Frontier Fires State Senate Leader (Who Also Worked For Frontier) For Supporting Attempts To Improve Broadband Competition

from the fighting-broadband-competition-at-any-cost dept

Thu, Jun 8th 2017 6:42am — Karl Bode

If you want to see what the US broadband sector really looks like, you should take a look at West Virginia -- a state where regional incumbent Frontier Communications holds so much sway over the state legislature, efforts to improve connectivity in the state have spent a decade in the gutter. Local Charleston Gazette reporter Eric Eyre has quietly done an amazing job the last few years chronicling West Virginia's immense broadband dysfunction, from the State's use of broadband stimulus subsidies on unused, overpowered routers and overpaid, redundant consultants, to state leaders' attempts to bury reports highlighting how a cozy relationship with companies like Frontier, Verizon and Cisco has led to what can only be explained as systemic, statewide fraud on the taxpayer dime.

But things haven't been going all that well for Frontier lately. Frustrated customers are leaving in droves (assuming they have the option) after the company bungled an acquisition of Verizon's unwanted DSL customers in Florida, Texas and California. It's also now saddled with debt from that deal, which prioritized growing bigger over commen sense. And employees say morale at the company is at an "all time low" after executives slashed all bonuses and merit pay increases -- but only for lower-level employees.

There's some indication that these problems are loosening the telco's traditionally iron grip on the West Virginia legislature. House Bill 3093, recently signed into law by West Virginia Governor Jim Justice, aims to improve broadband competition in the state through a combination of utility pole reform, and efforts to encourage local broadband community co-ops. Since it would have boosted competition in the state, Frontier obviously lobbied against the measure, hoping to keep its geographical fiefdom intact. It failed.

Eyre at the Gazette now notes that Frontier has responded by firing a six-year company executive and West Virginia Senate President (yes, at the same time) Mitch Carmichael for voting in favor of the measure.

So you should get a sense of what things are like in West Virginia just by the fact that Carmichael was deciding major state telecom issues while being a full-time employee of Frontier Communications. And Carmichael had been deciding on telecom-related issues for years with nobody apparently thinking that his recusal from some of these issues might just be a good idea.

This is so crazy that we should repeat it just so it sinks in: Carmichael was both a full-time employee of Frontier while also being the President of the state Senate, and constantly pushing for policies that favored his employer. And few, if any, state leaders apparently thought this was a problem. And it has been: Carmichael has long been an opponent of community run, municipal broadband, and had also recently voted down an effort that would have created a statewide broadband internet network, one that would have dramatically impacted Frontier's business interests.

Carmichael had just gotten a raise as well after almost being lured away by a Frontier competitor, so the firing surprised him. Carmichael says he also refused to sign an NDA demanded of him by the company to prevent him talking about his termination:

"Frontier Communications has laid off West Virginia Senate President Mitch Carmichael, a six-year Frontier executive who noted Monday that his dismissal follows his refusal to torpedo a broadband internet expansion bill that the company vigorously opposed...Carmichael said Frontier has asked him to sign a “nondisclosure” agreement that would prohibit him from talking about his dismissal. He said he refused to sign it. As senate president, Carmichael was Frontier’s most powerful ally in the Legislature.

Apparently, public annoyance at Frontier and the sorry state of broadband in the state (West Virginia is not-coincidentally ranked 45th in broadband connectivity) forced Carmichael to actually do the right thing:

"The one thing I’m not going to do here as Senate president is advance special interests,” Carmichael said. “It was obvious the body [Legislature] wanted that bill, and I wasn’t going to stand in the way of it."..."This was not something I wanted at all,” he said. “They had a bad year, from a legislative perspective. They severed ties from me."

To be clear, Carmichael had been willing to "advance special interests" previously, but Frontier's financial footing is so shaky -- and public annoyance at a lack of broadband competition was so severe -- he was forced to actually listen to what the public wanted. Now, courtesy of Frontier's waning influence, new West Virginia law allows 20 families or businesses to form nonprofit co-ops in areas shunned by traditional ISPs. The bill also authorizes up to three cities or counties to band together and build broadband networks in areas incumbents like Frontier have long refused to.

Meanwhile there are growing indications that Frontier, a company that has made a career out of trying to prevent real broadband competition in its territories at any cost, may at some point be looking at bankruptcy sometime in the next few years.

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Filed Under: broadband, competition, conflict of interest, mitch carmichael, west virginia
Companies: frontier

35 Comments

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Anonymous Coward, 8 Jun 2017 @ 6:53am

Take a loot at West Virginia?
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Anon, 8 Jun 2017 @ 7:14am

Two Things
First of all, it's not just he was an employee - he was an *executive* level employee. Someone should have called conflict of interest.

