BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF

Application of A. 20-05-010 FILED Corporation, Frontier California Inc. (U 1002 (Filed May 22, 2020) 03/18/21 C), Citizens Telecommunications Company of 04:59 PM California Inc. (U 1024 C), Frontier Communications of the Southwest Inc. (U 1026 C), Frontier Communications Online and Long Distance Inc. (U 7167 C), Frontier Communications of America, Inc. (U 5429 C) For Determination That Corporate Restructuring Is Exempt From or Compliant With Public Utilities Code Section 854.

JOINT NOTICE OF REJECTION OF ORDERING PARAGRAPH 4(o)(i) OF DECISION APPROVING CORPORATE RESTRUCTURING WITH CONDITIONS

Christine Mailloux Rachael E. Koss Staff Attorney The Utility Reform Network Adams Broadwell Joseph & Cardozo 785 Market Street, Suite 1400 601 Gateway Boulevard, Suite 1000 San Francisco, CA 94103 South San Francisco, CA 94080 Phone: (415) 929-8876 Phone: (650) 589-1660 E-mail: [email protected] E-mail: [email protected]

Attorneys for The Utility Reform Network Attorneys for Communications Workers of America, District 9

Noel A. Obiora Patrick M. Rosvall Attorney, Legal Division Sarah J. Banola California Public Utilities Commission BRB Law LLP 505 Van Ness Avenue, Room 5121 P.O. Box 70527 San Francisco, CA 94102 Oakland, CA 94612 Phone: (415) 703-5987 Phone: (415) 518-4813 E-mail: [email protected] E-mail: [email protected]

Attorneys for Public Advocates Office Attorneys for Frontier

March 18, 2021

1 / 7 INTRODUCTION Pursuant to Ordering Paragraph 4(o)(ii) of the Decision Approving Corporate Restructuring with Conditions, adopted in this proceeding on March 18, 2021 (the “Decision”), and in accordance with Rule 12.4(c) of the Rules of Practice and Procedure (“Rules”) of the California Public Utilities Commission (“Commission”), Frontier Communications Corporation, Frontier California Inc. (U 1002 C), Citizens Telecommunications Company of California Inc. (U 1024 C), Frontier Communications of the Southwest Inc. (U 1026 C), Frontier Communications Online and Long Distance Inc. (U 7167 C), and Frontier Communications of America, Inc. (U 5429 C) (collectively “Frontier”), The Utility Reform Network (“TURN”), the Public Advocates Office at the California Public Utilities Commission (“Cal Advocates”), and the Communications Workers of America, District 9 (“CWA”) (collectively, the “Settlement Parties”)1 hereby provide notice that they reject the adoption of Ordering Paragraph 4(o)(i).2 Ordering Paragraph 4(o)(i) would add a material condition not contemplated by the Parties’ Settlement Agreement to the list of requirements accompanying Frontier’s Restructuring and emergence from Chapter 11 bankruptcy.3 The current language of Ordering Paragraph 4(o)(i) also is not reflective of the Assigned Commissioner’s comments about this intended change as mentioned in the Commission’s March 18, 2021 Voting Meeting—specifically, that 10% of the 150,000 location must be in rural areas. As such, OP 4(o)(i) must be updated accordingly. Moreover, as currently written, the terms embodied in Ordering Paragraph 4(o)(i) are not supported by the record, are not feasible, would add substantial incremental costs to Frontier’s $1.75 billion capital expenditure commitment in the Settlement Agreement, and would upset the balance achieved by the Parties’ Settlement Agreement by limiting the buildout of fiber facilities to thousands of low income households, communities of color and rural households throughout Frontier’s diverse serving territory merely because they have access to one other broadband option that may or may not meet their needs. For these reasons, the Settlement Parties cannot accept the terms in Ordering Paragraph 4(o)(i). Based on their collective action in this notice rejecting Ordering Paragraph 4(o)(i), the

1 On December 24, 2020, Frontier, Cal Advocates, TURN, and CWA entered into a settlement agreement attached to the PD as Attachment 1 (“Settlement Agreement”). 2 Ordering Paragraph 4(o)(ii) states: Each party to the Attachment 1 Settlement Agreement shall have until 5:00 p.m. Pacific Daylight Time on March 29, 2021 to elect to file and serve written notice (1) accepting the provisions of subparagraph (i) above and (2) waiving any claim of inadequacy regarding the record and the insufficiency of notice regarding the 1

