Washington State AG Fines Frontier Communications A Pittance For Its Bullshit Fees
from the 'completely-fraudulent-surcharge' dept
In telecom policy circles, there's an army of "experts" who twist themselves into pretzels trying to pretend U.S. telecom is a healthy, normal, vibrant market. Blinded by partisan loyalties, sector financial links, or ideologies embedded decades ago in grad school, they're incapable of even acknowledging that Americans pay too much money for spotty, substandard service with historically terrible customer support. They're even less likely to acknowledge the corruption, regulatory capture, and lack of competition that made this dysfunction possible. If it is acknowledged, it's downplayed to a comical degree.
As in the Ma Bell days, at the heart of U.S. broadband dysfunction sits phone companies. Providers that have long refused to upgrade their aging DSL networks despite millions in taxpayer subsidies, yet lobby for state laws that ensure nobody else can deliver broadband in these neglected footprints either. These are companies that have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising, then, that many telco DSL customers are fleeing to cable, assuming they even have a second broadband option.
The poster child for U.S. telecom dysfunction is Frontier Communications. Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. Frontier-related graft and corruption in many states (like West Virginia) is so severe, state leaders have buried reports detailing the depth of the problem, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest.
In many states, regulatory capture ensures that Frontier's behavior never sees so much as a wrist slap. That was particularly noticeable when Frontier was recently busted charging users a $10 monthly "rental" fee for modems that the users owned. Frontier, like many big ISPs, has also been given free reign to impose all manner of additional sleazy and misleading fees, usually used to help broadband and TV providers falsely advertise a lower rate.
Even in states where consumer protection is a little tougher, the penalties aren't routinely damaging enough to deter bad behavior. The latest case in point: Washington State Attorney General Bob Ferguson reached a settlement with Frontier last week (pdf) in which Frontier will pay a $900,000 fine for years of imposing bullshit fees on the company's customers. One such fee, dubbed the "Internet Infrastructure Surcharge," imposed an additional $4 monthly on user bills:
"Ferguson began investigating Frontier in 2018 after receiving more than 600 complaints and "focused on Frontier Northwest's failure to adequately disclose fees during sales of cable, Internet and phone services since 2016," Ferguson's announcement said. "For example, the company charged as much as $3.99—nearly $50 per year—for an 'Internet Infrastructure Surcharge,' without adequately disclosing the surcharge in its advertising."
Note that Frontier has 3,735,000 broadband subscribers, each paying $4 a month in completely erroneous surcharges. That's nearly $15 million in bullshit charges in just one month, or $180 million in fraudulent revenue every year. While the $900,000 fine is semi-helpful, it's far from a deterrent -- especially considering that the ISP's settlement with the state doesn't require they stop charging the bullshit fee, just that they make it clear to consumers on their bill. $900,000 is chump change to these regional monopolies.
Keep in mind that Washington is one of the most "aggressive" states in the country at consumer protection, which admittedly isn't saying much. Also keep in mind that this is just one ISP. Numerous ISPs routinely engage in this same or worse behavior, usually with absolutely no penalty whatsoever from state or federal regulators like the FCC. It's the exact sort of behavior that's only made possible by two things: a lack of competition in the broadband market, and feckless, captured regulators who are more worried about campaign contributions than outright fraud.
All ignored, in turn, but a laundry list of telecom policy experts who've made entire careers out of pretending that the US telecom sector is healthy and immensely innovative. In reality, the closest many of these companies get to innovation is in coming up with ethically dubious surcharges.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: bogus fees, fake fees, fine, washington state, wrist slap
Companies: frontier communications
Reader Comments
Subscribe: RSS
View by: Time | Thread
These fines amount to additional, unlawful taxes since the government collects the money paid by citizens. Instead, the money, all of it, should be returned to Frontier's customers who paid it.
