NY Investigates Frontier Communications As US Telcos Slowly Implode

We've long explored how the nation's phone companies don't really even want to be in the broadband business. They routinely refuse to upgrade their networks despite millions in subsidies, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. US telcos 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 broadband option.

This dynamic often results in some absurd dysfunction. Like in West Virginia, where incumbent telco Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. The graft and corruption in the state is so severe, state leaders have buried reports, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest.

Things haven't been much better for the telco in states like Minnesota, where it's under investigation for failing to upgrade -- or even repair -- its shoddy networks. The same thing is also going on in New York, which just opened a renewed investigation after being inundated in complaints about terrible service:

"NY Public Service Commission (PSC) staff reported "that several Frontier Communications subsidiaries have significant service-quality problems, including escalating complaint rates, lengthy repair durations, and localized network reliability issues," a PSC announcement Thursday said. PSC staff is seeking more detailed information from Frontier on customer trouble reports and "will work with Frontier to develop and implement a plan to improve poor localized network reliability conditions," the announcement said.

You may be detecting a theme here. Things are so bad for Frontier, the company refused to even answer questions from analysts or the press during its latest earnings call. Most analysts think the company will ultimately teeter into bankruptcy, something that may also be in the cards for similarly large, dysfunctional telcos like CenturyLink. And while this kind of market failure is bad for consumers who already lack competitive broadband options, it's great for cable giants like Charter and Spectrum which are exploiting the US telco collapse to enjoy bigger regional monopolies than ever before.

Less competition means higher prices and no incentive to fix the cable industry's abysmal customer service. Throw in regulatory capture at the FCC and the steady erosion of broadband consumer protections into the equation, and you should be able to see how this is recipe for even bigger problems.