Frontier, amid bankruptcy, is suspected of lying about broadband expansion

Small Internet providers have asked for a government investigation into Frontier Communications’ claim that it recently deployed broadband to nearly 17,000 census blocks, saying the expansion seems unlikely given Frontier’s bankruptcy and its historical failure to upgrade networks in rural areas.

The accuracy of Frontier’s claimed expansion matters to other telcos because the Federal Communications Commission is planning to distribute up to $16 billion to ISPs that commit to deploying broadband in census blocks where there isn’t already home Internet service with speeds of at least 25Mbps downstream and 3Mbps upstream. An entire census block can be ruled ineligible for the $16 billion distribution under the FCC’s Rural Digital Opportunity Fund (RDOF) even if only one or a few homes in the block have access to 25/3Mbps broadband.

Frontier’s recent FCC filing lists about 17,000 census blocks in which it has deployed 25/3Mbps broadband since June 2019 and tells the FCC that these census blocks should thus be “removed” from the list of blocks where ISPs can get funding. Frontier reported more new broadband deployments than any other provider that submitted filings in the FCC proceeding. The 17,000 blocks are home to an estimated 400,000 Americans.

NTCA–The Rural Broadband Association, which represents about 850 small ISPs, is skeptical of Frontier’s reported deployment. “It may be possible that Frontier did precisely what was necessary to meet the standards for reporting significant increased deployment during this eight-month period in the face of years of historical inaction in these areas, admitted shortcomings on interim universal service buildout obligations, and increasing financial struggles,” NTCA told the FCC in a filing on Wednesday. “However, such a remarkable achievement warrants validation and verification given the implications. NTCA therefore urges the commission to immediately investigate the claims of coverage made in the Frontier [filing].”

NTCA further said that its members “serve rural areas in the same states as Frontier and, indeed, they frequently field pleas from consumers living in the latter’s service area in need of access to robust broadband service. This experience—and their decades of experience in serving sparsely populated rural areas of the nation more generally—have caused NTCA members to question whether the filing accurately reflects conditions on the ground changing so quickly in so many places in such a short time.”

“Now is the time to investigate”

The Institute for Local Self-Reliance (ILSR) also questioned Frontier’s reported deployment and created a map of where Frontier is newly claiming 25/3Mbps broadband:

“We are extremely concerned that many of these locations may not actually be getting the claimed 25/3Mbps,” the ILSR’s Community Broadband Networks Initiative Director Christopher Mitchell wrote. “If Frontier is exaggerating its coverage, now is the time to investigate before those households miss out on a massive opportunity to get high-quality Internet service from a company that, unlike Frontier, has basic competence.” Mitchell noted that Frontier’s poor network maintenance has been investigated by multiple states and that Consumer Reports has repeatedly found Frontier “to be one of the worst Internet Service Providers in the nation.”

There are 11 million census blocks in the US, though several million are entirely unoccupied. “Generally, census blocks are small in area; for example, a block in a city bounded on all sides by streets. Census blocks in suburban and rural areas may be large, irregular, and bounded by a variety of features, such as roads, streams, and transmission lines. In remote areas, census blocks may encompass hundreds of square miles,” the US Census Bureau says.

The FCC plans to award the $16 billion in a reverse auction later this year, and the money would be distributed to ISPs over the ensuing ten years. The FCC says the auction “will target over six million homes and businesses in census blocks that are entirely unserved by voice and broadband with download speeds of at least 25Mbps.”

Frontier says filing is accurate

We asked Frontier about its filing last week. The company told us its new deployments were made with funding from a previous round of grants distributed through the FCC’s Connect America Fund (CAF).

“The census blocks included in Frontier’s filing are those to which Frontier offers broadband at speeds of 25/3 or greater and are associated with Frontier’s existing CAF Phase II deployments,” Frontier said. Frontier said it previously notified the FCC of its deployment in most of the 17,000 census blocks in its regularly scheduled December 2019 FCC filing “prior to the release of the FCC’s preliminary list of eligible census blocks for the Rural Digital Opportunity Fund.”

Using $283.4 million worth of annual CAF program money that Frontier began accepting in 2015, the ISP is required to deploy 10/1Mbps service to more than 774,000 customer locations in 29 states. In January 2020, Frontier told the FCC that it apparently missed an interim deadline in 13 of those states. But Frontier had already deployed to 596,000 locations and said it was committed to finishing the buildout, which it is supposed to complete by the end of 2020.

