Verizon Is Dumping
Landline Customers

Newberry Springs can be impacted.

    Despite very poor public notice, a large number of public members attended the sixth of eleven scheduled public hearings on the proposed purchase of Verizon's landlines in California by Frontier Communications.  The July 21, 2015 hearing was held in Claremont, California.  Hearings are being held throughout the state.

Posted:  July 25, 2015

What's happening.

      An eastern firm, Frontier Communications is currently attempting to purchase Verizon Communications' telephone copper landlines, Fios (fiber optics), and pay-TV services in the states of California, Texas, and Florida.  Why should we care in Newberry Springs?  Because Newberry Springs is part of Verizon's turf and a sale can have a huge ramification on Newberry's future.

      The California Public Utilities Commission (CPUC) is holding a series of hearings in California to acquire public input as to whether the CPUC should permit the sale.  And if so, what requirements and conditions, if any, should be part of the CPUC's authorization.

The hearings.

      Recognizing the importance of the hearings, a Newberry Springs Community Alliance co-editor of the Blotter, Ted Stimpfel, attended the CPUC hearing in Claremont and testified before the Commission on the critical need of Newberry Springs acquiring broadband service.  Should the Commission later elect to do so, fiber optic installation in Newberry could be made a part of Frontier Communications' state licensing requirement.

      Stimpfel's testimony highlighted that Newberry Springs is an economically disadvantaged community that Verizon has left behind; and that Newberry does not have the availability of DSL nor direct broadband.  Under special programs like the Connect America Fund II, where millions of dollars are being made available to bring broadband to California's rural unserviced communities, Stimpfel wants Newberry Springs to be on the top of the list to receive broadband.  Frontier has already acquired a portion of the California grant allotment.

      Frontier Communications' President and CEO, Daniel J. McCarthy (center) with main office in Connecticut, and David Damian Figueroa (left), Frontier Communications' California AVP-Government & External Affairs representative, at the CPUC Claremont hearing.

      The Community Alliance's representative also pushed for the Commission to require the proposed sale to include a broadband service fee of only $10 per month for low income qualifiers.  Comcast, the ninth largest telephone company (by revenue) in the world, and a few other telephone companies in the United States, already offer a $10 monthly rate for high speed broadband for those who qualify as low income.

      In some places, a family who has a child that qualifies for free school lunches automatically qualifies the family for the $10 broadband service.  High speed Internet connection is playing an increasingly important role in the education of children.  So, if a $10 low income connection is being done elsewhere, why not in Newberry Springs, asks Stimpfel.

      The low income rate is a spin-off from the Ronald Reagan era; an overhaul to update the 30-year-old telephone Lifeline program for the Internet age.  A study in 2012 found that the average consumer saves $8,800 a year by getting online bargains that those without broadband can't get.  More than the average consumer, low income residents need broadband.

      During his testimony before the CPUC, Stimpfel stated that, "Without inexpensive broadband, rural communities, like Newberry Springs, will be denied a technological staple that is a basic necessity in today's world." 

      Stimpfel further attested, "Without such a low income rate, most of our children will not have broadband; and they will have a substandard education.  And, without minimal broadband speed, our community's future and economics will be stagnated."

      In today's world, good Internet connection is often necessary to fill-out employment applications and other basic functions.  Stimpfel testified before the Commission, "The lack of affordable broadband service is denying our community the ability to participate in the educational, economic, health, and social opportunities that other Americans enjoy."

      Stimpfel's presentation received applause from the audience and he was contacted the following day by the California Emerging Technology Fund in San Francisco who requested a formal declaration of his presentation for use in their work promoting low cost broadband.

      At the hearing, Ted Stimpfel scored a personal conversation with Frontier's president and CEO.  Further communication is expected between them.  Whether anything will come of this isn't known; but without Newberry Springs involving itself, nothing can happen.

Good things require community unity.

      Sadly, the Newberry CSD didn't have any representatives there.  Neither did the local Chamber of Commerce to promote business interests; nor were the property owners association represented.  Having more represented organizations there would have been helpful for Newberry's interests.

      Currently there are real opportunities for getting high speed broadband established in remote, rural communities.  Those that will acquire high speed broadband will be the communities that supportively claim it.

      The Newberry Springs Community Alliance welcomes all Newberry organizations, and interested private parties, to join with the Newberry Springs Community Alliance in the effort to acquire the golden opportunites that can be funneled into Newberry Springs.  These opportunities require collective community support.  County First District Supervisor Robert Lovingood, some state and private entities, and CEQA-NOW, are highly supportive of Newberry Springs acquiring improved infrastructure; but they can't do it alone, we must do our part.  Our community's involvement in the process is key!

