Frontier Backruptcy

Tony Deakins, Little T Broadband

Recently, I received a number of phone calls regarding Frontier Communications’ announcement that it was entering bankruptcy. This is a ploy often used by large corporations for narrow purposes, such as thwarting a particular litigation or other claims. This, however, was not the case with Frontier, as they have struggled with a debt proportionately equal to the national debt of several countries. A debt so large, filing bankruptcy was more or less anticlimactic. With a major bond series coming eminently due, had they not taken this course, it was likely their bondholders would have forced the move.

So, what does this mean for Frontier’s Otto and Scaly Mountain customers? Well initially, not much. It likely will take the balance of this year to sort out the bankruptcy. In the longer term, there are risks that form up around the following circumstances. Frontier already has sold-off a number of its most profitable markets. In “restructuring” their debts, they may well have to convert more of their remaining profitable markets into cash. It is certain they will have to constrain outflows, which lead to reduction in employees and rigorous efforts to reduce operating costs. That is to say, they will have to quit spending money just short of turning out the lights.

One troubling cost reduction tactic is reducing their commitment to marginally or unprofitable markets ... of which we are one. Frontier won’t withdraw service from profit- challenged markets where federal or state regulators will not allow them to do so, until a replacement provider can be found. Unfortunately, North Carolina is not one of those states, and the current regime at the FCC is not likely to allow itself to be involved either. It will be a couple of years or more before this all plays out, so there is no immediate reason for panic. And, it won’t happen abruptly, either. We will see customer service become insidiously less responsive. Replacement of the ancient equipment operating currently in our communities is not likely to be updated. And then, there will be the appeal to the state to subsidize operations here to which – unless there is a material change in attitude in Raleigh – there will be no reply that will give us solace. And, the larger telecoms and ISPs already have demonstrated no interest in our communities.

All that notwithstanding, we have a bit of time here to move forward with currently the only initiative in unincorporated Macon County to bring forth a viable alternative: Little T Broadband Services. And, we are making progress, albeit inch by inch and row by row. Our greatest obstacle remains sourcing funding that is not otherwise prohibited by the state legislature, and that is scant few as it is. I don’t mean to say they won’t allow us to receive local government grants, rather they won’t allow local government to fund our grant requests. To offset the seemingly inevitable consequences of Frontier’s bankruptcy, we will need to garner more that good wishes from local funding sources, and we will have to work faster than the current pace. From here-on, it’s; lead, follow or move out of the way.

And, I promise the next posting will focus on good news ... and, there is some coming, so stay tuned.