Windstream Holdings, which gets federal subsidies to provide internet service to Georgians in rural areas, has filed for Chapter 11 bankruptcy, but says it will continue to provide service during its reorganization.
“Customers are a top priority in this time,” said spokesman David Avery.
Windstream toppled into bankruptcy as Georgia legislators tried and failed to find money to subsidize internet service in the rural parts of the state that don't have adequate infrastructure. Those areas are underserved or not served, which affects economic development. Inconsistent or poor service leaves businesses unable to process credit card charges, schools unable to access learning materials, and customers unable to binge on the latest hot television series.
A lawsuit pushed the company into bankruptcy on Monday after an investor, Aurelius Capital Management, sued, alleging investors were hurt by Windstream’s decision to spinoff a subsidiary. The judge ruled that the 2015 spin-off violated the company’s financial covenants. Windstream said it filed for bankruptcy “to address the financial impact” of the judge’s decision.
The judge allowed Windstream access to up to $1 billion in credit. The company will use that to help it continue operating, Avery said.
The federal government subsidizes rural internet infrastructure and service through companies like Windstream via the Connect America Fund.
Congressman Doug Collins, who has dogged Windstream for years over bad service to his northeast Georgia constituents, took the opportunity Wednesday to fire a verbal warning.
“For years, Windstream has taken advantage of customers and taxpayers by promising speeds they know they can’t meet and failing to provide consistent broadband service while collecting taxpayer dollars and receiving substantial federal tax breaks,” the Gainesville Republican said in a press release.
“Despite its bankruptcy status, the burden of Windstream’s financial problems cannot fall on the shoulders of taxpayers who depend on their services to access the internet.”
Avery said Windstream recently completed upgrades in northeast Georgia that improved speeds from 100 to 300 megabits per second. That allows streaming of high resolution movies, for instance. The company is and will continue to be in compliance with all Connect America Fund milestones and requirements, he said.
Windstream’s Georgia service areas include about 700,000 homes, Avery said. The company does not release information on how many of those homes are customers.
According to information from Collins’ office, a 2015 Federal Communications Commission letter says Windstream was to get about $25 million a year for six years to serve about 65,000 Georgia customers with broadband service. It was to receive about $175 million annually for all the states it serves.
In January, Collins introduced a bill, the Connect America Fund Accountability Act of 2019, calling for companies like Windstream to provide more information to the FCC about services and spending on infrastructure, which will let the FCC monitor the use of federal money more closely. It has not passed.
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Credit: Nathan Posner for the AJC