Frontier's frictions bring fiber frenzy fault-finding to the foreground
Frontier Communications is moving forward with an expansion of its fiber network in Connecticut after the state's regulatory agency issued a cease and desist order and fined the company $5 million.
At issue were "reckless and inappropriate underground [fiber] installations," according to Connecticut's Public Utilities Regulatory Authority (PURA).
"When Frontier and its contractors were not using improper trenchless excavation, they were evidently deploying an equally unsafe practice of breaking into existing electrical conduits to cross roadways," according to the regulator's notice in July.
As a result, Frontier is halting work that involves putting fiber conduit underground, according to a local report on the matter. Instead, it's focusing on fiber that's attached to utility poles.
"A vast majority of our build in Connecticut is aerial so that continues on," said Frontier spokesperson Chrissy Murray.
But that aerial work can sometimes be fraught with problems. Earlier this year, Connecticut's PURA said that Frontier, Verizon and other companies that use utility poles in Connecticut had to replace more than 580 of the structures during 2021 because they were "deteriorated, unsafe or in immediate danger of falling." Due to the fact that there are more than 900,000 utility pole structures across Connecticut, the regulatory agency said it developed a new, standardized process to identify and replace structurally compromised poles.
"Utility poles are a critical asset not just for the delivery of safe and reliable electric service, but are increasingly important to the provision of competitive and affordable wireline and wireless telecommunications and cable services too," said PURA Chairman Marissa Gillett in a statement. "That is why PURA is accelerating its multi-pronged approach to addressing pole integrity and pole access issues in this state – to ensure the safety of our communities and a standardized approach statewide."
Frontier pushes fiber
The news comes amid Frontier's renewed interest in fiber following its emergence from bankruptcy.
The company built fiber to a record 281,000 new locations in the second quarter of 2022, up from 211,000 in the prior quarter. The company's grand plan is to build fiber to at least 10 million locations by 2025.
"We continue to pound the table on Frontier as the cleanest pure-play of FTTH [fiber to the home] trends for investors in the US," wrote the financial analysts at Wells Fargo in a recent note to investors. "With a fully funded build plan through mid-2024, a FTTH construction machine that is building momentum and increasing its targets, and nearing an inflection point where we expect fiber growth will outpace copper declines, we believe Frontier offers compelling value at current levels."
According to Leichtman Research Group, Frontier added 8,000 customers to its customer count during the second quarter of this year, growing its total base to more than 2.8 million subscribers.
Nationwide fiber craze
But Frontier isn't the only company betting heavily on a fiber expansion. From AT&T to Google to Verizon, a wide range of US telecom companies are in the midst of building fiber to thousands of new locations.
The demand is such that fiber vendors have struggled to meet customer demand, forcing them to raise prices in some cases. Further, many expect the situation to stretch into next year and beyond as the US government funnels billions of dollars into the construction of new fiber networks in rural areas.
However, all that construction may put a strain on fiber regulators, technicians and contractors, as it did in Connecticut.
Underground and aerial fiber installation have long posed a challenge to telecom companies of all shapes and sizes. For example, Ars Technica reported that Google Fiber exited Louisville, Kentucky, in 2019 in part because it used a micro trenching installation strategy that left cables exposed in the roads.
Broadband companies have long complained that utilities sometimes make it difficult or impossible for them to access utility poles in order to conduct network upgrades. For its part, the FCC recently said it would look into ways to quickly resolve such pole disputes.
An increasing appetite
The developments help shine a light on the friction among telecom companies, utilities and regulators. Telecom companies remain keen to expand their networks, in part to get access to billions of dollars in government subsidies. But utilities and regulators remain wary that those expansion efforts could push on-the-ground technicians to gloss over building codes and safety regulations.
For example, Connecticut's regulator reported that a Frontier contractor in recent months placed PVC conduit on either side of an excavation "to simulate the use of an existing conduit and to conceal an improper trenchless excavation." In reality, according to the regulator, the installation involved "the newly installed fiber optic crossing the gas service without a conduit."
"The customer is handling the situation, it is reflected in our guidance, and we really don't have anything to add beyond that," said Steven Nielsen, CEO of fiber installation company Dycom, when questioned about Frontier's troubles in Connecticut.
Dycom reported earning $78.7 million from Frontier in its second quarter, a figure Nielsen said represents a 147% increase from the same quarter a year ago.
"Today, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country," Nielsen explained during his company's recent quarterly conference call, according to a Seeking Alpha transcript. "This view is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden the set of opportunities for our industry."
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