Broadband Plan, Forfeiture Risk Stipulated as Ohio Approves Frontier/Verizon Deal
Ohio’s Public Utilities Commission voted Thursday to approve the Verizon/Frontier deal with stipulations that include the threat of financial forfeit for non-compliance. The stipulations, to which the companies, commission staff, and intervenor Comcast agreed in December, include a detailed protocol for Frontier and Comcast to follow in cutting over.
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Frontier agreed to develop and implement a plan for deploying broadband in its Ohio service territory, the commission said. That plan is due to the commission within six months of the deal’s closing, and must target 108 exchanges identified by the state Office of Consumer Counsel as being unserved. The order gives Verizon until Dec. 31, 2013, to be offering broadband at a download speed of at least 1 Mbps to 85 percent of households in its Ohio service area. Frontier agreed not to increase basic local exchange rates in the state while implementing the broadband plan. Frontier also agreed that, during the three years after the transaction closes, it will put $50 million into capital investments in Ohio, the commission said.
For three years after closing, Frontier must report quarterly to the commission on troubles per 100 access lines, repeat problems, restoration of lost service and restoring service-affecting conditions. If during the first two years of the agreement the telco fails to meet any performance metric, the company must forfeit $100,000 to the state for each failure. If during the agreement’s three-year term Frontier fails to meet any of the metrics, it must forfeit another $100,000 for each failure.
Verizon promised to keep on nearly 1,000 Verizon employees in Ohio. “The Commission will continue to closely monitor Frontier and Verizon’s activities and will maintain full regulatory oversight regarding the terms and conditions of the stipulations,” the regulator said.
“Frontier is very happy about Ohio’s approval,” spokesman Steven Crosby told us. The company is happy to comply with the stipulations, he said. “Expanding broadband is what we do,” Crosby said. “In the past some state commissions may have been burned by other companies, but we're all about providing more broadband, which is good for our customers, good for our employees -- because it means more work -- and good for our shareholders.”
The Ohio stipulations are “pretty standard, not in any way extraordinary,” Crosby said. “We think they're very natural and important and the right thing to do. We're putting them on paper and signing our name, but they amount to doing what’s needed to satisfy the customer, and if you deal with that trouble call the first time you're not going to get those second and third calls.”
Ohio is the fourth state, after Nevada, California and South Carolina, to approve the transaction, Verizon noted in a written statement. Regulators in Arizona, Illinois, Oregon, Washington and West Virginia, along with the FCC, also must approve the transaction or related transfers, the company said.
“Regulators in Ohio have put consumers first in approving this transaction,” said Carl Erhart, president of Verizon’s Central region. “The transaction will further each company’s strategic focus, and it holds numerous benefits for consumers and small businesses in Ohio, including Frontier’s commitment to increase broadband availability.”