FCC Clears Verizon, Frontier Landline Deal - InformationWeek
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5/24/2010
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FCC Clears Verizon, Frontier Landline Deal

Frontier Communications has agreed to pay $8.6 billion to acquire nearly 5 million Verizon telephone lines in 14 states.

The Federal Communications Commission approved Verizon Communications' plan to divest itself of nearly 5 million telephone lines in 14 states. The $8.6 billion sale to Frontier Communications came with some high praise as well as some concern over how well the deal will eventually play out.

All of the five FCC commissioners voted for the transfer, although the three Democratic commissioners expressed some reservations.

The landlines include all of Verizon's landlines in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin. Some landlines in parts of rural California are also included in the deal.

Verizon has been working to divest its rural phone lines, which are expensive to maintain, so it can "accelerate its focus on wireless, broadband, and global IP networks," the telephone company said as it hailed the FCC decision.

Verizon's earlier divestures of its landlines in Northern New England and Hawaii have been disastrous, resulting in bankruptcy for the acquiring companies and impaired service for consumers in those areas.

However, the FCC, cognizant of the New England and Hawaiian problems, said it had reviewed the record exhaustively and came to the conclusion that the 14-state divestiture to Frontier will help make the National Broadband Plan a success in rural America.

"No transaction is without risk and this one has its fair share," said FCC chairman Julius Genachowski in a statement. "But based on our review, considering the issues and concerns with the status quo path and Frontier's enforceable commitments to be good stewards of this vital infrastructure on behalf of consumers in its regions, we conclude that on balance the likely public-interest benefits outweigh the potential public-interest harms."

Genachowski noted that Frontier committed to a series of advanced features including deployment of broadband speeds of 4 Mbps downstream and 1 Mbps upstream to more than 4 million homes and to provide fiber solutions to underserved libraries, hospitals, and other public buildings.

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