Verizon Tries To Blame Net Neutrality For Huge Fixed-Line Broadband Asset Sale They Were Planning Anyway

from the nobody-believes-you-any-more dept

As we've been noting for some time, despite a lot of lip service to expanding broadband availability, AT&T and Verizon have been backing away from unwanted fixed-line broadband customers for years, either offloading them to smaller phone companies packaged with oodles of outstanding debt, or willfully neglecting to upgrade (or in some cases even repair) these users in the hopes they'll flee to wireless (or cable, where they'll be pitched wireless service anyway). Both companies clearly want to focus on wireless services, where caps and per gigabyte overages are far more profitable.

The problem is that in many markets this is going to wind up giving cable broadband a stronger monopoly over fixed-line broadband than ever before, resulting in even higher prices and worse service than those customers currently "enjoy." Meanwhile, the companies that Verizon and AT&T sell these assets to usually struggle under debt load and lack the resources or competitive incentive to upgrade user lines to next-generation broadband. Most will spend much of the next five to ten years struggling to get close to the FCC's new 25 Mbps broadband standard.

After selling off huge chunks of its fixed line networks to Frontier and Fairpoint years ago, Verizon has now announced it's actually selling all of its fixed-line broadband customers in Texas, California and Florida to Frontier Communications in a deal worth around $10.5 billion. The move's a great one for Verizon, which again gets to offload customers it never wanted alongside packaged debt, regulatory obligations and union woes. Investors don't think it's a great move for Frontier, which appears to be acquiring these quickly deflating copper assets simply for the sake of growing larger.

Anyway, point being, this is something Verizon's been working on for years now, and it's got nothing to do with net neutrality. Former CEO Ivan Seidenberg was bullish on fixed-line broadband, thus the $24 billion FiOS investment. New CEO Lowell McAdam lacks the patience for the slower ROI of fixed broadband, and has been planning Verizon's exit from fixed-line services since he was named the new CEO four years ago. So it's funny to see Verizon last week feebly trying to blame Title II and net neutrality for the company's decision to focus solely on wireless:
"The agency’s efforts to re-regulate the Internet have created uncertainty in the telecoms industry," McAdam said. He warned against the new proposed rules, also alluding to AT&T's recent acquisitions of two carriers in Mexico. "Washington should be very thoughtful how they go forward here," he said. "This uncertainty is not good for investment, and it's not good for jobs here in America."
There are a number of things wrong with that statement. One, as already noted, Verizon was already making this shift and it had nothing to do with net neutrality. Two, AT&T's entering Mexico because wireless is profitable -- they're not running to Mexico to hide from the FCC, which is just a stupid argument. Three, if Title II is so bad, why is the company acquiring these assets telling everyone Title II is no big deal?
"(Frontier CEO Maggie) Wilderotter said she was quite comfortable with what’s called “Title 2” regulation because Frontier already operates under those rules in many areas, and she noted that the proposed rules didn’t impose fixed broadband rates."
Four, it's worth reiterating for what feels like the fiftieth time that the regulatory "uncertainty" surrounding neutrality was actually caused by Verizon when it sued to overturn the FCC's original, flimsy rules the rest of the broadband industry was ok with. It's almost as if Verizon wants to add insult to injury lately by not only fighting net neutrality, but doing it using the flimsiest arguments humanly possible.
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Filed Under: fixed line, net neutrality, selloff, wireless
Companies: frontier, verizon

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  1. identicon
    Lord Binky, 9 Feb 2015 @ 12:53pm

    How is it they can even say "Oh that deal that was signed Yesterday? That was because of news from the day before." Unless they hired Miss Cleo fulltime, there is simply no way what they are alluding to as the reason for their actions fits in the time it takes for those actions to even be at a point to announce.Their PR guys must have a sticky note "The reason we did this is because of ".

    The frequency at which they do that shows how unconcerned they are with anything but profits. It would be pretty damn impressive they function like that if it wasn't for terrible it is.

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