FCC approves Frontier’s bankruptcy restructuring plan

The FCC approved Frontier Communications’ Chapter 11 bankruptcy restructuring plan, dismissing concerns raised by CWA and The Utility Reform Network (TURN) about Frontier’s intention to follow through on promised investment to improve service and on the issue of “virtual separation” of the company, separating service areas between “InvestCo” states that will receive new fiber deployment and “ImproveCo” states that will not.

An understanding of the company’s plan for Virtual Separation is critical in light of the change of ownership under this reorganization. The hedge funds that will own between 20-28 percent of the reorganized Frontier have a track record of forgoing long-term investments to fund dividends and stock buybacks. Elliott Management, in particular, launched a campaign at AT&T in 2019 advocating job cuts and asset sale to boost short-term shareholder returns. Such an agenda would be disastrous for Frontier and its customers.

CWA believes that the public interest will be harmed if Frontier fails to invest equitably across its footprint and service to Frontier customers is allowed to further deteriorate - especially in any service areas deemed “ImproveCo,” which may represent as much as 25 percent of households in Frontier’s current service areas. 

In the absence of an investigation of these issues by the FCC, some states like California are pursuing thorough oversight that is resulting in strong commitments to ensure the bankruptcy reorganization will benefit the public. Frontier’s recent proposed settlement to the California Public Utility Commission to gain approval of the bankruptcy restructuring plan included a commitment of $1.75bn in new capital investment, 350,000 new fiber to the premise connections, and a commitment to maintain technician staffing levels and California call center locations required to perform this work. CWA will continue its advocacy for other states to follow suit and for Frontier to use its enhanced financial flexibility to invest equitably across all the communities it serves.

Links:

CWA statement on FCC approval of Frontier’s bankruptcy restructuring plan (CWA, Jan. 15, 2020)