Frontier Communications will have to invest at least $150 million over the next three years to increase broadband speeds in West Virginia as part of a settlement to lawsuit filed in 2014 by the state's Attorney General Patrick Morrissey.
The lawsuit accused Frontier of promising broadband speeds of up to 6 Mbps but only delivering speeds of 1.5 Mbps or lower. Frontier has admitted to no wrongdoing but has committed to reducing its monthly rate for customers that were impacted by this to $9.99 per month, a savings of $10 to $20 per month. The reduced rate will be available until Frontier increases its network download speeds provisioned at 1.5 Mbps or lower to at least 6 Mbps, according to Morrisey's office. The price decreases will start Jan. 25.
An estimated 28,000 customers will benefit from the rate decrease in addition to any new customers provisioned at the slower speed. The rate reductions are expected to cost Frontier $6.25 million per year. In a press release, Frontier estimates this will cost the company about $1.5 million per quarter in revenue. Frontier has also set up a Web site for customers to see if they qualify for the discount.
Also as part of the settlement Frontier is required to pay $500,000 to the state's Consumer Protection Fund. The payment will be used to offset investigative and monitoring expenses.
Frontier is not the only company that's come under fire for not delivering on advertised broadband speeds. Fellow ILEC CenturyLink (NYSE: CTL) was asked by the National Advertising Division (NAD) to modify the way it compares its Internet speeds with those offered by Comcast (NASDAQ: CMCSA).
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