updated 07:00 pm EDT, Fri May 21, 2010
Frontier required to push 4 Mbps broadband
The FCC has approved Verizon's sale of rural DSL and landline accounts to Frontier Communications, a deal that was negotiated for $8.6 billion. The sale required approval from regulators in nine of the 14 affected states located in the West, Midwest, and South. Over 4.8 million lines will be transferred, including residential, business, and institutional accounts.
To gain approval, the companies had to commit to broadband expansion terms outlined by the FCC. Frontier will be required to deploy "broadband" of at least 3Mbps downstream to at least 85 percent of transferred lines by the end of 2013. The bar will be raised to 4Mbps downstream to the same percentage of customers by the end of 2015, with upstream speeds of at least 1Mbps.
Along with the residential deployment, Frontier must connect faster fiber connections to libraries, hospitals, and other institutions located in "unserved and underserved" communities. The company will be required to provide regular updates, including deployment data, to the FCC throughout the transition.
FCC chairman Julius Genachowski is "pleased" by Frontier's commitments to deploy broadband in rural America, according to an official statement. The Commission chief did acknowledge many of the concerns surrounding the deal, however.
"I take seriously concerns that have been expressed about the risks this transaction poses for consumers, employees, and competitors," he said. "No transaction is without risk, and this one has its fair share. But based on our review ... we conclude that on balance the likely public-interest benefits outweigh the potential public-interest harms."
Frontier's ability to meet the FCC terms has yet to be proven. The company faces a significant increase in debt associated with the transaction, along with a considerable increase in overall customers. The FCC mandate also appears to lack specific terms regarding service pricing for customers affected by the switch.