Frontier’s acquisition of Verizon’s wireline business in California, Florida and Texas appears well positioned to close in the first quarter of 2016 now that the FCC has given its approval to the transaction. In a press release Frontier noted that one remaining hurdle is to obtain approval from the state public utilities commission in California.
“The FCC views this transaction as being in the public interest and benefiting customers in the three acquired states,” said Daniel J. McCarthy, Frontier’s President and Chief Executive Officer, in the press release. “We agree, and believe it will further benefit those across the rest of the Frontier footprint as well. By doubling our size, we will add scale and scope to our operations, strengthen our product and service offerings, and improve the customer experience. We look forward to demonstrating our commitment to broadband investment and deployment in California, Florida and Texas. Soon, consumers and businesses in these states will benefit from our extensive experience, our high-touch local engagement management model, the focused use of the fiber-rich network, and our active involvement in the communities we serve.”
The Frontier/Verizon deal, valued at $10 billion, was announced back in February.
Frontier and the Connect America Fund
The commitment to broadband investment to which McCarthy referred pertains to Frontier’s promise to bring broadband at speeds of 25 Mbps downstream and 2-3 Mbps upstream to an additional 750,000 households across the company’s local service footprint, including parts of California, Florida and Texas, by the end of 2020.
That commitment apparently is in addition to the commitment Frontier made to bring broadband at speeds of at least 10/1 Mbps to unserved rural areas of its existing local service area in exchange for receiving $283 million annually from the Connect America Fund. Assuming the Verizon transaction is completed the company also plans to bring broadband to unserved rural areas of California and Texas in exchange for accepting an additional $48.5 million in CAF funding annually.
Verizon accepted CAF funding in those states on behalf of Frontier on the condition that the deal would be completed. Apparently the carriers were not happy with the CAF funding that the FCC offered for Florida, as funding for that state was rejected. Frontier will have the opportunity to bid to deliver service to a subset of unserved homes in that state in an upcoming reverse auction. For any areas it does not win, however, it could essentially be abandoning the area before it even begins offering service.
Undoubtedly Frontier took all of this into consideration before making the deal with Verizon. Frontier must have determined that Verizon’s Florida markets that already have broadband were worth the price paid.