Next steps to watch in Frontier’s takeover of Verizon systems

by Steve Blum • , , ,

It’ll be three or four months before Verizon formally hands Frontier Communications the keys to its wireline telephone systems in California (and Florida and Texas). On Thursday, the California Public Utilities Commission unanimously approved both the sale and a long list of conditions the two companies have to meet. That was the last significant regulatory hurdle for the deal. Texas said yes, Florida doesn’t review such things and the federal government also gave its blessing.

The conditions can be broken down into two categories: things that Frontier will have to work on after it takes possession, and things that both companies need to do before that.

The requirement that Frontier offer a $14 a month lifeline broadband package, for example, doesn’t kick in until mid-2017, although there’s nothing preventing the company from implementing it sooner. Likewise, Frontier is obligated to “open discussions with local broadband providers on means of partnering with them”. So far, that’s been taken to mean middle mile ventures such as the Digital 395 project along the eastern Sierra, where Frontier has already reached an agreement to lease a dozen strands of fiber along the route.

In the next few months, though, both companies have to disclose information regarding interconnection agreements, and Verizon will have to either fix serious problems with its overhead lines – many of which were highlighted during the CPUC’s review – or put enough money into an escrow account to allow Frontier to finish the work. Verizon will also have to meet the commission’s telephone service standards and maintain its lines “using long-term solutions rather than temporary fixes whenever possible, with a response time of 24 hours or less whenever possible”.

In other words, Verizon can’t sit back for another three months and watch its copper rot on the poles. That’s a particularly important condition, said commissioner Catherine Sandoval before the vote, because “we are expecting the El Nino to hit during exactly this time period before closing”.

Of course, there are a lot of other items on the checklist that both companies will have to tick off. Moving network operations and customers from one carrier to another is complicated, as is untangling the bits of the business – such as some middle mile fiber – that Verizon will continue to own.

Update: final version of the decision, with all appendices attached, has been posted (6 MB):

Final decision approving Frontier’s purchase of Verizon’s Californian systems, with appendices (6 MB)

Here’s a smaller file, with just the decision, and no appendices (600 KB):

Final decision approving Frontier’s purchase of Verizon’s Californian systems (600 KB)

With the exception of a concurring opinion filed by commissioner Catherine Sandoval added to the end of the appendices, it appears to be the same as the penultimate decision draft and appendices I posted earlier.