“[While] Frontier is missing CAF buildout milestones for 10/1Mbps service, losing a large number of customers, hemorrhaging cash, and seeking bankruptcy protection, it strains credulity for it to claim that it has upgraded service to 25/3Mbps in 16,000 census blocks in eight months,” two other groups that represent small Internet providers told the FCC in a filing on Monday. Those groups are the Wireless Internet Service Providers Association (WISPA) and National Rural Electric Cooperative Association (NRECA).

Although the CAF funding only requires 10/1Mbps speeds, Frontier told Ars that it’s providing speeds faster than that to homes in the 17,000 census blocks. This is copper-based DSL instead of fiber-to-the-home service, and data speeds over copper degrade with distance, so actual speeds depend on each customer’s location.

“Through Frontier’s CAF Phase II deployments, customers gain access to broadband of at least 10/1Mbps, with customers located closer to the deployment gaining access to faster speeds, including speeds of 25/3Mbps, and some as fast as 115Mbps,” Frontier told Ars.

Reasons to believe Frontier

We asked the FCC last week if it plans to investigate Frontier’s filing and did not receive an answer.

One broadband researcher who is a frequent critic of ISPs doesn’t see any reason for skepticism of Frontier’s filings. Free Press Research Director Derek Turner, whose in-depth examinations of ISPs’ filings last year discovered a major error in the FCC’s broadband data, said, “I would be surprised if [Frontier is] blatantly deceiving the FCC in an attempt to avoid potential competition from an RDOF fundee.”

Frontier itself would be a likely recipient of RDOF funding as the incumbent telco in many of these census blocks, Turner told Ars. “Indeed, in their bankruptcy materials, their most-favorable path forward is one where they are taking RDOF funds,” he said. Frontier recently acknowledged that its “significant under-investment in fiber deployment” contributed greatly to the company’s decline. Frontier told investors that it intends to step up fiber deployment to better position itself for long-term relevance.

Turner said that Frontier could have made its filing seem less suspicious by providing more detail “as to what these deployments are, if they were funded in part by [the FCC] or state grants, when they were planned and when they came online, and how they are being offered.”

Frontier offers Internet service in 25 states. It has 2.6 million Internet subscribers, with 1.4 million on DSL and 1.2 million on fiber. Frontier’s service area used to include 29 states, but the company just completed a $1.4 billion sale of operations in Washington, Oregon, Idaho, and Montana to Northwest Fiber.

Frontier losing customers

WISPA and NRECA told the FCC that Frontier’s business struggles should invite skepticism. “Frontier lost approximately 200,000 broadband customers from 2017-2018, representing a five percent decrease in broadband customers, and another 100,000 broadband customers through the third quarter of 2019,” the groups said. The groups also quoted a Frontier filing with the Securities and Exchange Commission in which Frontier said its “overleveraged capital structure coupled with operational challenges limits the company’s ability to invest in critical areas to maintain and grow the business in the face of intense competition and general secular decline.”

If Frontier is exaggerating, it wouldn’t be the first time the FCC has received bad data from ISPs. AT&T last month disclosed to the FCC that it falsely reported offering broadband in nearly 3,600 census blocks spread across parts of 20 states. AT&T blamed the false report on a software problem.

The FCC said in December that Verizon, T-Mobile, and US Cellular exaggerated their 4G coverage in official filings, but the commission did not punish the carriers in any way.

WISPA and NRECA pointed to the mobile carriers’ false filings in their argument that the FCC should investigate Frontier. “As the inquiry into the practices of mobile carriers indicates, it is well within the commission’s authority to ask Frontier for an explanation, especially given the stakes for hundreds of thousands of rural consumers that would be affected by a finding that these census blocks should be ineligible for RDOF,” the groups said.

Because census-block data is known to overstate coverage, the FCC in August 2019 ordered ISPs to submit geospatial maps of where they provide service instead of merely reporting which census blocks they offer service in. The FCC plans to use this data to improve how it selects grant recipients in future funding rounds.

But the more accurate maps aren’t available yet, and FCC Chairman Ajit Pai decided to proceed with the $16 billion distribution despite FCC Democrats urging him to wait for better data. The $16 billion accounts for most of the RDOF, which is slated to total $20.4 billion over 10 years. Like other universal service programs, the RDOF is paid for by Americans through fees imposed on phone bills.