This story was originally published by Mountain State Spotlight. For more stories from Mountain State Spotlight, visit www.mountainstatespotlight.org.
The pandemic caps a decade of West Virginia’s struggles with Frontier over internet service.
In the early days of the coronavirus pandemic, Andrew Dean, who owns a restaurant and convenience store in rural Pocahontas County, got creative.
He bought N95 masks in bulk and began selling them out of Dean’s Den for three bucks apiece. And he started taking orders for home delivery by phone and on Facebook.
His phone line went crazy. Then, it went dead. It took his internet down with it.
“It’s probably been out 25, maybe 30 times”, said Dean, counting up the number of times his phone or internet has gone out this summer.
When Dean calls Frontier Communications, his phone and internet provider, he tells the dispatcher to send a technician in a hurry. The lost orders, he estimates, can cost his business – located in Frost, an unincorporated community near the Virginia border – more than $500 in revenue a day.
Everything is moving online during the pandemic, but in rural West Virginia, there’s often a catch: The internet doesn’t work.
For years, West Virginia has placed near the bottom in state rankings of high-speed internet access. Now, school closures and stay-at-home orders have highlighted just how bad the problem is.
Nearly 40 percent of small businesses reported inadequate internet service during the pandemic, according to a survey conducted by a coalition of West Virginia economic development organizations. And West Virginia kids – stuck at home with no internet to do online assignments – fall behind.
In many parts of the state, the only affordable internet option is Frontier – West Virginia’s local telephone company. But Frontier has struggled with reliability issues. In the last few years, complaints against the company have become so prevalent that a state regulatory agency recently commissioned an audit of the company’s operations.
In April, Frontier filed for bankruptcy.
Still, the company continues to receive millions of dollars in federal grants to upgrade its network in communities like Frost. And it may well get more – it’s fighting to get out from under bankruptcy as quickly as possible so it can be eligible to receive billions of more federal subsidies that will be auctioned off later this year.
Meanwhile, customers and regulators – including the Federal Communications Commission – are expressing doubts about the company’s ability to follow through on its promises.
In 2010, Frontier purchased Verizon’s aging rural telephone network in West Virginia, and became overnight one of the largest telecommunications providers in the country.
At the time, staff at the state’s utility regulator, the Public Service Commission, were worried. There had been an “observable decline in Verizon’s capital expenditure” in recent years, they noted, and a marked increase in consumer complaints. So they were surprised when Frontier executives admitted they hadn’t bothered to visit Verizon’s facilities in the state while conducting due diligence, and had made “no formal study of Verizon’s physical plant.”
Both the commission’s staff and its consumer advocate ultimately opposed the deal.
But the commission’s three voting members – all governor appointees – approved it anyway. Frontier had lobbied hard, and promised to provide broadband to 85 percent of its new territory in West Virginia.
The company made similar promises to the FCC, which heralded the deal as a step toward its goal of achieving universal broadband access. But that goal has been largely elusive, particularly in areas deemed “high cost” by the commission – like much of mountainous, sparsely populated West Virginia.
The company is now bankrupt, and the FCC reports that 18 percent of West Virginians still lack a fixed broadband connection to their homes. The reality is even worse.
The data used by the FCC is “widely considered to be flawed,” according to a state report, because it is reported by the internet providers themselves. Frontier’s technology of choice – DSL, which is run over existing copper telephone lines – can be painfully slow. In contrast to fiber or cable – which are more common in urban, high-density areas – DSL speeds fall rapidly with distance.
Tests by the state’s Broadband Enhancement Council found that Frontier’s average download speeds were less than half of what federal regulators currently classify as broadband.
Over the years, Frontier has repeatedly promised to improve its network – and accepted millions of dollars in government grants to do it. In 2010, West Virginia was given $126 million as part of the federal Broadband Technology Opportunities Program, and handed a third of that money to Frontier to build out a high-speed fiber network.
It was a disaster.
Federal government administrators demanded West Virginia return $4.7 million after it discovered Frontier had charged the state unreasonable fees. Frontier refused to refund the state, and was eventually sued – along with two West Virginia officials who managed the deal – by a competitor for misusing the funds and preventing other companies from connecting to the new fiber.
Frontier has denied the allegations, and the case is still being litigated. West Virginia Attorney General Patrick Morrisey intervened in the lawsuit last year, hoping to recover the money. In June, a federal appeals court ruled that the case against Jimmy Gianato and Gale Given, the two former state officials, could move forward.
The scandal – a mixture of backroom dealmaking and unfettered government waste – still rankles. Given, the state’s chief technology officer at the time, had just completed a 32-year career at Verizon. Gianato resigned as director of the state’s Division of Homeland Security and Emergency Management in 2018 amid scrutiny of the division’s handling of federal flood recovery grants.
In 2013, Morrisey’s office began investigating complaints about Frontier’s service, and discovered that some customers were receiving internet at speeds less than a quarter of what Frontier advertised (“up to 6 mbps”). In the resulting 2015 settlement, Frontier promised to invest $150 million in improving its network.
