you go into politics for personal gain, why would you go through all the hassle of lying through your teeth an entire election just to have to deal with the public even more?

      reply to this | link to this | view in chronology ]

  • icon
    Bob Frankston (profile), 15 Jul 2019 @ 9:04am

    Of course broadband is a fictional business

    The value is all created outside of the network. The purpose of the infrastructure was to support content and service business. But those are all created outside the network and bits have no intrinsic value and we don't need pipes to keep all the packets in order.

    This is why I wrote https://rmf.vc/IEEEBBToInfrastructure

    reply to this | link to this | view in chronology ]

    • This comment has been flagged by the community. Click here to show it
      identicon
      Fiery Tesla Crash, 15 Jul 2019 @ 11:00am

      Oh, joy! EIGHT YEAR GAP ZOMBIE! NOT SEEN SINCE 2011!

      Bob Frankston: 7 (< 1), Jun 23rd, 2007 https://www.techdirt.com/user/bobfrankston

      I admit this one is clever with a link to what claims wrote. -- Which is "Copyright: 1974-2019 Bob Frankston"!

      But there's that EIGHT YEAR GAP which you cannot explain, nor does "Bob" even mention!

      No one would remember the password. It's unlikely to be kept on one system that long (3 computers for busy people), so how transferred, and why? Wouldn't matter, anyway: Techdirt reset all passwords! But no mention of extra trouble. And as most typical: no mention of the changes in eight years or that is back, just plops in with a quickie.

      So, "Bob" is claiming highly engaged to own site and writing papers, but skips EIGHT years at THE most influential site on teh internet? Baloney.

      This is the first unequivocal Zombie for LONG while, couple months since "Matthew Cline" raised the topic to visibility. Exactly NONE of the DOZENS prior have been back since I pointed them out. -- I told Zombie Master: you can't stop and can't go on, either or both courses look ODD once noticed!

      There's also the ODD "Griffdog" out today which is down to just over TWO COMMENTS EACH YEAR since 2016:

      Griffdog: 36 (5), 26 Mar 2012 https://www.techdirt.com/user/griffonjames

      reply to this | link to this | view in chronology ]

      • icon
        Stephen T. Stone (profile), 15 Jul 2019 @ 12:43pm

        FYI, Blue: Not everyone spends their every waking minute reading this site like you do.

        reply to this | link to this | view in chronology ]

      • icon
        Mike Masnick (profile), 15 Jul 2019 @ 10:17pm

        Re: Oh, joy! EIGHT YEAR GAP ZOMBIE! NOT SEEN SINCE 2011!

        Your constant focus on mythical "zombies" is kinda funny especially when it displays how ignorant you are of your technology history, considering who made the comment you're responding to. Bob Frankston is, um, not a made up person. He's quite well known.

        reply to this | link to this | view in chronology ]

  • icon
    Toom1275 (profile), 15 Jul 2019 @ 10:04am

    Amd yet the infrastructure and upkeep costs for maintaining a network continue to fall every year.

    reply to this | link to this | view in chronology ]

  • icon
    James Burkhardt (profile), 15 Jul 2019 @ 11:03am

    I am reminded of the business model of the clacks (a complex semaphore system using 16 lights) from the discworld. In Going Postal, we discover that the new owner of the Clacks ceased the daily maintenance downtime (30 minutes every day), but this has lead to longer "maintenance" that is actually repairs for a now aging and degraded system. Rather than upgrade the service, the owners enjoy repeatedly raising prices for consumers while continuing to neglect the costs of service.

    I should probably mention this book was published in 2004. Telecom dysfunction has been an issue for decades, and I concur with the confusion expressed by Mike that US politicians are able to express such a failure of understanding of the market and people accept it as truth.

    reply to this | link to this | view in chronology ]

  • icon
    Bob Frankston (profile), 15 Jul 2019 @ 11:04am

    And your point is?

    It's a big world and 12 years (not 8) is a mere blip.

    reply to this | link to this | view in chronology ]

  • icon
    tom (profile), 15 Jul 2019 @ 12:11pm

    Some of their points about rural business are valid. A DSL hub has about a 3 mile service range. One in an urban location might have a potential customer count in the hundreds or even thousands. The same hub in a rural location might have a potential count of around 50. It is made worse by the problem of the farther you are from the hub, the slower the max speed. The folks in the 2~3 mile ring, which all things being equal, has the most potential customers, will also be the ones who will get the slowest max speeds. Not many folks will pay $70/month for 1.5mbs max download speed.

    The plain phone service doesn't have the same distance limits but folks are dropping the POTS in favor of cell when they can get service.

    BUT, Frontier surely knew this before they bought the assets from Verison. Sounds like they are hoping their assets in the government will pay off.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2019 @ 1:34pm

      Re:

      Not many folks will pay $70/month for 1.5mbs max download speed.

      What ancient and creaking technology are you using in the US. I am three miles from the roadside cabinet and get better than 2mBs, that's bytes not bits.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2019 @ 2:47pm

      Re:

      A DSL hub has about a 3 mile service range.

      A single-mode fiber can go 6 miles easily, 50 with better cables/equipment, all at gigabit+ speeds. Instead of whining that their 100-year-old copper plant is no longer competitive, they could start upgrading. Conveniently, there's not a lot of red tape in rural areas.

      reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 15 Jul 2019 @ 12:51pm

    Can?

    Anyone here..
    Can anyone look up the Copyrights held over for Highspeed communications??
    Cisco is overcharging, and trying to get Haiwai out of the market..Cutting profit..
    But WHO holds the CR for the equipment and processes..And programming??(Viva le Linux)

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 15 Jul 2019 @ 1:47pm

    "100 percent of the universal service obligation to serve the most rural and high-cost areas"

    You have 100% of the obligation, but magically despite how much money you take, your service manages to get worse. Perhaps it is time we audit all the money from USF & see all of the rural and high-cost areas you haven't even managed to get close to yet.

    Hell I am pretty sure for the billions that have been looted from the USF by your ilk could have been used by people in those rural areas to run their own lines & still have money left over.

    reply to this | link to this | view in chronology ]

  • identicon
    TDR, 15 Jul 2019 @ 2:05pm

    "Nothing in this equation changes until one thing happens: apathetic voters wake up and stop electing politicians who prioritize monopoly profits over the public welfare. "

    You're assuming, Karl, that any other kind of person actually runs for public office anymore. What are people to do when virtually everyone who runs for office has the same self-serving objectives and cares nothing for public welfare?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 16 Jul 2019 @ 5:12am

    Amen, Karl.

    reply to this | link to this | view in chronology ]


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