Second - I sure hope retribution came *only after* the vote, no suggestions from his boss(es) beforehand. Any suggestion "you keep your job if you vote this way" would be interpreted as a bribe - paycheque only if you vote the way we want.
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Anonymous Coward, 8 Jun 2017 @ 7:14am

Glad the article doesnt praise Carmichael. Im sure he didnt grow a conscience - more likely he saw things coming to a head. Unbelievable he was working for the isp and the legislature overseeing it.
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Annonymouse, 8 Jun 2017 @ 7:15am

Bankruptcy?
Why not just turn around, investigate the executives for tax evasion and have them work it off as community service in the coal mines?
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This comment has been flagged by the community. Click here to show it

Anonymous Coward, 8 Jun 2017 @ 7:18am

Here I am again. This is why I keep saying that pro-regulation stance between government and economy will only work against you.

Here is more proof that Free-Market principles need a lot of air. We only need anti-monopoly and anti-trust regulations, which we actually do have, but they do not enforce them because not enforcing them gets you folks to support MORE regulation, which means more money for those coffers in the form of "campaign" donations, assorted kickbacks, deals, jobs for family members, and general power and legacy building.

You all have feet with huge holes in them from where you keep shooting yourselves!
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Jeffry Houser (profile), 8 Jun 2017 @ 7:47am

Common or Con Men?
Did you mean to say Common Sense or Con Men sense?
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Anonymous Coward, 8 Jun 2017 @ 7:48am

Fucking parasites should be in jail.
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Chip, 8 Jun 2017 @ 8:05am

Re:
This story about government action improving broadband competition proves that government action doesn't improve broadband competition!

Every nation eats the paint chips it Deserves!
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Anonymous Coward, 8 Jun 2017 @ 8:33am

Re: Two Things
Personally, I hope that they did it before so that some dumbass executive pays a legal price for their bribery to continue profiting by suppressing competition. This was such a brazenly criminal scheme that someone needs to go to jail, even if years too late, pour encourage les autres.
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Anonymous Coward, 8 Jun 2017 @ 8:37am

"Refused to" build

The bill also authorizes up to three cities or counties to band together and build broadband networks in areas incumbents like Frontier have long refused to.

The obvious thing for Frontier to do is agree to build a network, to prevent the cities from doing that... and then just not build what they promised. I hope the actual wording of the law doesn't leave this loophole. Telcos break promises all the time with little or no punishment.
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Anonymous Coward, 8 Jun 2017 @ 8:42am

Re: Bankruptcy?
Bankruptcy? No big deal. That's just how corporations privatize profits while socializing losses. You can bet the execs will all walkaway from it with their wealth intact.
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ShadowNinja (profile), 8 Jun 2017 @ 8:56am

Re: Re: Bankruptcy?
But those executives worked extra hard for those gigantic bonuses while driving their company into bankruptcy!

It's not easy to drive yourself into bankruptcy while you have a near monopoly on the market! That's why they should be rewarded for their innovation by keeping their giant bonuses!
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Anonymous Coward, 8 Jun 2017 @ 8:58am

Re:
Why not? The ISPs have been doing it for years.
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This comment has been flagged by the community. Click here to show it

Anonymous Coward, 8 Jun 2017 @ 9:19am

Re: Re:
Yep, but people hate to take responsibility for their own stupidity. They at least flagged my post in record time.

These folks really do have Stockholm's Syndrome when it comes to regulation.
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Anonymous Coward, 8 Jun 2017 @ 9:58am

Re: Re:
Cerelean Blue is his favourite flavour.
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Ryunosuke (profile), 8 Jun 2017 @ 10:02am

Re:
I agree, i am thinking of it of less "he grew a conscience" and more "I could lose everything."

"I Could lose my job (with Frontier tanking) and I could lose my position in the State Senate."
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Anonymous Coward, 8 Jun 2017 @ 10:47am

Re: Re: Re:

Yep, but people hate to take responsibility for their own stupidity. They at least flagged my post in record time.

Some people can't even recognize their own stupidity.
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This comment has been flagged by the community. Click here to show it

Anonymous Coward, 8 Jun 2017 @ 11:18am

Re: Re: Re: Re:
I get that you hate hearing the "I told you so" but calling the person that predicted what you were going to get "stupid" is telling on your own intelligence not theirs.
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Gorshkov (profile), 8 Jun 2017 @ 11:30am

Re:

Unbelievable he was working for the isp and the legislature overseeing it.

I don't disagree with you, but I'm curious - how else do you expect it to be when a position in the state senate is not a full time job?

Starting senators make $16,000, and the highest paid makes $55,000.