      Frontier Communications' President and CEO, Daniel J. McCarthy (standing on right) presenting his company's sales pitch at the California Public Utilities Commission hearing.  Shown seated at the table is Administrative Law Judge Karl Bemesderfer (left) and Public Utilities Commissioner Catherine J.K. Sandoval.  Commissioner Sandoval was most impressive with the knowledge and questioning that she displayed.

The Commission's duty.

      In broader view of the Community Alliance's emphasis on acquiring direct-connect high-speed broadband service for Newberry Springs, the proposed Verizon Communication sale of its landline communication services to Frontier Communications is far reaching, and it is leaving consumers with many unanswered questions.

      It is the duty of the California Public Utilities Commission to approve or disapprove the sale through the evidentiary fact-finding hearings and its investigations.  In essence, it is the duty of the Commission to determine whether the sale would be beneficial to the citizens of the state.  Would the service under Frontier remain the same or be better than under Verizon; or would the service be at risk of deterioration?

      If those with a telephone landline with Verizon in Newberry Springs have perceived a deterioration in Verizon's service, it wouldn't be surprising.  During the last couple of years, Verizon has been de-emphasizing its investment in its landline operations as it attempts to unload its landline involvement.  Verizon wants to concentrate its operations on wireless services.  Its landline operation is costly to maintain and is very heavily regulated by the state; while with wireless, there is a Wild West-type lack of regulation.

      As previously blogged in the Blotter, the wireless industry in the U.S. has bought-out Congress so that the FCC has no safe limits for cellular transmission radiation.  As earlier blogged, U.S. wireless carriers can transmit 5,800-times the radiation (per site) than is considered safe in some other parts of the world.  And, the U.S. industry is self-regulated, and multiple wireless companies can each stack their 5,800-times radiation blasters upon the same towers as other blasters.  So do the math and understand what is really being said when the cellular companies claim that they are operating under the FCC's safety standards.

      Since 2008, landlines in California have dropped from 24-million to only 12-million in 2014; an approximate 50% decrease in 6-years as consumers are opting for portable cellular.

Good deal for consumers?

      With a declining market, the question is: Why would Frontier Communications want to buy Verizon's landlines?  Yes, landlines is a niche market that Frontier specializes in; but is a Frontier takeover good for California consumers?  If the market continues to fall, will existing landline customers be faced with paying off Frontier's debt to keep the company afloat?  Who would be foolish to bail-out a failing Frontier?  Frontier is amassing tremendous debt as it is acquiring Verizon's landlines.

      Currently, Verizon Communications is rated the No. 2 largest telephone company in the world with revenues of $128.7-billion.  Frontier is a debt riddled company rated at No. 40 in the world with revenues of $4.7-billion.  With a declining landline market, do you want your service backed by the world's No. 2 company or No. 40?  (FYI: AT&T is No. 1.  The wireless unit at Verizon accounts for 70% of its total revenues.)

      Many customers with a Verizon landline are very concerned over the takeover.  Will Frontier's service be as good as what they have now?  Will rates increase?  For consumers who have signed-up with Verizon, will they have to pay early termination fees if Frontier's service doesn't measure up --- after all, they contracted for service with Verizon, not Frontier.  For those with e-mail addresses, will customers have to contact all their friends and businesses regarding their eventual transfer to a e-mail address.  The list of concerns by consumers goes on-and-on.

      In the Mid-West, Frontier has a history of bailing-out on commitments with a few communities in installing broadband; and some watchdog consumer websites have logged over 1,000 complaints regarding Frontier's service.

      Frontier claims that it has arranged the Verizon landline aquisition funds.  But there are no back-up operational resources shown for unanticipated expenses.  During Stimpfel's testimony, he questioned whether Frontier was waiting for the licence before running to Wall Street hedge funds for the gap operational costs.

      Frontier's background is primarily in smaller states and concentrated populations.  Maintenance and improvements are far more costly in rural areas where customers are lightly scattered across distant areas.  With Verizon bailing-out of the landline business, the hand writing is on the wall.  Verizon wouldn't be leaving if there was still good money to be made.  Verizon realizes that it has milked an aging cow for years and that it is now going dry.

      Frontier Communications appear to be the only acquisition suitor.  If Frontier acquires the licenses, expect rates to steadily climb.  The CPUC will be forced to approve rate hikes or risk Frontier going belly-up.  Frontier doesn't have the financial fall-back that Verizon has.

      So, is Frontier's acquisition a good deal?  Based upon Frontier's promises, it is.  However, based upon common sense, one has to be skeptical.  For Newberry Springs, does it matter?  Frontier can't ignore Newberry much more than Verizon has.  Thinking positively, there is always a chance that Frontier might be mandated or persuaded to bring broadband into Newberry.  Whether that happens, depends in part upon the community.

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