Competitors are pouncing on Verizon Communications’ (NYSE:VZ) move to sell 4.8 million access lines to Frontier Communications (NYSE:FTR) in 14 states, reaching out to Verizon customers in those areas and urging them to switch providers before the network changes hands.
In particular, Comcast (NASDAQ:CMCSA) has been targeting customers in Washington and Oregon, according to Donald Shassian, Frontier’s chief financial officer. Those attacks are made easier by the high-profile service problems Verizon customers saw in the Northeast after they became Fairpoint Communications customers, in a similar transaction. Frontier says it knows how to avoid the problems that beset Fairpoint. But in the mean time, while its deal is still pending (perhaps until next summer), Frontier can’t fight back in the markets it has yet to acquire.
“We can’t force [Verizon] to come up with a new promotion or new incentives or change their marketing,” Shassian said at an investor conference this week. “It’s been challenging to compete against Comcast’s campaign like that. We can’t advertise in those markets because we don’t have regulatory approval. That [would be] poking a regulator in the chest. You can’t assume you’re going to get something. You’ve got to sit back on your heels and hope Verizon does their best.”
Revenue from the assets Frontier is acquiring dipped 2% sequentially in the third quarter to just over $1 million. That followed a nearly 6% year-over-year decline in the first half of the year. While Shassian acknowledged that cable competition may be partly to blame for that third-quarter softness, it is also due to maturation of some Indiana markets, where Verizon’s fiber-to-the-premises network is thoroughly deployed. “They’re running out of runway there,” he said.
This week regulators in Oregon spelled out stipulations to their approval of the deal, including $10 million in broadband expansion and flexibility in long-term contracts for FiOS customers. The state is expected to greenlight the deal next week, when Washington regulators take their own turn.
Frontier may face its toughest battle in West Virginia, the only state in which it will have to have back-office systems converted upon the deal’s closing. Debate is already heating up in the state, which contains about 10% of the lines Frontier is acquiring. This week the Communications Workers of America held a press conference in which a Vermont firefighter — recounting his experiences with the Verizon/Fairpoint transfer — warned West Virginians of the potential threat to their 911 service posed by the Frontier deal.
A Verizon spokesperson replied, “Shame on them.”
Verizon has no right to say “Shame on them”. They have been using a reactive program for all of their copper Plain Old Telephone Service (POTS) And DSL copper fed coustomers. They have not maintained their copper circuits for years and have transferred faulted circuits to vacant cable pairs (cut-to-clear) until there are no vacant cable pairs to transfer the customer’s circuits to provide service driving their customers into a black martini rage.
No wonder the customer rushes to the cable companies. Mind you they are no better. By the time FIOS is available for those few customers left they too will go to the competition. Any company that wants to be in the bandwidth business using fiber to the home (FTTH) or fiber to the node (FTTN) and copper to the customer had better have a proactive maintenance program.
Donald McCarty
Frontier’s possible-soon-to-be competitors are using scare tactics to drum up business. If the customers yield and switch, they may well wish they hadn’t.
Frontier has shown itself to be a focused, striving organization making great headway in establishing, providing and maintaining service in the most difficult of environments – the rural market. Frontier employees have proved in Tennessee since 1994 they can rise to meet the challenges. And, I feel sure that this is true in their areas(like West Virginia). As to the 911 concerns, there should be none. Just because something happened in Vermont because of one company, doesn’t mean it’ll happen in West Virginia because of another. This is, as the old saying goes – “Comparing apples and oranges(No comparison)”
Comcast to Verizon customers: “Do you really want to take the chance that this transformative acquisition will impact your service in as-yet unknown ways? No way! Come with us! We’re buying NBC!”
“While Shassian acknowledged that cable competition may be partly to blame for that third-quarter softness, it is also due to maturation of some Indiana markets, where Verizon’s fiber-to-the-premises network is thoroughly deployed. “They’re running out of runway there,” he said. ”
Some Indiana markets(plural)??? There’s only 1 Verizon FiOS Indiana market. It’s Fort Wayne(and 2 nearby towns), Indiana.
Thoroughly deployed??? Wow, that’s NOT a phrase that I would use to describe Verizon’s FiOS deployment in the Midwest, since Fort Wayne, Indiana is the 1 and only there. No Verizon FiOS in the rest of Indiana, Ohio, Michigan, Illinois, or Wisconsin.
Have not heard the investor conference, but the above article makes Mr. Shassian sound uninformed on Verizon’s FiOS.