Bottom line: There is not a single senator in the state who is NOT going to be in a conflict of interest from time to time.
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Matthew A. Sawtell, 8 Jun 2017 @ 11:37am

So... how many other West Virginia Lawmakers are...
... double dipping with private companies
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tom (profile), 8 Jun 2017 @ 11:45am

I don't think WV is the only one with this issue. OK has a part time legislature as well. The session in OK ends in May so the legi-critters have 7 whole months to do other things.
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Anonymous Coward, 8 Jun 2017 @ 12:06pm

Re: Re: Re: Re: Re:
Oh, so you felt that that comment fit *you*, did you? That's what's *really* telling.
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GrooveNeedle (profile), 8 Jun 2017 @ 12:40pm

Re: Re:
True, but they are expected to recuse themselves from the situation as needed. Carmichael did not, or at least the article alludes to him never doing so in the past.
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JoeCool (profile), 8 Jun 2017 @ 12:49pm

Dispicable
There's nothing worse than a politician who won't stay bought. ;)
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Chip, 8 Jun 2017 @ 12:51pm

Re: Re: Re: Re: Re:
I TOLD YOU SOOOOOOOOOOOO

I told you all that elections exist and sometimes a different person gets elected and does things you don't like! WHY won't you acknowledge my obvious brillaince in contributing a deep and isnghtful contribution to eth confersaiton? It is because you are STUPID! That is why! Stupid stupid stupid! Recognize my genius in TELLING YOU AL SO!

Every nation eats the Paint chips it Deserves!
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Anonymous Coward, 8 Jun 2017 @ 1:45pm

Re: Re: Re: Re: Re: Re:
You could try a bit better impression. The trick is to not try as hard. Your first one was much better.

Don't feel bad if I do not play along the way you expect.
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Chip, 8 Jun 2017 @ 2:56pm

Re: Re: Re: Re: Re: Re: Re:
EVERYBODY says "that doesn't sound like me" when they hear their voice played back to them.

Every nation Eats the Paint chips it Deserves!
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R.H. (profile), 8 Jun 2017 @ 4:24pm

Re:
Only nine states have full-time legislatures. So, most state legislatures are going to have some version of this from time to time.
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R.H. (profile), 8 Jun 2017 @ 4:26pm

Re: So... how many other West Virginia Lawmakers are...
Since West Virgina has a part-time legislature (only nine states are full-time) I'd hazard a guess that all of their members who aren't independently wealthy also work for private companies. They only get paid while they're actually in session after all.
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Bruce C., 8 Jun 2017 @ 5:21pm

Re: Two Things
To be fair, many states pay their legislatures only as part-timers, so state senators and representatives need a second job to make ends meet.

Frankly, it's fascinating to me that Sen. Carmichael actually voted for the bill. It's hard to argue a conflict of interest when the politician in question actually voted against his personal interest.
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Lawrence D’Oliveiro, 8 Jun 2017 @ 8:56pm

A “Gresham’s Law” Of Political (In)Competence?
Peculiar how in the US, the venal and self-serving politicians manage to survive longer than the ones who demonstrate some actual personal integrity.

I don’t think it happens to quite the same extent elsewhere in the world of democratic nations. Why not? Perhaps because they manage to avoid politicizing the very institutions on which democracy is based--like the voting system and electoral boundaries.
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Thad, 8 Jun 2017 @ 9:45pm

Re: A “Gresham’s Law” Of Political (In)Competence?

I don’t think it happens to quite the same extent elsewhere in the world of democratic nations.

Well, I guess we'll see how Britain looks when they finish counting the votes.
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Andrew D. Todd, 9 Jun 2017 @ 2:49am

Frontier Was Set Up To Go Bankrupt
The point is, Frontier, like the other Reverse Morris Trust companies, was set up to go bankrupt. The predecessor companies, Verizon and AT&T, retained the cellphone business, they put as high as possible a valuation on the land-line business, they took out as much cash as possible, and as much interest-bearing notes as possible, and left the remaining business as highly leveraged as possible. In northern New England, they misjudged the business with Fairpoint, and Fairpoint didn't last for "a decent interval," to use the phrase about the Vietnam War, a chance to get out of sight before the inevitable collapse came. Frontier has lasted a decent interval, and the money has all been "laundered." South Vietnam lasted two years after the peace treaty (1973-75). By that time, American soldiers had been pulled back far enough that it was logistically impossible for them to do anything when the communists attacked. Frontier's main purchase of Verizon lines was seven years ago. A decent interval indeed!

Cellphones, WiFi, and other forms of wireless are winning. They don't have to maintain continuous branch lines. A repeater or a router every couple of hundred feet is plenty. The local electric company sent out a price-sheet, including not only prices per kilowatt-hour, but monthly all-inclusive prices for outdoor lighting. If you need a street-light, it's about ten or twenty dollars a month, depending on circumstances. That is the point to which, via Moore's Law, the price of a relay or router is converging. The Reverse Morris Trust companies were so pre-occupied with trying to manage their debt that they didn't look very hard at reasonably inexpensive measures such as fiber-to-the-neighborhood.

As one might expect, the rats are leaving the sinking ship.
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Thad, 9 Jun 2017 @ 9:57am

Re: Re: Two Things
You're assuming that getting reelected is not in his personal interest.
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Shawn, 23 Jun 2017 @ 2:11pm

what we see here.
What we are seeing here is a perfect example of a dishonest public servant. One who will not stay bought, and apparently acting against his primary employer. So yes it is perfectly correct for the company to fire him.
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