Opposition to Verizon-Frontier deal is growing
The opposition to the proposed sale of 4.8 million Verizon landlines to Frontier Communications is growing. State utility advocates, consumer groups, state officials, and unions have all raised serious concerns about the deal.
The proposed $8 billion sale would transfer Verizon's primarily rural line in 14 states, including: West Virginia, Washington, Oregon, Illinois, Ohio, Michigan, Wisconsin, and South Carolina.
In its filing last week, CWA pointed out that the deal -- which would represent a step backward in broadband deployment -- is largely driven by a tax loophole known as the Reverse Morris Trust. Using this tax loophole, Verizon will load Frontier with more than $3 billion in new debt -- and sell off its lines tax-free. As a result Frontier will not have the resources to provide quality service and expand advanced broadband.
The National Association of State Utility Consumer Advocates urged the Federal Communications Commission, which is reviewing the proposed transaction, to reject the deal.
"The merger proposed by Frontier and Verizon is not in the public interest," said David Springe, president of the consumer advocate group. "The failure of the companies to offer adequate consumer benefits or protections puts customers at risk of being served by a company without enough financial strength to make necessary improvements to local telephone facilities and widen the deployment of broadband access."
Free Press, a nonpartisan group that works to reform the media, also raised concerns about the sale in a filing with the FCC. Free Press cited Verizon's sale of lines in New Hampshire, Maine, and Vermont to FairPoint, which subsequently acquired substantial debt, was unable to accommodate the increased service area, and is now on the edge of bankruptcy.
Opposition to this deal As CWA and many other organizations continue to push for increased broadband quality and access, opposition to this deal is part of the same fight. We cannot let the big phone companies sell off their rural lines and widen the digital divide.
"This trend has the potential to leave rural areas with ill-equipped companies offering inadequate service at high prices," says the Free Press report. "This is in direct contrast to the stated intent of Congress and the Obama Administration to foster universal broadband to all Americans."
State Commissions are also reviewing the proposed transaction in West Virginia, Washington, Oregon, Ohio, South Carolina, and Illinois.
West Virginia's Attorney General, Darrell McGraw, recently urged that state's Public Service Commission to apply "heightened scrutiny" to its review of the sale, warning that it could create poor telephone service, higher costs, and job losses.
West Virginia's Chief Deputy Attorney General Fran Hughes supported CWA's position by saying, "We don't think Frontier has the ability financially to live up to the commitments it has made to the PSC."
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Comment: National Association of State Utility Consumer Advocates (FCC)
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