[ link to this | view in chronology ]
just add Attorney General Bob Ferguson's name to the list of other self-serving, self-interested assholes connected to the communications industry. even though it may be a little indirect, he's still connected otherwise he would have lumped a serious 'fine' on to Frontier instead of this 'pocket change' amount! how the hell can he even compare $180M to $900k? he might just as well said fuck it and let Frontier carry on! and if there is a deterrent here for other companies, i'd like someone to point it out to me!!
[ link to this | view in chronology ]
Tactics or intent?
Why oh why do Attorneys' General feel the need to 'negotiate' with a plaintiff when they have them cold? Why does the judge (not sure if it is merely allowed or insisted upon) accept such a weak settlement when they know how a continued case might turn out?
[ link to this | view in chronology ]
Re: Tactics or intent?
The Washington AG is an elected position, as in 42 other states. Perhaps he gets "campaign contribitions", or hopes to become corporate counsel for an ISP.
What's worse, the settlement authorizes Frontier to continue the supposedly-illegal charges for a year (3 months for existing customers), according to the Ars story. How many criminals are lucky enough to get a one-year grace period to stop being criminals?
[ link to this | view in chronology ]
Re: Tactics or intent?
Why do Attorneys' General offices have limited budgets, and thus limits on personnel to be thrown at such cases?
What are the limits on a court judgement that the AG could reasonably expect if the court rules in its favor? How much would it cost the state to arrive at that judgement, and how long would it take?
And what would it take to effect real change in the situation, rather than just "tell them better beforehand"?
The answers to these questions and others are out there!
[ link to this | view in chronology ]
Re: Re: Tactics or intent?
If blatent false advertising is so difficult to prosecute, there's something wrong with the law. Costs shouldn't matter, because Frontier should be paying them.
[ link to this | view in chronology ]
Re: Re: Re: Tactics or intent?
You realize that you're addressing the wrong branch of government, to blame the AG's office for problems with the law, right?
Before or after a judge decides the case? If before, you would be setting a dangerous precedent. Akin to the white elephant or the visiting monarch, the victim is harmed, innocent or guilty.
And if after, well, that's where we are right now. And until that payday, attorneys, paralegals, interns etc need to be paid.
... and hmm... a court judgement going right into the pockets of the plaintiff government branch. Remind you of anything law enforcement-wise? Surely that couldn't be a perverse incentive....
It's not that I don't think Frontier needs to stop doing that shit. Nor Comcast, etc. It's that the solutions aren't ever going to be simple, and they come with problems of their own.
[ link to this | view in chronology ]
Re: Re: Re: Re: Tactics or intent?
I'm not blaming the AG for the law. I'm saying one or both of these are weak; I'm not sure which.
After, of course. And after their appeals are exhausted, if applicable. No faux-legal bullshit.
Not really. They're paying a (tiny) fine, which may or may not cover costs. The settlement lets them keep the bulk of their ill-gotten gains and lets them keep breaking the law for another year. "Where we are right now" is that the AG has apparently given up hope for a fair settlement.
I agree with the other poster who said the money should go to the people who were overcharged. Although there might be other satisfactory settlements, like having them build out an open-access network until the "infrastructure surcharge" funds are depleted.
[ link to this | view in chronology ]
Surprise!
Fox slaps fox on wrist for raiding henhouse.
[ link to this | view in chronology ]
Anonymous Coward
I must be really, really slow. I've been reading this site for years and I always thought that Anonymous Coward posted a heck of a lot. I just now figured out that is the name used if you do not make up a name yourself.
[ link to this | view in chronology ]
Washington State AG mysteriously finds Porsche in driveway
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Imagine applying high court rules to low court...
'You have been found guilty of regularly making use of your job as a bank teller to defraud both customers and the bank itself, to the tune of stealing literally millions of dollars over the course of your employment. It is hereby ruled that while you may keep all of the money your stole you are required to pay the bank $200. Case dismissed.'
[ link to this | view in chronology ]