Windstream, FCC Reach Agreement on Dropped Calls

The Federal Communications Commission and Windstream Holdings Inc. of Little Rock have come to an agreement over complaints about frequently dropped calls throughout rural telephone networks.

As part of the agreement, Windstream will have to report data on its long-distance calls and pay the federal government $2.5 million.

In a statement, Windstream denied wrongdoing but said it would "enhance the way it monitors and manages its intermediate carriers" as part of the settlement.

"As the FCC has noted, call-completion issues are complex, in part because long-distance calls typically are handled by multiple third-party intermediate providers before reaching their final destinations," the statement said.

According to a document filed with the FCC, the commission received a letter in June 2011 from a collection of wireline trade associations claiming a "nationwide and industrywide epidemic" of dropped or poor quality phone calls throughout rural telephone networks.

The FCC created a task force in September 2011 to investigate, and in November 2012, the Wireless Competition Bureau requested information from Windstream regarding its performance and the performance of the intermediate providers that help complete long-distance calls.

Following Windstream's response, the bureau's concerns ultimately fell on the former network of Paetec Holding Corp. of Fairport, N.Y., which Windstream acquired in December 2011.

In November 2013, the FCC found that "rural call completion issues are serious and widespread" and issued new rules requiring providers to record and report detailed information about long-distance calls.

This week, the FCC ended its investigation on the condition that Windstream continue to report that information and produce a plan for further compliance. Windstream is also required to make a $2.5 million contribution to the U.S. Treasury within 30 days of the FCC's order.

"We appreciate the careful, deliberate approach the FCC took in this matter," said John Fletcher, executive vice president and general counsel at Windstream, in the statement. "While we disagree with the agency's conclusion that our call completion practices were not adequate, we believe this is the best way to resolve the inquiry and enable us to continue providing great service to rural customers."

Windstream (NYSE: WIN) is scheduled to report quarterly earnings on Thursday.