Already dealing with a Chapter 11 bankruptcy, Frontier Communications got another dose of grief this week with word that the telco will pay $900,000 to resolve an investigation by the Washington Attorney General's office into hidden fees and the "misrepresentation" of Internet speeds.
The bulk of that money will be earmarked to pay restitution to impacted customers, the AG's office said, noting that it will create a claims process to determine eligibility for restitution.
"Frontier is pleased to have this matter resolved," the telco said.
The resolution, which also orders Frontier to "clearly and consciously disclose all fees" and to be transparent about available Internet speeds, stems from an investigation by the state's AG office in 2018 following more than 600 complaints about Frontier. The probe, which was tucked into the AG office's "Honest Fees Initiative," included reviews of the website and advertising of Frontier's Northwest unit.
The AG office said the probe focused on Frontier's failure to adequately disclose fees during sales of cable, Internet and phone services since 2016. For example, Frontier charged as much as $3.99, or about $50 per year, for an "Internet Infrastructure Surcharge," without adequately disclosing the surcharge in its advertising.
Per the resolution, Frontier must halt that surcharge and clearly disclose monthly base prices on services, estimate taxes fees and other recurring charges, and provide the amount of each one-time fee charged only on the customer's first invoice for elements such as service activation and installation fees and equipment.
The AG office estimates that Frontier's Northwest division, at its peak, served more than 165,000 Internet customers in rural areas of Washington. In May, Frontier sold its Washington, Oregon, Idaho and Montana operations to Northwest Fiber for $1.3 billion. As a condition of that deal, Northwest Fiber is to invest $50 million to improve and expand Frontier's broadband infrastructure in Washington. That condition includes a commitment from Northwest Fiber (which provides service under the Ziply Fiber brand) to provide access to 1-Gig speeds to no less than 33% of locations in Frontier Northwest's territory within five years of the deal's closure.
"Broadband access is integral to our daily lives," Washington AG Bob Ferguson said in a statement. "The current pandemic has only amplified its importance. Knowing the true cost and speed of our Internet connection is essential to make an informed decision about a service that connects us to our work and to each other. Companies must be able to deliver what they promise, at the price they advertise."
The Washington AG office said the action against Frontier is the second against a service provider in the region tied to the Honest Fees Initiative. Late last year, CenturyLink paid $6.1 million to the state linked to an investigation over inaccurately disclosed fees and the failure to provide promised discounts to customers.
Those service providers aren't the only ones to draw the ire of a state AG. Last year, Charter Communications began to issue credits to New York customers tied to a settlement over allegations that Time Warner Cable (Charter acquired TWC in 2016) under-delivered on advertised Internet speeds. Charter did not admit any wrongdoing, but did agree to pay direct restitution of $62.5 million to more than 700,000 active customers in New York, with each customer getting between $75 and $150.
- Court approves Frontier's 'First Day' motions tied to bankruptcy filing
- FCC to be 'vigilant' in ensuring Frontier stays connected to vital services during restructuring
- Frontier files for Chapter 11 with plan to cut debt by more than $10B
- Charter to Pay $175M to Settle Broadband Speed Suit
- Ziply Fiber wraps $1.35B deal for Frontier northwest US operations
— Jeff Baumgartner, Senior Editor, Light Reading