West Virginia's Biggest Telco Says Broadband Business 'Unsustainable'

For years we've explored how the nation's phone companies no longer really want to be in the broadband business. They routinely refuse to upgrade their networks, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. Telcos in particular have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising then that many telco DSL customers are fleeing to cable, assuming they even have a second option for broadband.

This scenario has been particularly true in West Virginia, which has become the poster child for telecom sector graft and corruption. For years, incumbent phone provider Frontier Communications (which bought most of the state assets from Verizon), has seen zero competitive pressure to improve service. At the same time, they've enjoyed rampant regulatory capture, to the point where company executives have simultaneously acted as state senator, without a single question raised. The company has also been routinely under fire for bilking the government (read: you) out of millions of dollars intended to shore up coverage gaps.

Frontier in West Virginia is the picture perfect example of why we can't have nice things. Coddled natural monopolies, free from competition and meaningful oversight, always double down on bad behavior. Yet as customers in the state routinely complain about lengthy outages and terrible service, Frontier executives are blaming everybody but themselves, to the point where the company is now proclaiming that its entire business model in the state is "unsustainable":

"Frontier serves only about ten percent of the state voice lines in its service area-and falling-but has 100 percent of the universal service obligation to serve the most rural and high-cost areas," Mendoza said in a statement. "Our customer base continues to decline, while the cost of service per line has increased dramatically. This has resulted in an unsustainable model for providing service in rural and high-cost areas, manifesting in increased numbers of service complaints. We plan to reach out to the state's leaders to collaboratively find solutions to this difficult challenge."

Of course Frontier put itself in this business by gobbling up Verizon's unwanted assets in a bid to grow bigger for bigger's sake and thrill its investors. While some of the company's decline is due to copper phone users switching to wireless, much of it is because the company's still offering broadband speeds to most of its customers that don't even meet the FCC's modern definition of "broadband." Don't upgrade your network? Customers leave. The real "unsustainable" model is throwing millions of dollars at apathetic natural monopolies but never holding them accountable for failure.

When Frontier executives talk about finding "solutions" with state lawmakers, they usually mean "throw even more taxpayer money at us that may or may not actually be spent to fix the problem." Frontier has been lavished with subsidies and tax breaks for years, only to face accusations it not only defrauded the government, but used much of that money on projects that didn't actually help improve last mile connectivity. A monumental portion of Frontier's problems are very much of its own design.

This is US broadband in a nutshell. Regional telecom monopolies, which all but own state and federal lawmakers, face zero regulatory or competitive pressure to actually do their jobs. As a result, in state after state, DSL networks are being allowed to literally fall apart so telcos can shift their focus to sexier objectives (usually business service or wireless video advertising). And when the government does act, it usually involves throwing even more money at a broken market, then failing to adequately ensure that money is spent properly.

Cable giants like Comcast and Spectrum then rush in to dominate the market, raising rates, neglecting customer service, and making everything worse across the board. Rinse, wash, repeat. In state, after state, after state. And while fifth-generation wireless is often painted as some kind of panacea for this problem, that's simply not the case. Nothing in this equation changes until one thing happens: apathetic voters wake up and stop electing politicians who prioritize monopoly profits over the public welfare.