Frontier Collects Oregon Approval with Multiple Conditions
Frontier Communications’ proposed acquisition of Verizon networks in Oregon received approval late Friday from the state Public Utility Commission. But the regulator imposed a series of conditions in addition to settlements negotiated earlier between Frontier and the commission’s staff and other intervenors. The company is embracing all such stipulations with enthusiasm, said spokesman Stephen Crosby.
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“Bottom line: We're excited and looking forward to providing telecommunications services including broadband to the state of Oregon,” Crosby said by e-mail. The unanimous approval makes Oregon the sixth state to approve the transaction, along with Arizona, Ohio, Nevada, California and South Carolina. Only Illinois, Washington and West Virginia -- and the FCC -- have to approve the deal for it to go through. “It’s moving along nicely,” Crosby said.
“Oregon’s rural areas and small and medium-sized communities need access to broadband,” said Frontier Chief Operating Officer Dan McCarthy. The companies recently filed a brief with the West Virginia Public Service Commission seeking its approval of the deal (CD Feb 23 p8).
Conditions set by the Oregon commission include a $10 million increase to $25 million of the amount that Frontier must spend on broadband deployment and enhancement within three years of closing. Frontier expects to complete the transaction during the second quarter of 2010, it said Friday.
In addition, Frontier would have to report annually in detail on its service quality and complaint incidence, as well as report quarterly on the main company’s financial health and that of its Oregon operating company subsidiary. Oregon is demanding “most favored state” status in exchange for approval, meaning that if it adopts consumer protections undertaken by other states Frontier will abide by them.
Earlier stipulations to which Frontier agreed after negotiating with utility commission staff and intervenors include an agreement that the telco won’t attempt to recoup transition costs from customers. It also agreed that for the 12 months following closing it would report to the commission on savings from synergies, changes in work force and company structure and their impact on Oregon customers and operations and the company’s efforts to expand broadband in the state.
Frontier agreed that its books will be open to state review, that for five years after closing it will report quarterly to Oregon on its balance sheet and that for the same period report it will report annually to the state the information it provides to the FCC.
Another stipulation calls for Frontier to be offering broadband to 95 percent of its Oregon territory within two years of the deal’s closing. The company agreed it would keep offering the FiOS service initiated by Verizon for two years after closing, and assented to extensively detailed stipulations on maintaining continuity of operating and business systems. Monthly and weekly reports would be made on the company’s efforts to serve low-income customers. Frontier would maintain rates charged by Verizon for 120 days after closing.
Frontier agreed to honor existing Verizon interconnection agreements “in all respects,” the commission order said. The acquiring company has agreed to honor Verizon wholesale price lists and tariffs and “make no increases for at least two years after closing,” the order said. Intrastate transit rates, terms and conditions will remain the same. Frontier agreed not to seek to avoid any of its responsibilities as an incumbent local exchange carrier by claiming an exemption under the Telecom Act.
For one year after closing, Frontier agreed not to discontinue any intrastate competitive service offering, according to the order. The company agreed to provide monthly wholesale service quality reports and to participate in a commission docket to set wholesale service benchmarks. Verizon agreed to provide certain wholesale data for the year leading up to closing, the regulator said.
To assure attention to operating and business system management, Frontier agreed to an escalation mechanism and contact point for problems in that area encountered by competitive local exchange carriers, and to maintain operating service system functionality, performance and e- bonding for wholesale services “at least equal” to what Verizon provides now. The acquiring company agreed to maintain a flow of information and communication with CLEC customers, to maintain a change management process “similar to one currently in place with Verizon” and to keep existing Verizon support centers “operational at comparable levels with safeguards comparable to those currently in place.”
Frontier also committed to provide ordering, provision and maintenance processes and intervals “consistent with those Verizon currently provides,” and to deliver “timely resolution” of wholesale service problems consistent with that seen now under Verizon.