- California regulators finally gave Verizon the greenlight for its Frontier merger
- The proceeding spanned several months, including discussions of DEI, deployment and workforce commitments
- Verizon expects to close the transaction on January 20
After months of regulatory pushback, Verizon finally secured California approval for its $20 billion Frontier acquisition.
The California Public Utilities Commission (CPUC) today unanimously voted in favor of the deal. Following that ruling, Verizon issued a press release announcing it expects to close the transaction on January 20.
New Street Policy Analyst Blair Levin said CPUC’s decision was “imminent” based on an Administrative Law Judge (ALJ)’s filing yesterday evening.
While Verizon “may not have gotten 100% of what it sought, on the critical issues of deployment, employment and supplier contracts, it appears that Verizon got nearly everything that we thought material,” he wrote in a note today.
Initially, the key issue for the CPUC was Verizon’s commitment to roll back its diversity, equity and inclusion (DEI) policies, as that could conflict with California’s own diversity laws.
Progress in the proceeding came in December when the ALJ recommended CPUC approve the transaction, on the condition Verizon agreed to some more DEI-related requirements.
Those include creating a recruiting pipeline for “underrepresented populations” and meeting regularly with state officials regarding procurement, employee retention and recruitment.
Concerns then arose about CPUC’s deployment requirements. Verizon said deploying 100/20 Mbps speeds or greater to all locations served by 88 wire centers “would be very difficult and costly because these wire centers are located in remote areas of Frontier’s service territory with rugged, mountainous terrain.”
The operator asked CPUC to modify that requirement to exclude locations served by another broadband provider as well as locations where no customer had requested service.
CPUC Commissioner John Reynolds affirmed Verizon’s deployment obligations at today’s voting meeting, while noting the company may apply for state grants to offset costs in more expensive locations.
Without such a condition, customers in rural, low-income areas “might simply experience degraded service as copper infrastructure ages with no replacement,” he said. “The obligation here is real and enforceable.”
Over the course of CPUC’s proceeding, Verizon also agreed to invest $500 million in California small businesses as well as offer $20/month broadband to low-income consumers in the state.
Verizon’s good news comes after the operator just dealt with a significant network outage that affected New York, D.C. and other parts of the country.
Levin thought perhaps CPUC would raise questions on additional reporting requirements in light of the disruption, but the vote proceeded as planned.
“For now, we will simply say, such outages usually spark an FCC investigation which leads to a negotiated settlement in which there is a fine and a consent decree to take actions that reduce the risk of a recurrence,” he said.