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Verizon’s nationwide effort to sell off its land lines and focus on cellular service has hit a legal bump in Illinois — which is good for customers and telecom workers, because their quality of service and jobs are at risk should the debt-laden deal with Connecticut-based Frontier Communications be approved by regulators.
After hearing the case on the proposed Verizon-Frontier landline sale in Illinois, an administrative law judge (ALJ) with the state’s Commerce Commission yesterday recommended rejecting the proposed Verizon-Frontier merger, which would affect more than a half million people throughout Illinois. “The proposed reorganization will diminish Frontier’s ability to provide adequate, reliable, efficient, safe and least-cost public utility service,” Judge Lisa M. Tapia wrote, mostly because it would leave Frontier with too much debt.
“The ALJ’s reasoning is consistent with the positions that our union took and the arguments that we made about the enormous risks this deal poses for consumers and workers,” said Jim Bates of International Brotherhood of Electrical Workers Local 51, which represents Verizon workers in the area around Springfield, Ill.
“We have been concerned from the beginning about the impact of this proposed merger on Frontier’s financial stability given the enormous debt that it would incur,” said Ron Kastner, Business Manager of Local 21, the largest IBEW telecom union in Illinois.
The proposed Illinois deal is part of a $8.6 billion restructuring effort by Verizon, which wants to sell 4.8 million land lines in more than a dozen states, the Quad City Business Journal reported.
Tapia’s decision raised serious doubts about Frontier’s qualifications to step into Verizon’s shoes as the second largest incumbent carrier in Illinois. “The minimal benefit to Illinois customers is not worth the substantial risks to which customers would be exposed,” she wrote.
Her decision recognizes that a switch from Verizon — one of the largest, most financially secure telecommunications companies in the world — to a financially and operationally challenged company like Frontier could be disastrous for consumers and workers. After all, Verizon’s two other recent divestitures to smaller companies ended in bankruptcy and a significant deterioration in customer service.
Yesterday’s ruling is only a recommendation to the Illinois Commerce Commission (ICC); a final ruling by the body is expected by the end of April.
“Customers and workers from both Verizon and Frontier need to be protected from this Wall Street-backed scheme. We hope the ICC, other state regulators, and the FCC pay close attention to the ALJ’s recommendations,” said Ron Collins, vice president for Communication Workers of America’s District Two. “If the ICC or another state reject the deal, that should send both companies back to the drawing board to restructure the deal.”
CWA or IBEW have intervened in state regulatory proceedings on the proposed sale in West Virginia, Illinois, Ohio, Pennsylvania and Washington. Both unions are also intervenors in the case before the Federal Communications Commission.
The proposed deal has already passed a federal antitrust review, and commissions in Arizona, California, Nevada, Ohio, Oregon and South Carolina have approved settlements. A partial settlement has been reached in Washington state. There was no state regulatory review in Idaho, Indiana, Michigan, North Carolina or Wisconsin.
More information about why citizens are mobilizing to stop the Verizon sale to Frontier is at www.verizonfrontierdeal.org. For information about ending the digital divide visit www.speedmatters.org.
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Rand Wilson is an organizer and chief of staff at SEIU Local 888 in Boston.