Vermont regulators are giving Verizon’s decision to sell 1.6 million lines in Vermont, Maine and New Hampshire the thumbs down. They are concerned that buyer of these lines, Fairpoint Communications of Charlotte, NC is too small and as a result the service will suffer, according to The Wall Street Journal.
Fairpoint will have to take on about $2.5 billion in debt to make the deal happen, which means there is real risk of quality of service will go down as Fairpoint starts to tighten the belts to pay off the debt. This is particularly bad news for Verizon which is counting on sales of these quasi-rural lines to fund its fiber optic network. The $2.5 billion can be revived if Verizon lowers the price.
This isn’t the last we have heard of Verizon’s problems with the state PSBs, and expect this to become a hot issue in the upcoming election year.
Update: A spokesperson for Verizon emailed me and said that the sale of lines is not for funding the fiber optic network.
We are NOT counting on this money to fund anything, including Fiber deployment. Our debt is very low and our cash flow is high. We have the capex already built into our funding plan. We are selling these lines simply because they are not a strategic fit for us given our broadband plans. Plus, we’ll continue to be heavily invested in Vermont with wireless and enterprise.
Why phone lines - 1.6 million in total - not strategic for a phone company, I don’t get!
6 comments so far
8:11 AM PT
Om,
My tree is trimmed and chestnuts are roasting! Verizon is NOT counting on this money to fund anything, including Fiber deployment. Our debt is very low and our cash flow is high. We have the capex already built into our funding plan. We are selling these lines simply because they are not a strategic fit for us given our broadband plans. Plus, we’ll continue to be heavily invested in Vermont with wireless and enterprise. Also, you imply the deal is over… isn’t by a long shot. Process just continues, as we noted at Policyblog on Friday: (link)
Happy Holidays! CZ
8:19 AM PT
CZ
As far as me saying the deal is over - I don’t make that assertion. It is pretty clear from the post above. It is your interpretation of what I write.
Happy Holidays
11:35 AM PT
How can anyone from Verizon assert they have a strategic plan for anything. This corporation has the most inept management from top to bottom and will eventually run the landline business into oblivion! The only thing CZ is correct about is the cash flow they have and are trying to steal from the consumers of the three northern states like a thief in the night. Keep them chestnuts roasting!
3:00 PM PT
Verizon isn’t a phone company - they’re a communications company. And POTS service just isn’t where the future, and the money, is. I can easily see why POTS lines aren’t strategic for Verizon. POTS is old tech, and fading out as people move to cellular and broadband with digital phone services.
7:07 PM PT
Those POTS lines are the future! What you miss is that those lines occupy the right-of-way necessary for something like FIOS. This is the furthering of the digital divide right under our noses. POTS lines are compelled to common carriage and non-discriminatory requirements by regulation while broadband is a comparative wild west. Often there is no franchise (assuming no TV or now its statewide) and definitely no USF. Vermont definitely was going to lose its future had this gone through.
12:56 AM PT
My guess is that these POTS lines are too thinly spread to make a FIOS deployment (BPON/GPON based fibre tree) economic - Verizon’s strategy must be to focus on upgrading customers to FIOS wherever possible, so to have these rural lines that can’t be FIOS upgraded doesn’t fit. Makes complete sense, though it’s not great for people in rural areas who will be stuck with DSL, probably on long lines that give low bandwidth, and in some cases won’t get broadband at all.
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