West Virginia Should Approve Deal, Frontier and Verizon Urge
Verizon and Frontier laid out for the West Virginia Public Service Commission an extensive set of arguments in a filing late Friday summing up the companies’ case for approval of their proposed transaction. The deal would give Frontier ownership of Verizon landlines in 14 states. It ran into resistance last week when an administrative law judge with the Illinois Commerce Commission recommended against approval, saying consumers would be ill-served (CD March 11 p13). Illinois, West Virginia and Washington are the only states where approval of the transaction remains pending.
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"Frontier has unequivocally expressed its commitment to West Virginia and has pledged significant human and capital resources to provide quality telephone service, to expand broadband, and to maintain Verizon services, rates, terms and conditions,” the companies said in their filing. West Virginia, where Frontier already has about 144,000 lines in 76 wire centers in 38 counties, will be both a “strategic focus” and the setting in which Frontier plans to place a new regional headquarters, the companies said. As the state’s second largest incumbent local exchange carrier, Frontier has established a record of quality service and regulatory compliance “while doing right by its employees and the community,” the filing said. Frontier already has achieved 92 percent broadband penetration in its West Virginia service areas, the company said.
The companies have settled with intervening competitive local exchange carriers in every affected state, including West Virginia, but West Virginia is the only state where Verizon and Frontier haven’t been able to come to terms with commission staff and the state consumer advocate’s office. The staff and the advocate claim wrongly that Verizon and Frontier have failed to provide material documents and pertinent information, the companies said. “There is no reasonable dispute about whether this proceeding has been fully litigated,” they added. “If anything, Verizon and Frontier have provided an excess of material and information."
Frontier is financially sound and able to shoulder the debt occasioned by the deal, the filing said. Verizon is not muscling Frontier into an unwanted arrangement, and the deal will work to Frontier’s benefit and shouldn’t be tarred with the brush of difficulties that FairPoint Communications and Hawaiian Telecom had after acquiring networks from Verizon, they said.
The companies said the state’s consumer representative and regulatory commission staff are “intent on extracting a pound of flesh from Verizon,” demanding payments before the company can hand off its holdings in the state. Despite a commitment by Frontier of more than $200 million toward capital investments once the deal closes, state officials continue to insist that Verizon pay an “arbitrary” exit fee of as much as $300 million, ostensibly as a performance bond, the filing said. “Such a fee would send a strong negative message to businesses considering investing here, since a company would face the prospect of a retaliatory penalty if its business focus should change.”
"Through literally thousands of pages of testimony, exhibits and answers to contesting parties’ minutely detailed questions about every possible facet of this transaction, Frontier and Verizon have built a comprehensive, compelling case for why the Public Service Commission should approve it,” Verizon spokesman Harry Mitchell told us late Friday by e-mail. The West Virginia filing “lays out 110 indisputable facts that demonstrate the benefits of the transaction,” he said.