- A CA judge recommends approval for Verizon/Frontier but thinks more DEI commitments are needed
- Notably, the judge determined Verizon’s letter to the FCC doesn’t conflict with state diversity laws
- It’s now more likely regulators approve the deal before the DoJ’s expiration date, said NSR Policy Analyst Blair Levin
Verizon’s Frontier deal is on the verge of landing regulatory approval from California, despite the operator dropping diversity, equity and inclusion (DEI) policies. Still, the state wants to issue some more requirements related to workforce and diversity.
An Administrative Law Judge this week recommended the California Public Utilities Commission (CPUC) approve the transaction, on the condition that Verizon establishes a recruiting pipeline that aims to hire “underrepresented populations” and meets periodically with state officials regarding procurement, employee retention and recruitment.
Other requirements include maintaining Frontier’s small business accelerator program for five years and conducting quarterly employee satisfaction surveys that contain questions related to inclusion.
Notably, the judge determined Verizon’s commitment to the Federal Communications Commission (FCC) doesn’t conflict with California DEI laws as long as those additional conditions are met.
“We find that the commitments in the Verizon-FCC letter can be consistent with California law when taken along with additional commitments and requirements as detailed in Ordering Paragraphs 2-31,” wrote the judge.
Verizon, like AT&T and T-Mobile, sent a letter to FCC chair Brendan Carr confirming it would drop DEI programs and policies, which was the key issue for California regulators.
“It is not done yet, but the odds favor the CPUC approving the transaction prior to the one-year anniversary of the DOJ approval, the critical date for the transaction,” said New Street Research Policy Analyst Blair Levin in a note Thursday.
The Department of Justice approved the deal on February 14, but that approval will expire after one year, upping the pressure for Verizon to settle with California so that it can close the acquisition in early 2026.
Verizon already agreed in September to invest $500 million in California small businesses as well as use CPUC diverse spend benchmarks. Aside from compromising on DEI, Verizon must offer $20/month broadband for 10 years after the transaction’s close and increase its planned fiber passings in the state.
The judge also recommended Verizon should be required to provide fiber backhaul services “on a non-discriminatory basis” to projects that receive funding from state and federal programs.
That, along with other buildout requirements, will likely be “acceptable” to Verizon and “not material to investors,” Levin wrote.
The low-cost internet requirement is a bit more contentious, given the telecom industry’s opposition toward rate regulation. California earlier this year introduced an affordable broadband bill, modeled after New York’s law, but that legislation was shelved due to “too much legal uncertainty” over the new Broadband Equity, Access and Deployment (BEAD) guidelines.
Per the June 6 restructured notice, subgrantees must still offer one low-cost service option but states and territories are prohibited from setting the rate of that service.
The judge further proposed that Verizon should agree not to raise the prices of its and Frontier’s low-income services for five years. CPUC could issue the final verdict next month at its January 15 voting meeting.