The FTC has settled a case in which Frontier Communications was accused of charging high prices for under-delivered internet connectivity.
The US telecommunications giant has promised to be clearer with subscribers on connection speeds, and will cough up more than $8.5 million, or less than a day in annual profit, to end the matter.
Frontier used to primarily pipe broadband over phone lines to people in rural areas, expanded to cities, and today supplies the usual fare to homes and businesses: fiber internet, TV, and phone services.
Thousands of its subscribers, however, complained they couldn’t use Frontier’s internet to do even basic tasks, prompting the FTC to investigate. The US government watchdog, with state prosecutors, 1in turn took Connecticut-based Frontier to court last May.
The FTC’s commissioners have now voted 4-0 to approve a settlement deal with the cableco, and have asked a California federal judge to approve the package. Frontier will have to produce evidence of the internet speeds it claims to deliver, and will admit no guilt as part of the settlement [PDF].
The settlement also requires the telco to pay $8.5 million “in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers,” according to the FTC, and an extra $250,000 to customers who specifically suffered from sub-par broadband, with any spare money going to the Consumer Protection Prosecution Trust Fund.
The FTC also wants Frontier to provide discounts to netizens who were not told their internet was slower than advertised. In addition, the telco have to fork out $50 to $60 million to set up fiber-optic internet service to 60,000 locations in California over the next four years.
“Frontier lied about its speeds and ripped off customers by charging high-speed prices for slow service,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, thundered in a statement. “[The] proposed order requires Frontier to back up its high-speed claims. It also arms customers lured in by Frontier’s lies with free, easy options for dropping their slow service.”
Before it was hit by the FTC’s lawsuit, the biz announced it had managed to successfully emerge from Chapter 11 bankruptcy protection, and has since expanded to support fiber internet. Frontier reaped $5bn in net income in 2021, and boasted of a “reinvented brand identity” in its latest financial report.
“My office will not stand by while businesses take advantage of consumers by failing to provide them with the services they have purchased,” said Los Angeles County District Attorney George Gascón, one of the prosecutors involved in the case.
“We will continue to work together with our law enforcement partners to make sure that companies fulfill their promises to consumers and that they refrain from making false statements in their advertisements.”
The Register has asked Frontier for comment. Maybe the call didn’t get through. ®