None of this prevented Frontier from continuing to soak up government money. In 2015, the federal government agreed to give Frontier $38 million a year to establish or upgrade service to 10 megabits a second in rural communities across West Virginia.
One of those communities is Frost.
New Frontier equipment popped up in town a few years ago, said Dean, who can see it through his restaurant’s front window. When it works, his internet is fast. But once you head up the street a few miles from Dean’s Den to his house, not so much.
DSL speeds degrade rapidly with distance. By the time the line reaches Dean’s house, it’s barely usable, he said. At the advice of a Frontier technician, Dean ended up purchasing a second line.
“It didn’t do much of anything. I mean, forget about even watching Netflix,” Dean said.
Mike Holstine also lives a few miles out of town. Holstine, a civil engineer, manages one of the largest radio telescopes in the world at the Green Bank Observatory, just north of Frost. He’s also a member of the Broadband Enhancement Council.
Over the years, Holstine’s DSL speeds have slowed to a crawl. In response to his complaints, Frontier blamed his location: He was simply too far away from the networking equipment in town.
To Holstine, that explanation made no sense. “I didn’t pick my house up and move further away from the switch,” he said.
A Frontier spokesman confirmed that there had been three service outages in the area since March, and blamed a power outage and damage done by an unaffiliated third party.
In a written statement, the company said, “Frontier takes seriously its commitment to deliver adequate and reliable services to our customers and the West Virginia communities we serve, including providing service to the most rural and remote areas of the state where other providers choose not to invest to deliver service and where the costs to provide service are the highest.”
But when auditors dissected Frontier’s finances and operations last year, they found that the company had “not been placing the focus” on preventive maintenance – fixing issues before they turned into outages and customer complaints. The company had assigned local managers to schedule preventive maintenance, but for whatever reason – its union has long claimed Frontier’s technicians are overworked – it “was not being done.”
State regulations, auditors noted, mandate that telephone companies like Frontier adopt a preventive maintenance program. But “the dispatch center, at this time, only handles customer-generated work – i.e., new installs and trouble reports,” auditors found. What’s more, Frontier was spending less on network maintenance, even as the number of complaints skyrocketed.
Maintenance expenses fell significantly from 2012 to 2018, auditors found. So did capital expenditures: the money Frontier spent to upgrade its network.
Frontier tried to keep the magnitude of that drop a secret, but bungled it. Reporters used copy and paste to lift redacted text from the publicly released report, and published it.
The numbers were sobering. From its peak in 2012, Frontier’s capital expenditures had fallen by half in 2018.
Legal filings in Frontier’s bankruptcy case help explain the declining investment in West Virginia. In its disclosure statement, the company had “recognized a number of opportunities to invest in its fiber network” – fiber provides vastly improved speeds over DSL – but was “constrained” by debt. Frontier had borrowed billions to purchase Verizon’s and AT&T’s phone networks, including those in West Virginia, just as the market was moving on to newer technologies, such as fiber and cellular.
Ron Pearson, a retired federal bankruptcy judge who now serves with Holstine on the state broadband advisory council, doubts whether Chapter 11 can save Frontier’s business. The proposed restructuring would remove $10 billion from Frontier’s books, but would leave the company still burdened with $7 billion in debt. With Frontier shedding customers, Pearson questions whether it will be able to generate the cash to pay off that debt while maintaining its sprawling network.
“I think the bankruptcy is flawed,” he said.
Pearson is frustrated that Frontier’s customers aren’t able to participate in the bankruptcy process. “We don’t have a say in the case,” he said.
But the state’s Public Service Commission does, and it’s not happy with what it’s seen so far.
Frontier has proposed a “virtual separation” of its business into two units: “InvestCo” and “UpgradeCo.” States inside InvestCo would see new fiber rollouts, while those in UpgradeCo would be stuck with DSL.
The company would decide which bucket West Virginia falls in after it emerges from bankruptcy, but some fear West Virginia would end up in the latter.
The plan threatens to create “two distinct classes of customers,” warned Tom White, a lawyer at the Public Service Commission’s Consumer Advocate Division, in a brief. “As a result, West Virginia will end up on the short end of any future capital broadband investment,” he wrote.
Frontier’s bankruptcy plan was approved by a federal judge in late August. The fate of Frontier now lies with regulators, who must also approve the restructuring.
The West Virginia PSC has yet to make a ruling. Its staff wants to extract concessions from the telecom, including a guarantee that the state will end up in InvestCo.
Frontier – so far – isn’t budging, and it’s pushing hard to get the plan approved by October. That month, the federal government will auction off up to $16 billion to subsidize the expansion of rural broadband – $766 million of which could go to West Virginia. Frontier has applied to bid, although regulators must still determine it is “financially qualified” before the company can receive any money.
Pearson doesn’t think Frontier should be given any more chances. He cites Frontier’s bankruptcy and the accusations that it mismanaged government contracts as reasons it should not be allowed to participate in the auction.
“With the track record that Frontier has in West Virginia, I don’t think they should be trusted to bid,” he said.
Lawyers from both the state and Frontier’s union are using the proceedings as an opportunity to grill the company on how it intends to fix the problems identified in the audit.
