The intensity of opposition to the proposed deal is growing, especially since the recent bankruptcy of FairPoint Communications after an eerily similar Verizon landline sell-off in Maine, New Hampshire and Vermont. The northern New England debacle follows Hawaii Telcom’s bankruptcy after Verizon sold that company to the Carlyle Group.
The deal with Frontier still faces scrutiny by public utility commissions in Illinois, Washington state and particularly in West Virginia, where nearly the entire state would be impacted.
“This deal is driven by greed – and we can learn from Northern New England’s and Hawaii’s experience to make sure it does not come to pass here or in the other 13 states,” said CWA’s District Two Vice-President Ron Collins, who has been leading the campaign in West Virginia.
The union has aggressively used television, radio, newspaper and Internet advertising along with membership mobilization at the state capitol and across mostly rural West Virginia to generate a real debate about the pros and cons of the $8.6 billion deal. (See the ads here.)
With the first public hearing in West Virginia set for January 12 in Charleston, the union is organizing a rally two days earlier at the state capitol with hundreds of members and supporters expected to attend.
In addition to CWA President Larry Cohen and V.P. Collins, the rally will feature a firefighter from Vermont who will share the negative experience that first responders have had since the FairPoint deal was approved. Seniors, church leaders and small business are also expected to speak.
Verizon’s motivation to sell is obvious. Management would like to ditch the traditional landlines that originally put them in business. Verizon (and most other telcos) used the landline revenues to bankroll aggressive expansion into wireless and Internet services that for the most part are unregulated and not unionized.
And similar to the catastrophic FairPoint deal last year, Verizon is using the same “Reverse Morris Trust” tax loophole to avoid taxes on the $3.3 billion part of the sale that Frontier will instead take on as debt. (See an explanation of how it works here.)
The union is making the case to the PSC, politicians and the public that if the deal is approved, it will only deepen rural West Virginia’s “digital divide” with a small carrier that is financially overextended without the resources to improve service or expand high-speed broadband. (Read CWA’s 200 pages of testimony against the sale here.)
Like FairPoint before it, Frontier is making promises to invest millions in DSL Internet upgrades, improve services and maintain existing job standards.
“If this sale goes through, it will permanently consign West Virginia to slower speed DSL technology that is already outdated and woefully inadequate,” said Collins. “The future of the information superhighway in West Virginia is at stake.” (To learn more about policies to build affordable, universal high-speed broadband investment, visit SpeedMatters.org.)
With a price tag for the sale that Frontier can’t afford, a 75-percent increase in its debt and a business model that diverts most profit to pay huge dividends to shareholders, it’s all too likely that Frontier, already mired in debt, will follow in FairPoint and Hawaii Telcom’s footsteps. Bankruptcy is a tempting excuse not to honor service commitments and an enticement to break union contracts.
Collins does not expect a decision by the Public Service Commission until sometime in February or early March.
“We recognize that building a movement to successfully block this sale requires more than just saying ‘no.’ In the meantime, we’re going to keep reaching out, keep building public support. We’re going to make sure that decision-makers have the facts and know that there are viable — and much better — alternatives to this deal.”
Rand Wilson is an AFL-CIO communications coordinator. Steve Early is an independent labor journalist who for decades worked for CWA.
Rand Wilson is an organizer and chief of staff at SEIU Local 888 in Boston.