Major US ISP Frontier Files For Bankruptcy, Monopolistic Apathy Isn't A Business Model.

from the ma-bell-got-the-ill-communication dept

The nation's phone companies don't really want to be in the residential broadband business. They routinely refuse to upgrade their networks despite millions in taxpayer subsidies, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. US telcos 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 broadband monopolies like Comcast, assuming they even have the choice.

The poster child for this kind of dysfunction has long been Frontier Communications. Frontier, the third biggest telco in the U.S., has been repeatedly busted in a series of scandals involving substandard service and the misuse of taxpayer money. In States like West Virginia, leaders have buried reports exposing the depth of Frontier's grift, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest. The company has since been under investigations from New York to Minnesota for failing to upgrade or even repair its aging network.

This week, Frontier finally filed for bankruptcy, hoping to finally wipe the slate clean after several decades of bungled and ill-advised mergers, massive debt, and operating a business model where snide neglect was the centerpiece. Of course the company's announcement can't acknowledge any of these self-inflicted gunshot wounds, with Frontier insisting it has learned its lesson:

"With this agreement with our Bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” said Bernie Han, President and Chief Executive Officer. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers. The services we provide to our customers keeps them connected, safe and informed, and I would like to thank our team for their continued dedication, especially in light of the current environment."

But nobody has learned any lessons here. Frontier engaged in mindless mergers and growth for growth's sake, refused to upgrade vast swaths of its network, and then ran to government (read: lobbying) shelter when the house of cards started to fall apart. And while it acknowledged in a report to investors that mindless M&A and under-investing in its network was a part of the problem, investors generally like network under-investment and mindless M&As because they're profitable on the short term.

There are a few simple reasons the U.S. has mediocre to terrible broadband, and contrary to conventional wisdom the problem isn't logistics, geography, financing (we've thrown billions upon billions the the problem) or the difficulty in deploying it. The problem is the entire U.S. system is built to reward short term thinking and punish long term vision, especially as it pertains to unsexy things like infrastructure. Well that, and powerful telecom monopolies that all but own state and federal legislatures and most regulators, ensuring that real disruption and competition rarely takes root.

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Filed Under: bankruptcy, broadband, competition
Companies: frontier, frontier communications

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  1. identicon
    Anonymous Coward, 15 Apr 2020 @ 2:51pm


    I have often thought that a great weakness of chapter 11 is that the board and C suite remain in control of the company undergoing chapter 11. A better arrangement would be if they were both turfed without compensation and banned for a significant period from management of that company. I'd say that period should be at least a decade, if not for life. This way the aim of preserving a potentially viable company could continue without a way for the board and upper management to profit from the bankruptcy protection.

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