'Here come the judge' on customer service
In May 2009, Verizon and Frontier announced the proposed sale of 4.8 million landlines in 14 states for $8.6 billion.
Connecticut-based Frontier Communications is trying to acquire 600,000 Illinois phone lines from Verizon Communications Inc., mostly in rural areas, including Dunlap.
Lisa Tapia, the administrative law judge reviewing the proposed deal of Verizon-Frontier, recommended the Illinois Commerce Commission reject the deal.
Tapia said in her 46-page report, “The proposed reorganization will diminish Frontier’s ability to provide adequate, reliable, efficient, safe and least-cost public utility service.”
She said Frontier’s existing Illinois customers and existing Verizon customers would both be harmed by the deal, due to enormous debt Frontier Communications will take on as part of the deal.
Steve Crosby, senior vice-president of government regulatory and public relations for Frontier Communications, said, “We wholeheartedly disagree with her. We are somewhat perplexed by her statements.
“The judge just misses many points. After further review, we hope she will reconsider.”
Christy Reap, Verizon spokeswoman, said, “We disagree with the administrative law judge’s proposed order, which it’s important to note is just a recommendation. We believe the commission should not adopt the administrative law judge’s recommendation, but, instead, should issue an order that approves the transaction, as regulatory commissions in six other states have already done.”
Crosby added, “There is no basis to the judge’s findings. This deal is very beneficial for the state.”
Tapia’s report states, “The evidence shows there is a significant risk that problems could occur if the transition is made too prematurely so as to create a potential for harm to Illinois customers.”
It further states, “When weighed against the many risks of the transaction, including, among others, the risk of systems integration, the purported benefits of the transaction do not justify approval.
“Frontier would also be almost tripling its size and will be burdened with an enormous amount of approximately $3.3 billion in debt. The financial pressure, along with more wire lines to handle, leads the commission to conclude that service quality will certainly be diminished. The ultimate consequences of diminished quality service will be borne by Illinois customers,” Tapia said.
Verizon and Frontier issued a joint statement in response to the judge’s report.
The statement read, “The commission staff ignores the significant public benefits the transaction will bring to Illinois, including a specific, enforceable commitment by Frontier to deploy broadband to 85 percent of the households passed in its newly-acquired service area — an increase of more than 100,000 unserved and underserved households in the affected service territories.”
The statement emphasizes the judge’s report fails to address this and other clear evidence on the record concerning the effect of the transaction.
The Verizon-Frontier statement said virtually all of the concerns raised by Tapia were raised in these states, and in each case, the state commission found that the transaction was in the public interest and unanimously approved it.
Reap said Frontier would spend $40 million on broadband services in Illinois and provide 25 percent more broadband than Verizon is currently offering.
Verizon and Frontier’s statement said, “Frontier is a strong and capable company with both the financial capacity and operational expertise to deliver on its commitments, and brings a laser focus to serving the local market.
“Frontier has made broadband available to 87 percent of the households in its existing Illinois service territory. Frontier is ready, willing and able to significantly increase broadband deployment in Illinois”
The joint statement concluded, “The record is absolutely clear that consumers in Illinois will not receive these benefits if the transaction is denied.”
Tapia, on the other hand, said Frontier would not be any more effective than Verizon in expanding the quality of broadband services in the areas it proposes to acquire.
The ICC will have the final say.
The ruling will affect several area communities, including Peoria, Dunlap, Morton and Washington.