Lawmakers Question Why FCC Is Throwing Taxpayer Money At Incompetent Telcos With History Of Fraud

Broadband

from the repeat-the-same-mistakes dept

In West Virginia, incumbent telco Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. State leaders have buried reports detailing the depth of the grift and dysfunction, and, until a few years back, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest. The result has been about what you’d expect: West Virginia routinely shows up as one of the least connected states in the nation.

Frontier has spent years taking taxpayer money then failing to adequately upgrade its network. So when the FCC recently threw another $9 billion in subsidies at the broken U.S. telecom sector, lawmakers like Republican Sen. Shelley Moore Capito, were kind of annoyed to find Frontier again slated to get $371 million to “expand broadband” across eight states. $250 million was doled out to Frontier in West Virginia despite its shaky history in the state, something that alarmed Capito in a letter to the FCC last week (pdf):

“The stakes are simply too high to provide nearly $250 million to a company that does not have the capability to deliver on the commitments made to the FCC.”

Consumer groups have also been hammering the FCC, calling its latest auction a “boondoggle” in which ISPs exploited a broken system to obtain money that, with a few exceptions, won’t actually fix broadband availability issues. Capito went on to correctly note that with Frontier’s history of very recent incompetence and grift in West Virginia, throwing more money at the company and expecting some different outcome is foolish:

“Frontier’s mismanagement of prior federal funding through the Broadband Technology Opportunity Fund program, resulting in $4.7 million in funds repaid to the federal government for improper use, raises significant questions about their ability to manage federal funds of this magnitude. Furthermore, Frontier has a documented pattern of history demonstrating inability to meet FCC deadlines for completion of Connect America Fund Phase II support in West Virginia. The inability to deploy federal funds in a timely fashion to make improvements to a network delivering broadband service at speeds of 10/1Mbit/s or higher should raise significant concerns about their capacity to build out a network delivering 100 times that level.”

As we’ve noted a few times now, the U.S. seems intent on throwing taxpayer subsidies at companies with a long history of failing to live up to their promises despite 30 years of this not really working out that well. What we don’t appear to have any interest in is actually tackling the real reason U.S. broadband sucks: a handful of powerful regional monopolies have cornered their respected markets, then successfully lobbied state and federal policymakers to look the other way and pretend none of this is actually happening. It’s a textbook case of monopolization and regulatory capture. And we couldn’t care less.

As COVID lockdowns highlight broadband’s essential role in connection and survival, pressure will only mount to throw even more money at industry. But unless policymakers take aim at the underlying corruption protecting the status quo, history will only repeat itself.

Filed Under: broadband, competition, fcc, fraud, shelley moore capito, subsidies
Companies: frontier