Frontier Communications has hit what may be one of the largest snags in completing its proposed acquisition of AT&T's (NYSE: T) Connecticut wireline business as the state Public Utilities Regulatory Authority (PURA) denied a settlement the telco reached with state officials.
In a filing it issued on Thursday, PURA said the settlement, which was jointly written by Connecticut's Attorney General George Jepsen and Consumer Counsel Elin Swanson Katz, did not properly address the needs of Connecticut residents.
Regulators said that the settlement's elements contained "merit for further discussion in an effort to rehabilitate them wherever possible." A meeting to discuss these issues will be held in September.
PURA raised three issues it raised in denying the request. It said that the agreement's price caps would not have any real benefit since residential phone rates are not forecast to rise. They added that Frontier did not provide enough details about its proposed broadband investment plan for the state, and a provision that would have utility regulators set levels of philanthropic giving would be "inappropriate."
Jepsen said in a statement that PURA's denial did not take into account the benefits they laid out and suggested that the regulator did not understand some of the agreement's terms.
"We respectfully disagree with other conclusions, including that the settlement is not enforceable--it is enforceable by PURA itself, as with all settlements it approves," Jepsen said.
Earlier this month, Frontier reached an agreement with the Connecticut Attorney General to invest $64 million over 2015, 2016 and 2017 to expand and improve broadband in Connecticut and to accelerate its inspection of the outside plant it is acquiring.
PURA's decision is a major blow to Frontier's acquisition process.
The service provider has already received two key federal approvals from the FCC and the Justice Department. Earlier, the acquisition gained the support of Communications Workers of America (CWA) Local 1298 President William Henderson III. Initially, Henderson opposed the sale because he said neither Frontier nor AT&T had issued a whole lot of information about their business plans.
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