REGIONAL— After months of mediation, officials from Frontier Communications and the Department of Commerce have reached a stipulation agreement that is designed to settle most outstanding …
REGIONAL— After months of mediation, officials from Frontier Communications and the Department of Commerce have reached a stipulation agreement that is designed to settle most outstanding issues related to Frontier’s telephone service quality and billing practices.
The parties signed the agreement on Aug. 1, as an alternative to a contested case hearing, which would likely have consumed several more months and considerable resources on both sides.
The agreement comes nearly a year and a half after the Minnesota Public Utilities Commission opened an investigation into Frontier following revelations of poor service and questionable billing by the company reported in the Timberjay in late 2017.
The Department of Commerce, which undertook the inquiry on behalf of the MPUC, issued a scathing report on Frontier’s service quality, billing practices, and substandard infrastructure this past January, that suggested the company was in violation of as many as 35 state laws or rules.
State regulators received more than 1,000 public comments as part of the investigation, including many that were highly-detailed and documented.
The Commerce Department’s investigation had also suggested the company could be subject to significant penalties for its actions. “The Minnesota Legislature has provided a clear set of remedies to curb misconduct of rogue companies, ones who routinely, knowingly disregard the law and jeopardize the lives and well-being of Minnesotans, including hefty civil penalties and criminal prosecutions,” noted the report. Frontier representatives have strongly disputed many of the findings in the department’s report.
While state regulators could still issue significant fines, none are included within the stipulation agreement released earlier this month. In response to questions from the Timberjay, Commerce Department spokesperson Emma Bauer said the department “prioritizes Minnesotans’ customer service and focused on obtaining tangible remedies for Minnesota consumers.”
Bauer emphasized that the proposed settlement seeks to address multiple issues raised by Frontier customers and that the agreement gives those customers a means to file individual claims for credits and other compensation for past problems. “In addition, going forward, the settlement includes required remedies for customers that experience problems related to call answer times, installation, loss of service, service impairment, missed repair appointments and repeat trouble with telephone service,” stated Bauer.
Specific steps outlined in the 36-page agreement include:
• Issuing refunds within 90 days to those customers who can provide documentation that they were overbilled for services or for services that they never received. The company will be required to mail notices to all customers in the state alerting them of the refund opportunity.
• Committing in good faith to improve telephone services and comply with all applicable Minnesota rules and laws.
• Provide training to current and future Frontier employees and contractors prior to assigning them to perform duties associated with phone service in the state, including facilities, billing, or collections.
• Waiving primary phone service installation fees if the company is unable to complete installation within three business days.
• Requiring bill credits and refunds of $10 per day for businesses or $5 per day for residential customers if reported outages are not repaired within 24 hours. Refunds increase to $20 per day for businesses and $10 per day for residential customers if the outage lasts longer than 10 days. Customers could receive a similar refund if the company is unable to fix reported static, cross talk, or inadequate volume on their phone line within the same time frame.
• Requiring Frontier to issue a $25 credit if a repair ticket commitment date is missed when the customer is required to be at their premises.
• Requiring Frontier to pay credits in some cases if calls to the company’s 800 number take longer than ten minutes for an initial answer.
• Requiring Frontier to issue credits or refunds to customers who were charged an early termination fee for service without having signed a term agreement or being aware of automatic renewal provisions. Frontier will be required to notify those who may qualify for such refunds or credits.
In virtually all cases, Frontier will only be required to issue credits or refunds on a case-by-case basis, assuming adequate documentation by the customers involved.
The proposed settlement does not address widespread concerns expressed by customers about the reliability and speed of Frontier Internet service, which is not technically regulated by the MPUC. According to Bauer, some of those issues may still be addressed in a separate investigation being conducted by the Attorney General’s office.
In addition to refunds and other outreach to customers, the settlement package requires Frontier to submit regular reports on its compliance with the agreement, including the number of credits and refunds it might issue, the number of outages, and the time taken for repairs. Among those reports, Frontier must present the MPUC with a maintenance plan for upgrading its facilities, including repairing temporary lines, above-ground lines awaiting burial, exposed lines, and broken or damaged pedestals or poles. As part of the plan, Frontier will be required to establish an 800-number for the public to report problems with the company’s facilities. The company will also be required to provide regular updates on its progress in improving its facilities. All of the provisions of the agreement will apply for a period of two years, after which the company could be released from the requirements if it demonstrates consistent compliance.
Judge recommends approval
An administrative law judge assigned to the case is recommending its approval by the MPUC, which would be the next step in the process. ALJ Jeffery Oxley oversaw public hearings held in Ely and elsewhere in the state last year. He also served as a mediator between the parties as they developed the terms of the proposed settlement. While ALJs don’t typically issue such recommendations, Oxley noted that he has considerable experience in telecom issues, having served as the executive general counsel for a telecom company that purchased wholesale capacity from Frontier.
It turns out Oxley wasn’t the only state representative in the talks with a telecom background. According to Oxley, one of the Commerce Department’s lead staffers in the talks worked under him in the legal department of the same telecom company.
Telecom companies in the state have been watching the handling of the Frontier complaints with interest and weighed in with comments under auspices of the Minnesota Telecom Alliance (MTA) in March. According to Oxley, the MTA “expressed its concern that in resolving this matter, the Commission could adopt several interpretations of Minnesota rules relating to telecommunications advanced in the Department report with which the MTA disagreed.”
The public will also have a limited amount of time to weigh in on the agreement. The MPUC issued a notice of public comment on the deal earlier this month and that comment period continues through Aug. 21. Anyone interested in commenting on the settlement can visit mn.gov/puc, and select Speak Up! to find this docket. You can add your comments to the discussion or email your comments to firstname.lastname@example.org. The MPUC is expected to take up the settlement formally at a board meeting in September or October.
Enforcement of any agreement with Frontier could be affected by the company’s ongoing financial woes. The company’s stock, which had traded as high as $124 a share as recently as 2015, was trading at just 79 cents a share as of this week. The company reported a net loss of $5.32 billion in the second quarter, which included a goodwill impairment likely resulting from previous acquisitions of landline capacity. The company has been hemorrhaging customers due to quality concerns and cost, among other factors. “We continue to be challenged by ongoing revenue declines, content cost escalations, higher labor costs, and other pressures across the business,” said Dan McCarthy, President and CEO, in response to the second quarter results, which the company reported earlier this month.
While the company continues to labor under a massive debt load, it will likely generate some additional cash flow through the recently-announced sale of its operations in four western states for $1.352 billion. The deal, which still requires regulatory approval, could help Frontier cover at least some of its short and long-term debt obligations. If approved, the deal isn’t expected to close until next year.