Frontier bankruptcy settlement approved despite requests for scrutiny
CHARLESTON — Letters sent last Friday from state broadband officials and lawmakers urged the West Virginia Public Service Commission to scrutinize a proposed deal to approve Frontier Communication’s bankruptcy reorganization in anticipation of a Jan. 19 meeting.
Instead, the PSC issued two orders the same day they received the letters, accepting Frontier’s reorganization plan which included promises to make capital improvements and expand broadband internet across the state.
In exchange, Frontier must meet monthly and quarterly reporting requirements and could face financial penalties if it falls behind in its promises.
“The PSC’s approval is another step toward Frontier’s emergence from Chapter 11 restructuring,” said Allison Ellis, senior vice president of regulatory affairs for Frontier, in a statement Wednesday.
“A successful restructuring will give Frontier a fresh start, allowing the company to make investments in its network and operations to expand fiber and enhance services to West Virginia consumers and positions Frontier to continue as a competitive provider of communications services to the customers and communities we serve,” Ellis continued.
The West Virginia Broadband Enhancement Council hand-delivered a letter to the PSC on Jan. 15. Chairman Robert Morris called on the PSC to carefully review a joint stipulation agreement between Frontier, PSC attorneys, the PSC Consumer Advocate Division, and the Communications Workers of America union that approved Frontier’s bankruptcy reorganization plan.
“We ask that the commission not rush its final decision in this case if such haste is not legally required,” Morris wrote. “The state of West Virginia has been on the receiving end of empty promises in the past and we ask that the commission exercise its jurisdiction to the fullest extend allowed by law.”
Frontier, in both the joint stipulation agreement and the PSC order issued Jan. 15, agreed to spend $200 million — or a minimum of $50 million annually — on capital improvements by Dec. 31, 2023, and to deploy fiber high-speed internet to at least 150,000 locations in the state by Dec. 31, 2027.
Frontier’s West Virginia operations would be known as “InvestCo.” The company would deploy fiber to homes and businesses when people subscribe, also called FTTP. Frontier set a goal of FTTP broadband deployment to 75,000 locations three years after it emerges from bankruptcy, which is expected in early 2021.
In his letter, Morris called on the PSC to review a similar settlement Frontier proposed to the California Public Utilities Commission. According to Ars Technica, Frontier agreed to expand FTTP broadband to 350,000 locations within six years, with a goal of 100,000 locations by the end of 2022 at a cost of $1.75 billion. Morris said any deal accepted by the PSC should be equitable with the proposed California settlement.
“Frontier has made similar promises in a proposed settlement agreement before the CPUC,” Morris wrote. “With the foregoing in mine, we strongly urge the Commission to continue its careful review in this case to ensure that … the settlement agreement proposed for West Virginia is on par with the stipulation currently pending approval in California.”
Frontier cited in the settlement its winning bid in phase I of the Federal Communication Commission’s Rural Digital Opportunity Fund auction late last year. Frontier was one of nine companies awarded winning rights to expand high-speed broadband internet service to 119,267 unserved Census tracts in West Virginia. Frontier was the largest recipient of RDOF dollars, winning $247.6 million.
In his letter last Friday, Senate President Craig Blair, R-Berkeley, asked the PSC to set aside Frontier’s RDOF winning bid when making its decision about the company’s bankruptcy reorganization plan.
“Absent a settlement in West Virginia, Frontier would already have to invest those dollars in West Virginia,” Blair said. “When comparing that with the agreement before other states, I urge you to equalize for and factor out the pending (RDOF) support attributable to other states.”
House Transportation and Infrastructure Committee Chairman Daniel Linville, R-Cabell, is a member of the Broadband Enhancement Council. In his letter, Linville said that Frontier serves roughly the same number of California residents as it does in West Virginia. Those factors, he said, should be taken into account before accepting the settlement.
“The federal bankruptcy proceedings and the orders of the judges in this case have afforded the PSC an opportunity to ensure West Virginia is treated fairly as Frontier Communications seeks to reorganize and emerge from bankruptcy,” Linville wrote. “I respectfully urge that the PSC not approve any settlement which does not, after careful analysis, afford and guarantee the citizens of West Virginia the investment and performance afforded the citizens of any other state.”
The same day these letters were sent to the PSC, the PSC issued two orders, including the order accepting the joint stipulation agreement for Frontier’s bankruptcy reorganization plan. The second order included the results of a management audit of Frontier’s operations.
Speaking on WV MetroNews Talkline on Wednesday, PSC Chairwoman Charlotte Lane defended the two Frontier orders. She said the orders will help hold Frontier accountable to its promises and claims for broadband expansion and maintenance of its existing copper phone and internet systems.
“We are very excited that finally we are getting to help Frontier’s customers,” Lane said. “What Frontier has agreed to do and what the Commission has ordered them to do will put money back into the system that has been lacking over the years. What we have done in our orders … is so we can monitor what Frontier is doing to make sure they are living up to their promises and making sure they are putting money back into the system, deploying fiber to the homes, and also upgrading and maintain their copper systems.”
West Virginia joined the FCC and 14 other states that have approved Frontier’s bankruptcy reorganization plan. The U.S. Bankruptcy Court for the Southern District of New York approved Frontier’s plan last August.
(Adams can be contacted at firstname.lastname@example.org)