Frontier says it plans to implement many of the audit’s recommendations, including a new preventive-maintenance tracking system. But it brushed aside others as “unnecessary or overstated” – such as auditors’ proposal that the company improve reliability by installing more fiber. Upgrading the rest of its network backbone to fiber would cost $100 million, said Frontier, and would be “prohibitively expensive.”
Frontier’s dire financial situation has not stopped the company from paying out $38 million in bonuses to its executives, which the bankruptcy judge approved in May.
Frontier is also under scrutiny by federal regulators. After the FCC announced the upcoming subsidy auction, Frontier challenged the final numbers. It demanded around $80 million be taken off the table in West Virginia because the company claimed it was already providing internet at 25 megabits per second in hundreds of communities across the state.
Frost is one of those communities. But Holstine said he’s never come close to getting those kinds of speeds.
When he talked to a technician working on the network switch in Frost, he learned that the switch was only rated at 6 megabits a second.
“How can they put a switch in that’s only capable of six and claim that they’re providing 25?” he said. “It’s ludicrous.”
In response to Frontier’s claims, Sen. Shelley Moore Capito, R-W.Va., wrote a letter to the FCC demanding it “closely scrutinize the veracity” of Frontier’s challenge. The commission did, and found Frontier’s claims didn’t hold up. Frontier had displayed a “pervasive lack of credibility,” the commissioners wrote in a statement.
The company said it was unable to comment on the FCC’s finding because it was “under the mandatory FCC quiet period’” in the runup to the auction. It did note that the speeds it reports to the commission may not be available to every customer in a census block “because internet service speed is dependent on equipment and is distance-sensitive.”
As Frontier fights to salvage its business, the company’s rural customers continue to suffer.
Emily Higginbotham is a senior at Roane County High School. It’s a sparsely populated county, with only 14,000 residents. And in its southern reaches, where Higginbotham lives, Frontier is the only landline provider available. The internet, she says, “barely exists.”
After the pandemic hit, teachers began assigning online work. Her French teacher sent YouTube videos she couldn’t load. Tabs on her browser would spin and spin trying to open her assigned history readings.
“It would take hours to get assignments done,” said Higginbotham. Sometimes, she’d go over to a friend’s house who had more reliable internet and they’d crowd around a single computer.
It affected her grades, she said. Assignments got turned in late after she had trouble accessing the materials. “We’re not able to achieve our full potential,” she said.
The school system simply wasn’t prepared to transition to learning at home, said Richard Duncan, the county’s superintendent. Roane schools had been investing in technology for years. The county system bought every kid a laptop and upgraded the internet connections at its schools. But the pandemic rendered much of that investment useless as schoolhouses shuttered.
“So much of our curriculum was based on the assumption that you have good internet connection while you’re using it,” Duncan said. “We still don’t have a good solution for that.”
Finding a solution has been the task of Matt Erb, chairman of a committee dedicated to improving broadband in Roane and surrounding counties.
“I don’t think people really grasp how bad the problems are,” he said.
As communities watched Frontier’s services degrade, they’ve hunted for other options. Erb cited some progress – his committee received $125,000 from the state to develop a plan for improving the internet in the region – but in the three years he’d been working on the committee, it hadn’t managed to get a single new family online.
The pandemic has illustrated just how much has been lost, said Duncan. “We didn’t invest in making sure our kids and families had the internet at their house,” he said. “That’s one thing that would have really changed the whole game for us.”
Now, the state is playing catch up. Gov. Jim Justice has pledged to spend $50 million of federal CARES Act grant money to expand broadband, and recently signed an executive order that would make it easier for smaller companies to bid in the FCC auction, calling it a “game changer.”
“We’re going to cover up West Virginia with broadband,” he said.
The press conference announcing the order was a rare show of bipartisan unity: The Republican speaker of the House of Delegates was there, alongside a pair of Democratic state senators.
None mentioned Frontier by name, but the Connecticut-based company was on everyone’s mind.
“I’m really tired of people outside of the state making decisions for us on broadband,” said Sen. Bob Plymale, D-Cabell.
All of this renewed attention comes too late for Gemini Carpenter and her family, who live in southern Roane County. Carpenter watched her daughter struggle after schools closed. Assignments were unavailable because her computer wasn’t on the school’s network, and the family quickly ran out of data on their phone plan.
For years, Carpenter subscribed to Frontier – her house is a few miles from a network switch – but it eventually got so slow it wasn’t usable.
“It’s horrible internet, and there’s nothing you can do about it,” she said.
When the pandemic hit, Carpenter would send her daughter, then a high school senior, to her brother’s house to do schoolwork.
Poor internet, Carpenter said, helps perpetuate false stereotypes about rural West Virginians.
“You get told all the time how awful West Virginia schools are,” she said. But it’s not because the kids aren’t as smart or the teachers as hard working, she said, they just don’t have the same resources ‒ like going home and taking a practice SAT test online.
“If we were all on an even playing field,” Carpenter said, “you might see a difference.”
Lucas Manfield is a Report for America corps member covering business and economic development.
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