Frontier Communications agreed Wednesday to acquire nearly five million telephone customers being spun off from Verizon, primarily in rural areas, for $5.25 billion in stock. The buyout supercharges Frontier into the nation’s largest rural telephone company.  But the deal also puts a spotlight on large providers sacrificing their rural customers to focus on their larger urban markets.  About 700,000 of those Verizon customers are now off the list for Verizon FiOS deployment, as they transition into Frontier service territories.

Verizon’s chairman and CEO Ivan Seidenberg characterized the spinoff as part of Verizon’s interest in larger cities where advanced technology deployment makes sense.

“This transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services and other broadband development, and global IP,” he said.

Our analysis of this will focus on the broadband implications of the transaction.  With this acquisition, Verizon wins by offloading more expensive and difficult-to-serve rural communities, where it is unlikely to deploy large broadband platforms in the future.  Frontier wins by becoming the nation’s largest rural telephone and communications services provider, potentially accessing even larger shares of forthcoming broadband stimulus money and other revenue available from the Universal Service Fund to sustain rural telephone service.

But will customers win?  Today’s announcement provides additional evidence that broadband service is diverging in urban and rural communities.  Large communities are enjoying deployment of advanced broadband platforms, and rural communities are simply not.

Frontier Communications Believes Rural America -Is- Their Business

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Traditionally, data plans from wireless phone providers, whether they call them “unlimited” or not, usually carry a fine print “5GB monthly usage limit” somewhere in the terms and conditions.  Some providers do nothing if you happen to exceed it, others will threaten to terminate your service, or charge you overlimit fees that quietly accumulate until the phone bill arrives in the mail.  Wireless data providers limit consumption primarily because they don’t have the capacity to provide you with limitless access, at least not yet.  But the paltry limits most providers set, with nasty overlimit fees for exceeding them, aren’t justified either.  Most providers do everything but come out and admit you are only supposed to use their services for web browsing and e-mail reading, so control yourself.

Verizon Wireless has a complication, however.  In the coming week, they are expected to unveil an HP 115NR Netbook with built-in wireless broadband capability designed to work on Verizon’s network.  The Netbook will cost $199 after mail-in rebate, and your commitment to a two year service contract with a data plan priced $40-60 a month.

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One of the biggest anti-consumer disasters of the last 15 years was President Clinton’s signing of the 1996 Communications Act.  This bought and paid for legislation deregulated a major part of the telecommunications sector with the idea that the “free market” would somehow provide sufficient checks and balances to protect against media concentration, monopoly abuse, and locking out technological advancement wherever robust competition was unlikely.

How’s that working out for you?

Consolidation and corporate control of broadcasting, telephony, broadband, and other communications services has been rampant and largely unchecked by the Federal Communications Commission during the last 10+ years.  The result is a handful of players controlling the services we all depend on in our daily lives.  Usage caps and overpriced tiered billing is just the latest example of market concentration.  Companies realize consumers have few options for equivalent services, so they can dictate the terms and conditions with almost no oversight or control.  Local and state governments confronting this issue have come to realize their hands are tied, because telecommunications deregulation without assurances of a competitive marketplace always equal monopolistic behavior.

Net neutrality has also been a victim of a hands-off regulatory authority that is supposed to foster competition, equity in access, and prohibit abusive behavior.  The Federal Communications Commission has failed on every front.

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Thanks to Jay Ovittore and the City of Wilson, we have the video from the consideration of HB 1252, the horrible bill that would have made municipal broadband a virtual impossibility in the state of North Carolina.  Everyone who participated in our pushback should give themselves a pat on the back, because YOU helped make all the difference between broadband choice and advancement in the state vs. forcing communities into a broadband backwater.  Don’t believe for a second you just have to sit back and take what big telecom forces on you.  This shows you don’t!

This is what we can do — make the difference!

The NC Public Utilities Committee sends HB 1252 to a study committee. May 6, 2009.

Frontier Essentially Accuses Time Warner Cable of Being a Shakedown Artist

Frontier Communications has continued its aggressive campaign to hit back against its cable competition, most notably Time Warner Cable.  In its most recent advertising in the Rochester area, Frontier compared Time Warner Cable’s broadband usage caps and rate hikes “the Cable shakedown.”  Wow.  Even we don’t go that far.

Frontier has gotten aggressive since Time Warner Cable made Rochester, Frontier’s largest service area, a test market for its Cap ‘n Tier program, temporarily shelved.  Frontier doesn’t believe for a second that Time Warner Cable is done with metered billing in this community, and neither do we.  So they are going to spend the summer continuing efforts to poach Time Warner’s customers.

Meanwhile, Frontier CEO and Chairwoman Maggie Wilderotter has penned an e-mail being sent to every Frontier customer commenting on the economy and calling out cable for annual rate increases:

Dear Frontier Customer,

We are in tough economic times. As you look for ways to save money, I want to assure you Frontier is dedicated to providing you with robust, value-added voice, high-speed data and video products.

Now, more than ever, Frontier is committed to the communities we serve. As a significant employer and a major taxpayer, Frontier takes pride in our active role in our markets. Our local managers and front line employees are highly visible and involved in many community organizations and events. They stand ready to suggest ways to use our services and resources wisely.

We provide innovative solutions and products for all types of communications needs. Fast, reliable communications technology, especially broadband, has never been more important. Customers tell me that as their budgets get smaller, the value of using our services in the home increases. Many families rely on Frontier products for their jobs, education and entertainment. Whether it’s Digital Voice, Data, or Video, we are here to help you explore different product and pricing options. Just visit any Frontier location or give us a call at 800-921-8101 and our customer care representatives will help you.

Despite recessionary times, Frontier continues to invest in the technology that gives you the power to connect at home, in the office or on the go with speed and reliability. We are committed to your complete satisfaction. Unlike our Cable Operator competitors, we don’t depend upon an annual rate increase; in fact, Frontier provides price protection plans so you know what to expect during your agreement term. We are proud to offer the best products at the best prices in our markets – with unparalleled service to make the customer experience the best it can be. Frontier is local, financially solid, and optimistic about the future.

Although none of us know when it will happen, I do believe better times are ahead. We have been tested before and emerged stronger. We will get through this, and Frontier is here for you in good times and challenging times.

Thank you again for your business and support. We take it seriously and all of us at Frontier will continue to work hard to provide you with the best communications products and services.

Sincerely,
Maggie Wilderotter
Chairman and CEO
Frontier Communications
[email protected]
I can help you!

Now if only their DSL product could deliver consistent results no matter where their customers might live (and they keep their own 5GB ‘acceptable use’ stuff unmonitored and unenforced.)