Verizon (NYSE: VZ) finally made it public that is selling its wireline assets in three states to Frontier for $10.5 billion, but besides getting more cash to fund its wireless operations, its decision was also influenced by the FCC's move to reclassify wireline broadband providers under Title II of the 1996 Telecom Act.
Speaking to investors and reporters about the new deal, Lowell McAdam, CEO of Verizon, said that the Title II proposal and associated regulatory uncertainty was a big factor.
"An important consideration was the current regulatory uncertainty and the potential impacts on future investments of a reclassification of broadband under Title II," McAdam said.
Earlier this week, the FCC signaled that its new net neutrality rules will reclassify broadband as a telecommunications service under Title II of the Telecommunications Act.
Verizon has been one of the staunchest critics of Wheeler's Title II proposals, arguing that it is "counterproductive because heavy regulation of the Internet will create uncertainty and chill investment among the many players."
For its part, the FCC claims that its proposal to reclassify broadband Internet access under Title II has the legal footing it needs to withstand any legal challenges that telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ) plan to launch once the rules come out.
Verizon intimated in January that it was looking to sell off some of its wireline assets as it looks to sharpen its focus on the wireless business, which it says is poised for more growth. At the same time, the wireless business is not unionized and is not as heavily regulated as the wireline services it offers. Verizon's wireless business makes up nearly 69 percent of its $127 billion in annual revenue.
For more:
- WSJ has this article
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