Frontier Communications 2013 Annual Report Download - page 14

any underlying telecommunications component, and that there is no obligation to separate out and offer that
transmission component subject to common carriage regulation. As the significance of the Internet expands,
federal, state and local governments may pass laws and adopt rules and regulations, or apply existing laws and
regulations to the Internet (including Internet access services), and related matters are under consideration in
both federal and state legislative and regulatory bodies. We cannot predict whether the outcome of pending or
future proceedings will prove beneficial or detrimental to our competitive position.
In October 2009, the FCC issued a proposed rulemaking looking at rules to “Preserve a Free and Open
Internet,” (i.e., net neutrality) including a reconsideration of the legal classification of broadband and proposed
restrictions on broadband network management practices. On December 21, 2010, the FCC adopted an order
imposing some regulations on Internet service providers. These regulations affect fixed and mobile broadband
providers differently. These regulations became effective November 20, 2011, and we are in compliance with
these regulations. On January 14, 2014, the U.S. Court of Appeals for the D.C. Circuit vacated the portions of
the FCC’s rules that prohibited blocking and required non-discriminatory treatment. The Chairman of the FCC
has stated his intention to preserve the spirit of the vacated rules. The D.C. Circuit’s ruling may be appealed or
the FCC may take other regulatory actions to implement “Open Internet” policies. The future state of these
regulations and their effect on us is unknown.
Video programming
Federal, state and local governments extensively regulate the video services industry. Our fiber optic-based
video service is subject to, among other things, subscriber privacy regulations; requirements that we carry a
local broadcast station or obtain consent to carry a local or distant broadcast station; rules for franchise
renewals and transfers; the manner in which program packages are marketed to subscribers; and program access
requirements.
We provide video programming, on a limited basis, in Oregon, Washington and Indiana pursuant to
franchises, permits and similar authorizations issued by state and local franchising authorities. Most franchises
are subject to termination proceedings in the event of a material breach. In addition, most franchises require
payment of a franchise fee as a requirement to the granting of authority.
Many franchises establish comprehensive facilities and service requirements, as well as specific customer
service standards and monetary penalties for non-compliance. In many cases, franchises are terminable if the
franchisee fails to comply with significant provisions set forth in the franchise agreement governing system
operations. We believe that we are in compliance and meeting all material standards and requirements.
Franchises are generally granted for fixed terms of at least ten years and must be periodically renewed. Local
franchising authorities may resist granting a renewal if either past performance or the prospective operating
proposal is considered inadequate.
Environmental regulation
The local exchange carrier subsidiaries we operate are subject to federal, state and local laws and
regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of
pollutants into the environment and the remediation of contamination. As an owner and former owner of
property, we are subject to environmental laws that could impose liability for the entire cost of cleanup at
contaminated sites, including sites formerly owned by us, regardless of fault or the lawfulness of the activity
that resulted in contamination. We believe that our operations are in substantial compliance with applicable
environmental laws and regulations.
Additional Information on AT&T Transaction
The consummation of the AT&T Transaction is subject to the satisfaction of certain conditions, including
review or approval by the U.S. Department of Justice, the FCC and the Connecticut Public Utilities Regulatory
Authority, and other customary closing conditions. We expect the transaction to close in the second half of
2014. A full conversion of AT&T’s Connecticut operations onto our existing systems and networks is planned
to correspond with the closing of the AT&T Transaction.
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES