Minnesota customers could get credits, refunds under proposed settlement with Frontier Communications

Customers of Frontier Communications plagued by myriad phone-system failures could receive credits or refunds under a settlement agreement between the company and the Minnesota Department of Commerce.

But Frontier and the Commerce officials should expect a grilling on the settlement Thursday, when it is scheduled to be reviewed by the Minnesota Public Utilities Commission (PUC). The Minnesota Attorney General's Office and the PUC's staff have questioned terms of the deal.

The Commerce Department issued a scathing report in January concluding that Frontier may have broken 35 laws and failed its Minnesota customers with shoddy service, lax record-keeping and inadequate investment in its own network. Commerce has been working with Frontier in recent months on a settlement.

The Attorney General's Office — while not making a recommendation whether to approve the settlement — criticized it in a regulatory filing. "The proposed settlement's remedies strike the [Attorney General's Office] as paltry compared with Frontier's alleged misconduct."

The AG's office, which is conducting its own investigation of Frontier, also "expressed concern that the proposed settlement fails to resolve any past violation of Minnesota's telecommunications statutes or rules. It merely kicks the can down the road."

In a filing, PUC staff appear to have similar concerns. "While there is a refund/credit plan, as submitted there is much undeveloped and unclear about the process." Parts of the settlement "suggest that a number of issues are being delayed rather than being resolved," the filing said.

The Commerce Department and Frontier both defended the agreement. "The department believes the proposed settlement is in the public interest and supported by substantial evidence," the department said in a filing.

The settlement, they said, would provide a way for customers to "recover remedies for past telephone service deficiencies and prospectively establishes very substantial service quality performance standards Frontier must meet."

Stamford, Conn.-based Frontier, a publicly traded company, has denied allegations that it broke Minnesota laws. In the settlement agreement, Frontier does not admit to any noncompliance with state laws and regulations.

Frontier, which also operates under the name Citizens Communications, is Minnesota's second-largest landline phone provider with 90,000 to 100,000 customers, many in rural northeastern and southern parts of the state.

The PUC began looking into Frontier in 2018 after hearing from its customers about poor service, from static-filled phone calls to billing mistakes. The PUC ordered a Commerce Department inquiry. It also set up seven public hearings across the state and accepted further comments directly from Frontier customers.

Overall, the PUC received more than 1,000 complaints, including 325 solely about Frontier's internet service and 400 concerning combined web and phone problems. The PUC generally regulates only landline phones, and the Frontier settlement excludes internet service issues. The state and the company disagree on regulatory authority over the internet.

The refunds or credits would cover a host of problems, including disconnection without proper notice; failure by Frontier to repair poor transmission; certain service outages; missed repair appointments by Frontier; and improper late fees and several other incorrect billing matters.

Frontier would provide a plan for customers to seek refunds and credits — subject to review by the Commerce Department. Frontier must notify all of its existing Minnesota customers by mail or e-mail of the opportunity to file a claim. Former Frontier customers would also be able to seek refunds.

The settlement proposal also sets out remedies for some future Frontier service issues, including certain outages, call-quality problems and call-waiting times of more than 10 minutes for customer complaints.

In a PUC filing, the Attorney General's Office faulted the proposed settlement for, among other things, not requiring Frontier to put a specific amount of money in escrow for paying out claims.

The settlement "merely provides a procedural framework for the types of remedies available. … There is even less certainty as to how Frontier's future conduct will be evaluated because the proposed settlement fails to set forth any detailed process for handling future customer claims."

The Commerce Department said in a statement that, under the settlement, "Frontier would have to meet high standards for delivering service to Minnesotans — from 911 service to timely repairs."

The PUC's staff questioned why the settlement seems to give the Commerce Department primary enforcement responsibility — not the PUC itself. "It is not clear where the proposed settlement includes much action by the commission," the PUC staff filing said.

The PUC, whose five members are appointed by the governor to staggered terms, is the state's primary utility regulator. The Commerce Department, an arm of the governor's administration, does analysis for the PUC, working in the public's interest.

PUC staff wrote that the proposed settlement doesn't allow the PUC to challenge decisions by Frontier to deny customers' claims.

The department could disagree with a Frontier denial, and the two parties could enter mediation. But if a Frontier denial were based on a PUC rule, "the commission appears to have no ability to weigh in on its own motion and exercise its decisionmaking authority," the filing said.