Abandoning Middle America

Verizon’s plan to sell its local phone businesses in
14 states to Frontier Communications poses significant risks to consumers, workers and communities.

Verizon wants to shed wireline and broadband systems in rural parts of Illinois, Washington, California, Minnesota, Ohio, Michigan, West Virginia, Indiana, Wisconsin, South Carolina, North Carolina, Arkansas and Oregon. They are areas of low population density where the company believes it will be too expensive to install its next-generation, high-speed fiber optic lines. Verizon stands to make $8.6 billion from the deal, but, thanks to a loophole in the law, won’t pay a dime in taxes.

Frontier will get 4.8 million phone lines, 900,000 high-speed Internet lines, and become the new employer of close to 11,000 workers—including more than 4,000 members of the International Brotherhood of Electrical Workers.

"Frontier will triple in size," said IBEW International President Edwin D. Hill. "There are concerns about the company’s ability to sustain itself, retain its employees and maintain an acceptable level of service for its customers." There is also concern that smaller communities will be locked out of the new, high-speed fiber optic technologies for which Verizon has become known.

Similar Verizon deals have left companies and consumers on the verge of bankruptcy and consumers stuck with the mess. In 2008, Verizon sold its operations in Maine, New Hampshire and Vermont to FairPoint Communications. Since then, the company has faced an unprecedented number of complaints from frustrated consumers and a stock price that has plummeted 95 percent. In 2005, Verizon sold its Hawaiian assets to Hawaiian Telecom. Since then, the company has lost 21 percent of its customers and filed for bankruptcy.

Experts worry Frontier will face a similar fate, putting customers, workers and the economic health of America’s rural communities in jeopardy. If approved by regulators, the deal, first proposed in May, could close by the spring of 2010.

Case In Point:

Statement of IBEW President Ed Hill on FairPoint Bankruptcy
Edwin D. Hill, International President of the IBEW, issued the following statement after FairPoint Communications Inc. announced today that it plans to file for Chapter 11 bankruptcy protection shortly after purchasing land line assets from Verizon: (Click here to read more)