Free Press concerned with Verizon Frontier deal

One of the nation's leading consumer advocacy groups recently voiced concern with the Verizon Frontier deal and its potential impact on rural America. In the blog post, Free Press joined the call to close the RMT tax loophole that is enabling the deal to happen.

Free Press's Adam Lynn writes:

Consider Verizon's comments to the Federal Communications Commission in March: "[m]aking broadband available to these unserved, rural areas is a challenge for the Commission and other policymakers that must be a central concern as the Commission develops a national broadband strategy."...

Now, Verizon has hit a new low with this doozy: The company is abandoning the majority of its rural customers in its service area. Its press release trumpeted, "Verizon to Divest Wireline Businesses in 14 States; Significant Benefits to Verizon Shareholders." The company is asking the FCC to approve the sale of its rural lines to a smaller company called Frontier Communications.

Verizon simply doesn't want to interact with anyone but the highest paying customers. In its own financial speak, Verizon hopes "to transform our growth profile and asset base" to focus on "more densely populated markets." The company is quick to note this move would "return a total value of $8.6 billion to Verizon and shareholders." The company's statement was made less than two months after Verizon paid lip service to the importance of rural broadband in its comments to the FCC.

Verizon hopes to use a tax loophole known as a reverse Morris trust (RMT) to dump its rural operations on Frontier. In a nutshell, a RMT allows a company to sell something tax free as long as the recipient is a much smaller company.

Read the rest of the Free Press' argument against the sale here.

FreePress.net (Free Press)

The Dirty Truth about Rural Broadband (Free Press)