Illinois Commerce Commission, other regulators, urged to heed Judge's concerns

After hearing the case on the proposed Verizon Frontier landline sale in Illinois, the Commerce Commission's Administrative Law Judge (ALJ) issued her proposed order today.

Judge Lisa M. Tapia recommended denying the Verizon-Frontier application and rejecting the proposed merger.

Tapia wrote, "the proposed reorganization will adversely affect Frontier's ability to perform its duties under the [Commerce Commission] Act, in that the proposed reorganization will diminish Frontier's ability to provide adequate, reliable, efficient, safe and least-cost public utility service; and will significantly impair Frontier's ability to raise necessary capital on reasonable terms and to maintain a reasonable capital structure… Accordingly, the proposed reorganization must not be approved." (Prop. Order p. 44)

"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 IBEW Local 51 Business Manager Jim Bates whose local represents Verizon workers in the area around Springfield, IL.

"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.

Tapia's decision also raised serious doubts about Frontier's qualifications to step into Verizon's shoes as the second largest incumbent carrier in Illinois, given the enormous problems and disruptions that resulted from two previous Verizon selloffs. "The minimal benefit to Illinois customers is not worth the substantial risks to which customers would be exposed. Thus, the risk level is so great that it warrants rejection outright," wrote Tapia." (Prop. Order p. 32)

The ALJ's 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 would 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.

The ALJ's decision is only a recommendation to the Illinois Commerce Commission (ICC). On March 19, the Joint Applicants will file briefs with the Commission making their final case for the deal. On March 25, intervenors will respond to the briefs by Verizon and Frontier.”

"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 CWA'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.

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.