Is the ghost of FairPoint Communications haunting Frontier Communications? Probably not as much as telecom industry insiders would think, though FairPoint's problems certainly could give Frontier's critics some handy background support for their points of view.
Frontier's plan to acquire former Verizon Communications' landline assets in 14 states has run into more opposition recently in Illinois, where a judge ruled that state regulators should not approve the deal because of the resulting debt load for Frontier.
Though regulators in at least six of the 14 states affected by the deal already have given their approval, Frontier and Verizon have encountered problems in at least four states, including Illinois, West Virginia, Oregon and Washington (It later did gain approval in Oregon).
Are those who oppose the deal using FairPoint's laundry list of problems after a similar acquisition of Verizon properties to argue against Frontier's plan? No, not directly. In Illinois, we see a judge concerned about Frontier's ability to remain financially healthy under the debt load. In West Virginia, we have seen unions protesting the deal as they look out for workers' livelihood. Elsewhere, people are concerned about getting accurate bills on time and getting decent levels of customer service and support. All of these issues exist in their own corner of the universe. All of them are reasonable concerns.
Where there are similarities are in the intentions of the seller, and the good intentions of the buyers. Verizon wants to get rid of these lines, and will not invest much in them if it doesn't. The same was true of the lines Verizon unloaded to FairPoint in New England. Frontier, like FairPoint, cares about supporting these lines and serving the customers at the other end--they have to because serving the types of markets these lines are in is Frontier's core business.
That's why Frontier deserves a chance, the same way that FairPoint deserved a chance. FairPoint flubbed the opportunity in a number of ways, but long-term, it still has the chance to be a solid service provider in New England.
Though a few similarities exist, Frontier needs to be judged on its own merits. The level of concern that's been raised is a reminder of how important the stakes are to customers and employees that would be affected by the deal. Ultimately, Frontier should work with the states and constituents involved to gain support for the deal because it's the best chance for an independent telco to thrive in a changing market, and the best chance for customers in the affected states to continue seeing the benefit of telecom investment and innovation. -Dan