2 / 7 Parties understand that the Decision voted out at the March 18th voting meeting will not take effect in the form voted on. See Decision at 78 (OP 6). Additionally, the Settlement Parties continue to support their collectively-endorsed edits to the February 12, 2021 Proposed Decision, as expressed in their comments on March 4, 2021 and March 9, 2021. Even if these edits will not be accepted in their entirety, upon review of the revisions in the voted decision and after conversation among the Settlement Parties, it is their unanimous consensus that Ordering Paragraph 4(o)(i) should not be adopted. Time is of the essence to permit Frontier to emerge from Chapter 11 bankruptcy by March 30, 2020, which is necessary to enable Frontier to begin to deliver the public benefits of Restructuring and avoid further, substantial bankruptcy-related expenses. The key reason is that the new language in Ordering Paragraph 4(o)(i) is not feasible and undermines key parts of the Settlement Agreement. Since release of the Rev. 1 Proposed Decision, the Settlement Parties have worked to propose a revision to Ordering Paragraph 4(o)(i) so that “at least 10 percent of Frontier’s planned fiber buildout to the 150,000 locations with an Internal Rate of Return of 20 percent or less”. . . be in locations in which Frontier is the only fixed broadband Internet access service provider.” The Settlement Parties recommend this alternative language that in their collective view reasonably furthers the Commission’s expressed goal to improve broadband availability in rural areas. As set forth below, the Parties urge the Commission to remove or modify, as proposed by the Settlement Parties, Ordering Paragraph 4(o)(i) in its Decision and adopt a new decision approving the Restructuring at its upcoming March 25, 2021 meeting. DISCUSSION The Settlement Parties are united in their position because the record does not support the requirement that Frontier deploy fiber to 150,000 locations in which there is not another fixed

provisions of subparagraph (i) above. A failure by a party to the Attachment 1 Settlement Agreement to timely file and serve its election shall be deemed to be its election to accept the provisions of subparagraph (i) above and waive any claim of inadequacy regarding the record and the insufficiency of notice regarding the provisions of subparagraph (i). As noted above, in response to this requirement, the Settlement Parties collectively reject and do not accept the provisions of subparagraph (i) in the Decision. 3 The Ordering Paragraph 4(o)(i) was added through a revision that occurred after the parties’ comments on the Proposed Decision and during the “quiet period” imposed by the Commission’s ex parte rules. As a result, the Parties did not have an opportunity to address the addition of this provision in the Revised Proposed Decision prior to its ultimate adoption at the March 18, 2021 meeting and, therefore, must procedurally reject the Order. 2

3 / 7 broadband Internet access service provider or a finding that such an endeavor is feasible. There are substantially fewer than 150,000 locations in its service territory without access to fixed broadband Internet access service from another provider. Moreover, that number will significantly decline next year as other broadband service providers, both existing and new providers within Frontier’s service area, begin to fulfill the Federal Communications Commission Rural Digital Opportunity Fund (RDOF) program requirements to bring new broadband infrastructure to unserved California areas within the six years. As a result, the Settlement Parties agree that it will not be feasible to comply with Ordering Paragraph 4(o)(i) requiring “All of Frontier’s planned fiber buildout to the 150,000 locations with an Internal Rate of Return of 20 percent or less . . . [to] be in locations in which Frontier is the only fixed broadband Internet access service provider.” In addition, the requirement to target deployment in locations where Frontier is the only fixed broadband Internet provider would substantially and exponentially increase the cost to deploy FTTP due to factors including the lower concentration and density of areas, as well as the geographic scope of areas, not served by a fixed broadband provider (e.g., there are generally only small pockets not served by cable TV broadband or another provider such as one neighborhood or street versus an entire community). Further, the proposed change would upset the careful balance in the settlement agreements adopted by this Decision, which reflect compromises reached by all active Parties in this proceeding and a substantial stretch investment commitment by Frontier of $1.75 billion over 4 years based on the projected financial capacity and revenues and returns from this investment. Frontier has determined that if it is required to deploy to 150,000 locations with no other broadband provider, the vast majority of the deployment locations would have a negative return on investment (e.g., IRR of less than 0), meaning that Frontier would not recover any return on the expenditures. As such, this provision is unduly burdensome and inconsistent with Frontier’s fiscally disciplined approach underpinning Frontier’s success following its emergence from bankruptcy. In addition, typically, deployment to locations where the economics provide no opportunity for a return is supported by public funding programs like RDOF, the California High Cost Fund B and CASF. Frontier would not remain financially viable in California and would put in jeopardy the other substantial commitments Frontier has made in the Settlement Agreement and settlements with the other parties, including the Yurok Tribe and CETF if it were required to make substantial increased investments with no ability to generate a return on its

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4 / 7 expenditures. Finally, the revised language in the Decision would undermine the intent of the Settlement to ensure that Frontier’s fiber deployment would reach lower income residents, communities of color and rural households already served by a cable TV or other broadband provider. Cal Advocates and TURN noted one example in their reply comments on the PD explaining that pursuant to a Legislative directive from Senate Bill (SB) 535 (2012) a state agency analysis found that “disadvantaged communities” are present throughout California including Frontier’s territory in Los Angeles and Riverside counties.”4 These areas are largely already served by cable TV and other fixed broadband providers. Yet in many of these areas, the services offered by these alternative providers are inadequate or unduly expensive. Similarly, as Frontier noted in its comments on the PD, many rural communities that have asserted they require improved broadband service such as Colusa City in Colusa County are currently served by a cable TV broadband provider (e.g. Comcast in Colusa City).5 Under the current language in the Decision, Frontier’s commitment to target FTTP deployment to 150,000 locations could not include these urban and rural communities because of the mere existence of another fixed broadband service provider, even though these communities state that they are not being adequately served by any provider today. For the reasons above, the Commission should follow the Settlement Parties’ consensus that Ordering Paragraph 4(o)(i) should not be adopted. Although the Settlement Parties cannot support Ordering Paragraph 4(o)(i) as adopted, they can agree to a modified version of this Ordering Paragraph as part of the Commission’s immediate approval at its next voting meeting on March 25, 2021, as follows: All At least 10 percent of Frontier’s planned fiber buildout to the 150,000 locations with an Internal Rate of Return of 20 percent or less set forth in Paragraph 19 of the Attachment 1 Settlement Agreement shall be in locations in which Frontier is the only fixed broadband Internet access service provider. Frontier shall use the California Interactive Broadband Map (Map) to identify areas with only one service provider, unless it is able to show that the Map is inaccurate. At least 10 percent of the funds Frontier allocates to the fiber buildout to the 150,000 locations shall go to locations outside of Urbanized Areas, as defined by the U.S. Census Bureau as areas with fewer than 50,000 people.

