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Workers Tell FCC: No Deal on Verizon-Frontier Sale

April 9, 2010

On April 1, nearly 200 union members and consumer advocates rallied in front of the Federal Communications Commission headquarters in Washington, D.C., to tell regulators to say “No Deal” to the proposed sale of portions of Verizon’s landline systems in 14 states to Frontier Communications.

Said IBEW International President Edwin D. Hill:

It’s a bad deal for workers, a bad deal for consumers and a bad deal for the economic future for large parts of the United States.

Verizon wants to unload 4.8 million phone lines and 900,000 high-speed internet lines in mostly rural parts of the country, where it believes it will be too expensive to expand its next generation of fiber-optic networks.

Critics of the deal, which include the IBEW and Communications Workers of America, say that the sale would bury Frontier – one of the nation’s smaller telecoms – in debt, potentially threatening the jobs and benefits of thousands of telecommunication workers.

There is also a concern that Frontier does not have the financial resources to offer the high-speed broadband and other technologies that Verizon is known for, creating a deep digital divide for rural communities who cannot take advantage of new technologies.

Speaking at the rally, IBEW Telecommunications Department International Representative Bob Erickson told the crowd about a similar deal – the 2008 sale of $2.4 billion of Verizon’s landlines in Northern New England to FairPoint Communications – which ended in disaster.

Erickson said:

It’s appropriate that today is April Fools, because Verizon is trying to trick us again. Instead of offering new products and new broadband service, FairPoint is in bankruptcy court. We can’t let Verizon dump its debt and walk away from its responsibilities to rural America.

FairPoint, after absorbing more than $500 million in debt from the sale, was forced to declare bankruptcy in February. A similar deal in Hawaii led to the bankruptcy of Hawaiian Telecom only a few years earlier.

A busload of Verizon workers from West Virginia –the state that will be most affected by the deal – traveled more than eight hours to be at the rally.

One of the workers, CWA Local 2010 member Richard Henderson, was particularly upset over Verizon’s use of an obscure financial loophole that allows it to avoid paying taxes on expected profits from the deal.

Henderson said:

I work hard every day and I have to pay my share. Why does Verizon think it can get away without paying its taxes?

On March 24, the House of Representatives voted to eliminate the loophole, known as the Reverse Morris Trust. The legislation is now under consideration in the Senate.

Following the rally, a group of union members and consumer activists met with FCC Commissioner Michael Copps to express their disapproval of the deal.

The FCC is expected to take up the case after the appropriate regulatory agencies in the affected states finish their reviews.

For more on the campaign to stop the sale, click here.