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Regulatory staff propose settlement in Frontier’s acquisition of Verizon telephone lines

Dec. 24, 2009
Docket Number: UT-090842

Editor’s note: This news release reflects the position of the telecommunications staff of the Washington Utilities and Transportation Commission (UTC) and NOT the views of the three-member commission. It discusses a staff recommendation that the commissioners have not yet reviewed. Any positions taken or comments offered by the commission staff regarding this proceeding should be attributed clearly to staff members and NOT to the UTC.

OLYMPIA, Wash. – State regulatory staff today proposed numerous conditions in announcing a settlement in the acquisition of Washington’s Verizon landline residential and commercial telephone business by Frontier Communications Corp.

Staff members of the Washington Utilities and Transportation Commission (UTC) recommended approving Frontier’s proposed acquisition of Verizon’s landline phone lines on conditions outlined in a multi-party settlement filed today. The proposed acquisition does not include Verizon Wireless customers.

The commission’s regulatory staff makes independent recommendations in contested rate cases, and its recommendations are not binding on the three-member UTC. The panel will consider the staff recommendation along with those of other parties in the case. The settlement requests the commission make a decision by March 8.

The settlement includes a number of provisions to protect Verizon phone customers. These include:

Investing $40 million to expand high-speed Internet access in Washington.
Submitting quarterly financial reports identifying merger savings.
Branding and transition costs to be paid by stockholders, not ratepayers.
Increasing financial incentives to prevent a decline in service quality.
Adopting Verizon’s existing rates and contracts.

Under the settlement agreement, residential telephone rates will not increase from the current levels for three years after the transaction is approved. Customers would receive credits if the company’s service quality does not meet specific standards. The company also would be required to pay an additional $10 – from $25 to $35 – to residential customers for missed service repairs or installation appointments. In addition, customers would receive a $5 credit if their telephone line is out of service for more than two days.

Another provision would allow a 90-day window for customers who use Verizon for their long-distance carrier to choose another provider without incurring a $5 switching fee. Current Verizon long-distance customers may retain Frontier as their toll provider in the future. Low-income customers who qualify for phone service through the Washington Telephone Assistance Program will receive a one-time $75 credit if the company fails to offer appropriate discounts or deposit waivers.

Last May, Verizon announced an agreement in which Frontier would acquire approximately 4.8 million landline phone lines as part of an $8.6 billion transaction. The transaction will increase Frontier’s telecommunication customer base in 14 states, including Washington. The Federal Communications Commission (FCC) also must approve the transaction and government regulatory approval is needed in nine states. California, Nevada and South Carolina have already approved the business deal.

The commission has received 143 comments with 31 in favor, 45 undecided and 67 opposed to the proposed transaction. Customers who would like to comment on the case are encouraged to do so by mailing their correspondence to: P.O. Box 47250 Olympia, Wash., 98504; e-mail comments to comments@utc.wa.gov or call toll-free 1-888-333-9882. The commission’s deadline for accepting public comments is Jan. 11, 2010.

Verizon, created in 2000 by a merger of Bell Atlantic and GTE, is the second-largest local telephone service provider in Washington, serving about 487,000 phone lines in cities such as Redmond, Kirkland, Everett, Bothell, Woodinville, Wenatchee, Kennewick, Pullman, Chelan, Richland, Naches, Westport, Lynden, Anacortes, Mount Vernon, Newport, Oakesdale, Republic and Camas-Washougal. Headquartered in Stamford, Conn., Frontier Communications serves 2.3 million customers in rural and smaller-city markets. Currently, Verizon has approximately 1,300 employees in Washington, who would be transferred to Frontier once the deal is complete.

The UTC is the state agency in charge of regulating the rates and services of telephone companies operating in the state of Washington.

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Editor’s note: A copy of the UTC staff members’ settlement agreement is available at: www.utc.wa.gov/090842.

Staff contact: Marilyn Meehan
Posted/updated: 04/15/2010

 

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