February 6 is the halfway point of the FCC's 180-day shot clock for the agency's review of the proposed Verizon/Frontier merger. The proposed transaction likely would strengthen broadband competition across Frontier’s service areas located across 25 states, enabling broader deployment of fiber and fixed wireless services, including bundled service plans. Verizon and Frontier serve separate geographic areas, so the merger would not cause any consumer to lose the choice of a competitor. As a result, the proposed Verizon/Frontier presents likely public benefits, and it does not appear to raise any significant potential anticompetitive concerns that would stand in the way of prompt approval.
The Commission should decide on the proposed merger well before the agency's shot clock expires. The agency's shot clock for completing transaction reviews was intended to be the outside date by which transaction reviews raising substantial concerns are completed – not the considerably shorter date by which most reviews, such as the Verizon/Frontier merger which do not raise substantial concerns, are approved.
According to the parties' public interest statement, Frontier provides voice services and broadband services to approximately 3 million subscribers in urban, suburban, and rural areas across 25 states. Since it emerged from bankruptcy in April 2021, Frontier has prioritized fiber deployment and invested $4.1 billion in fiber facilities as part of a plan to reach 10 million locations by 2026. Although Frontier now has reached 7.2 million fiber locations and is on its way to achieving its 10 million goal, Frontier has amassed debts of $12 billion. Looming debt obligations will make it difficult for Frontier to obtain financing to expand its fiber connections beyond 10 million. Additionally, Frontier lacks wireless service offerings that would allow it to offer bundled service plans that could compete head-to-head with rival cable broadband providers that offer broadband, video, and wireless services.
Under the proposed deal, Verizon Communications would acquire 100% of Frontier Communications, adding more than 2 million fiber subscribers to Verizon's 7+ million Fios subscribers. Verizon has a market capitalization of over 167 billion, and Verizon reported total operating revenues of $134.8 billion and free cash flow of $19.8 billion in 2024. Thus, Verizon has the financial resources to more cost-effectively retire Frontier’s debt than Frontier could on its own, with sufficient resources available to pay for fiber facility expansions that will increase connections beyond 10 million in Frontier's territories. Furthermore, Verizon will make its mobility and fixed in-home wireless broadband plans available to Frontier subscribers, including as bundled plans. In all, the merger would boost market competition in Frontier’s territories, creating a stronger challenge in those areas to incumbent cable broadband providers.
Notably, the Verizon/Frontier merger presents a potential public benefit for lower-income consumers. The transaction would result in the expansion of the Verizon Forward affordability program to Frontier's territories. Verizon Forward offers qualifying customers Fios service with 300 Mbps speeds at $20. It also offers fixed wireless 5G Home or LTE Home service for $20 for customers who qualify and subscribe to certain 5G mobile plans.
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