Where have I seen this before?
Apparently Verizon is shedding itself of more landlines, this time in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington State, West Virginia, Wisconsin, and border areas of California.
The sale of over 4.8 million phone lines will be made to Frontier Communications, a company that specializes in servicing small towns and rural areas. The price tag? $5.3 billion.
This will not be a good deal for the consumers in those states.
Like the sale of its landline business in northern New England, Verizon is selling to a much smaller company that is, quite frankly, not really capable of handing the sudden increase in the sheer number of customers it will find itself dealing with. Frontier will suddenly be three times larger after the sale, much like FairPoint Communications did after taking over operations in Maine, New Hampshire, and Vermont.
FairPoint, like Frontier, 'specialized' in serving small towns and rural areas. After spending $2.3 billion to acquire Verizon's landlines in northern New England, it quickly found itself in over its head. Service quality fell, the delays for customers to have service added, moved, or otherwise changed went from a couple of days to weeks. FairPoint has lost 80,000 customers since the takeover. The consumer did not get a good deal with that sale. It didn't help that FairPoint bought an increasing share of a decreasing market, a proven formula for failure.
The regulators in the states affected by the sale of Verizon's landline services to Frontier had best take a close look at the proposal, ask questions about the effects of the sale, and look to northern New England to see how the last sale of Verizon assets has worked out. This is a deal to which the state regulators shouldn't say “No”, but “Hell, no!!” Many of the same conditions apply to the Frontier deal as applied to the one with FairPoint, but costing a heck of a lot more money this time.
How anyone can think buying Verizon's cast offs will somehow make them money is beyond me. Like the previous deal, Frontier will be buying an increasing share of a decreasing market. Unless they update their infrastructure to incorporate things like Fiber To The Home, they will find themselves shedding customers as competitors like cable and wireless offer better service at lower prices, just as been happening here in northern New England.
This is a deal from which Frontier and the affected states should walk away.