CUB: 'Make sure consumers are protected' in Verizon deal
October 30, 2009—CUB fears Verizon's proposal to sell its local lines to Frontier Communications will be anything but a good deal for Land of Lincoln consumers, and could spark the kind of disaster that's happening now in New England after a similar "deal."

The $8.6 billion proposal, announced last May, would have Verizon selling nearly 5 million local lines in 14 states to Frontier. That would affect about 600,000 Verizon customers in Illinois. The companies need state and federal approval to proceed. The Illinois Commerce Commission (ICC) expects to make a decision by May, 2010.

Recently, CUB joined with the Illinois Attorney General's office to file testimony recommending that the deal be denied, pointing out the pitfalls for consumers when a small telephone company buys from a phone giant. Frontier's Illinois operations would increase seven-fold because of the proposed deal.

"We want to make sure consumers are protected and this deal doesn't lead to higher rates and lower-quality service," CUB Executive Director David Kolata said.

Most recently, FairPoint Communications filed for bankruptcy only 18 months after it bought Verizon's local phone and Internet network in Maine, New Hampshire and Vermont. For months, FairPoint had been struggling under growing debt, shrinking revenue, and customer-service and billing glitches.

"The proposed sale of 4.8-million Verizon access lines to Frontier raises numerous public interest concerns as to Frontier's ability to succeed where several previous Verizon divestitures have proven to be major trainwrecks," Boston-based telecom expert Lee Selwyn said in an introduction to his testimony. "Frontier has failed to demonstrate that its senior management have either the experience or the focus to successfully run the proposed Illinois operations."

Selwyn argued that Frontier would be "under significant pressure to raise its rates" to cover costs, under the parameters of the deal. If the deal is approved, he proposed that Verizon be required to keep its stock in Frontier for at least five years so the company "will be forced to support Frontier and its management" until Frontier is able to provide "stable, high-quality service."

A Frontier spokesman reportedly dismissed arguments against the deal, saying he "would prefer a very clean approval with no conditions."

CUB encourages Verizon customers to let the ICC know how they feel about the Verizon-Frontier deal. Call the ICC at 1-800-524-0795, or file a public comment online. (Look for case is 09-268). Also, give to CUB's consumer-defense fund to support our involvement in utility cases like this.