Frontier, CETF broadband adoption deal crashes and burns

16 July 2018 by Steve Blum
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A forced partnership between Frontier Communications and the California Emerging Technology Fund (CETF) to enroll low income broadband users fell far short of its 200,000 household goal, gaining only 9,173 subscribers over its two and a half year lifespan. That number is one of the few things that Frontier and CETF agree on. Who’s to blame and what comes next are hotly disputed.

It’s uncertain how many of those households were enrolled by CETF. Frontier independently acquired some, if not most, of those new subs through its normal sales channels.

One of the conditions the California Public Utilities Commission imposed when Frontier bought Verizon’s wireline telephone systems in California was an “aspirational” – delusional would be a better description – pledge to bring 200,000 low income households into the digital world in less than three years. To do that, Frontier promised to distribute “up to” $3 million to community organisations, via CETF. It’s a non-profit corporation tasked with managing tens of millions of dollars worth of so called “public benefit” obligations that were likewise extracted from telecoms mergers in California.

(It’s completely separate from the California Advanced Services Fund – that money comes from taxpayers and is directly administered by the CPUC).

In May, a month before the agreements that created the program expired, CETF asked the CPUC to amend its original decision and, in effect, extend the two contracts between CETF and Frontier by decree. And, as a kicker, fine Frontier $35 million. Frontier’s response amounts to a deal is a deal.

There are other issues. One involves Frontier’s promise to give 50,000 Chromebooks to low income households – it’s unclear how many were distributed. Frontier says it will continue to give away the devices, but only to its own subscribers. Another is Frontier’s $13.99 low income broadband package, which has morphed into a confusing and hard to find array of three packages with different rules and price points. Then there’s the 50 free WiFi hotspots Frontier pledged to fire up. It apparently managed to get 17 in operation, and is working on the rest.

There’s more to the dispute. The documents published so far are linked below, and I’ll be writing about it in the weeks ahead.

On the face of it, Frontier is more or less doing what it promised. The contracts that CETF signed are vague and larded with weasel words, like “aspirational” and “up to”. The $3 million figure was a cap, with the amounts paid determined by the performance of CETF and its partners – $60 per new broadband sub they signed up (whether for Frontier’s service or someone else’s) and $50,000 for workshops. The only significant hard deadline was the expiration of the second, implementation contract at the end of last month (the initial settlement contract set the goals and outlined the program, the second one filled in the details).

On the other hand, there’s the question of what the CPUC thought it was getting when it gave Frontier permission to buy Verizon’s Californian systems. The CPUC’s formal decision was bundled up with all the settlement contracts Frontier signed with CETF, and several other groups that “intervened” in the case. Commissioners will have to decide whether to reopen that review.

Commonly, the CPUC either rejects this sort of request – a “petition to modify” a decision – or just makes technical corrections. I’m not going to hazard a guess as to what they’re going to do with this one. It’s worth noting, though, that three of the other “intervenors” – the CPUC’s office of ratepayer advocates, TURN and the Center for Accessible Technology – filed an ambivalent joint response. They “take no position regarding…CETF’s request for commission action”, but instead “urge the commission to investigate the allegations”.

Translation: it’s a mess.

Documents published to date: