Frontier Communications’ proposed purchase of Verizon’s wireline telephone systems in California is under review by the California Public Utilities Commission, which has to decide if the deal is in the public interest. Catherine Sandoval is the commissioner assigned to lead the review, and she’s laid out a broad basis for doing it, stating that it’s not just the interests of Verizon’s current customers that matter, instead “at the least, we must be able to say that the proposed transaction is overall net beneficial in its impact on the various affected constituencies.
She listed several criteria for deciding that question, including Frontier’s ability to contend with the decaying state of Verizon’s copper networks and the overall effect of the deal on broadband service in California…
What is the current physical condition of the Verizon landline
How capable is Frontier of absorbing 2.2 million additional
customers? Does Frontier have adequate staff and facilities to scale up to the necessary size?
How compatible are the Frontier and Verizon systems and
equipment, including…IP-enabled and broadband infrastructure systems and equipment.
What is the impact of the transaction on competition for Voice Over Internet Protocol (VoIP) and broadband services?
Frontier depends entirely on wireline systems – unlike Verizon, it doesn’t have high margin mobile networks to nurture instead – and it has a history of pursuing upgrades in the handful of Californian systems it owns. But in order to turnaround Verizon’s systems it has to up its game in California: it would go from a couple hundred thousand customers to a couple million. Frontier needs to detail its plans for doing so and demonstrate its ability to execute.