California, Texas Approval Needed for Verizon/Frontier Transfer To Go Through
Even though the FCC approved the proposed transfer of Verizon wireline systems in California, Florida and Texas to Frontier last week (see 1509030063), that doesn’t mean the deal will still go through entirely unchanged, said experts in interviews. California is the only state where there could be an issue, though some experts said the state wants Frontier to take over for Verizon’s wireline services. In Texas, the deal hasn’t been approved yet, but one official says it will likely go through soon. In Florida, the Public Utilities Commission doesn’t have the authority to block the deal since the services are deregulated, a PUC spokeswoman said.
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The California Public Utilities Commission is to vote on the Frontier/Verizon transaction Dec. 3. There's no indication the PUC’s process will hit any roadblocks, even though the commission voted last week to move forward with a network study of both AT&T's and Verizon’s services (see 1509030043), said Ana Maria Johnson, CPUC Office of Ratepayer Advocates' project supervisor, in an interview. There's no connection between the study and the proposed transaction, and the study won't hinder the transaction, she said. Her office does require conditions for the commission to approve the transaction, she said. “It basically has to do with making sure service quality is improved,” Johnson said. “We need to make sure there is a plan to address all of those [consumer] concerns. Those conditions are necessary to make the transaction be in the public interest.”
It's important for consumers and Frontier alike that if the transaction goes through, Frontier is able to keep up with the necessary network maintenance, said California's Regina Costa, the Utility Reform Network's executive director. Because the state of Verizon’s wireline network is “horrible,” she said, Frontier needs to be ready to take it over and possibly put a significant amount of capital into repairs. While Costa said this deal may be closed by December when the commission is planning to vote on the matter, it’s also possible the process will take a little longer, depending on the testimony that's filed in the meantime. “This has national implications,” she said. It’s important that the California commission looks at this information, she said. "You would be hard-pressed to find a worse actor than Verizon and I don’t think anyone would be sad to see them go. But what we want from this is a company to take over the operations that is viable -- we want this to work.”
The rubber stamp has been “greased up for a long time” on this deal in Texas, said Charles Land, executive director of Texaltel, which represents telecom carriers in Texas. The commission has very little authority over the transaction and the only thing it needs to approve is the transfer of the CLEC affiliate, he said. The organization would have liked to have seen some conditions from the state on this agreement, but Land said he doesn’t think that will happen. Instead, he said the transfer of services is pretty much guaranteed to go through as is.
Texaltel as a whole was hoping prices on Verizon’s wireline services would be required to meet AT&T’s, but that doesn’t seem likely either, Land said. One of the organization's other concerns, he said, is that Frontier is going to flash-cut all of its operating systems from Verizon the weekend after the deal closes, which seems unlikely to succeed without complications. Also, most of Verizon’s interconnect agreements are operating in evergreen, he said. “They’re operating well past their expiration date and have been for years,” Land said. “We would have liked some binding assurance that Frontier isn’t going to notice all those for renegotiation.” The Public Utilities Commission of Texas couldn't be reached for comment.