4 Cal Advocates Reply Comments (March 9, 2021) at fn 10. 5 Frontier Reply Comments (March 9, 2021) at 4. Frontier explained that in October 2018, for example, Frontier proposed a California Advanced Services Fund project (Colusa) to enable fiber optic based High- Speed Internet (“HSI”). The Commission denied Frontier’s proposal in response to challenges received by other wireline broadband providers, including Comcast, because the Commission found that the proposed project area already has broadband available at served speeds. 4

5 / 7 The Settlement Parties’ proposed revision of Ordering Paragraph 4(o)(i) will still impose significant additional costs and complexities on Frontier. However, in order to enable it to obtain approval and emerge from Chapter 11 by March 30, 2021, Frontier is prepared to absorb the costs and agree to target and deploy at least 10% (15,000) of the 150,000 FTTP locations to areas where it is the only fixed broadband service provider. Frontier will also agree that at least 10% of the expenditures associated with the 150,000 locations are incurred outside Urbanized Areas, as defined by the U.S. Census Bureau as areas with fewer than 50,000 people. Frontier will work in good faith with the key stakeholders who will receive reports and participate in collaborative discussions pursuant to the terms of the Settlement Agreement related to the implementation of these requirements. As previously communicated to the Commission, under its confirmed Plan of Reorganization, Frontier will be subject to substantial additional costs and claims from its lenders if Frontier does not emerge from bankruptcy on or before March 30, 2021. Frontier and other parties, including the Yurok Tribe, will benefit if the Commission were to approve and Frontier could emerge from Chapter 11 by March 30, 2021.6 The Settlement Parties believe that the Commission is in a position to adopt a final decision within that timeframe that is both consistent with the Parties’ collective positions and supported by the record so that Frontier can emerge from bankruptcy before being exposed to these significant costs. Time is of the essence. The Parties therefore urge the Commission to remove or modify, Ordering Paragraph 4(o)(i) in its Decision as proposed above by the Settlement Parties, incorporate proposed edits as requested and adopt a final decision addressing the Restructuring at its upcoming March 25, 2021 voting meeting. Ordering Paragraph 4(o)(ii) would not require modification. This would allow Frontier to emerge from Chapter 11 bankruptcy on or before March 30, 2021 which is necessary to enable Frontier to begin to deliver the public benefits of restructuring and avoid further, substantial bankruptcy-related expenses. In the alternative, if the Commission does not remove or modify Ordering Paragraph 4(o)(i) in its Decision as proposed above by the Settlement Parties or adopt a revised final decision by March 25, the Commission should provide a reasonable opportunity for the parties to comment on a revised draft, including the issues raised by the addition of Ordering Paragraph

6 The Yurok Tribe/Frontier Settlement provides additional financial resources to the Yurok Tribe if the Commission approves Frontier’s Restructuring by March 30, 2021, and it will facilitate the Tribe’s ability to submit applications for federal funding for its portion of the project funding. Attachment 3 to PD, Settlement Agreement at p. 6. 5

6 / 7 4(o)(i) so that the feasibility, costs, and administrative problems with this alternative language can be properly evaluated as part of the procedural record of the proceeding. Comments could be solicited on a shortened time schedule (e.g. 5-7 business days). CONCLUSION The Settlement Parties strongly support their Settlement Agreement and believe that Frontier’s Restructuring and timely exit from bankruptcy is in the public interest based on the conditions reflected therein. However, they cannot accept the additional condition in Ordering Paragraph 4(o)(i) and urge the Commission to avoid further delay of Frontier’s emergence from Chapter 11 and risks to the build out vital fiber facilities to key areas in Frontier’s service territory, by deleting this requirement or limiting this requirement as explained above and adopt a final decision by March 25, 2021. Executed at Davis, California on this 18th day of March 2021.7 Patrick M. Rosvall Sarah J. Banola BRB Law LLP P.O. Box 70527 Oakland, CA 94612 Phone: (415) 518-4813 E-mail: [email protected]

By: /s/ Patrick M. Rosvall Patrick M. Rosvall Attorneys for Frontier

7 Pursuant to Commission Rule 1.8(d), counsel for Frontier is authorized to sign this Joint Notice on behalf of all parties. 6

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