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.
Since Verizon and Frontier are not direct competitors for wireline services and Frontier does not offer wireless services, the parties are not direct competitors. Their wireline services operate in different geographic territories. As a result, consumers would not lose a choice of providers if the merger is approved. Indeed, there does not appear to be any significant concerns regarding anticompetitive conduct or consumer harm if the FCC approves the transaction.
Moreover, comments filed in the FCC's proceeding by Communications Workers of America (CWA) addressing the purported use of contractors on construction projects by Frontier and comments filed by the Coalition for IP Network Transition regarding Verizon's and Frontier's migration from remnant legacy networks to IP-based networks involve allegations that are not specific to this particular transaction. Concerns raised in those comments are fitting for consideration, if at all, by other federal agencies or by the Commission in separate proceedings that apply to all providers in the communications marketplace. In short, there do not appear to be any issues raised by the proposed Verizon/Frontier merger that require the Commission's decision to be delayed or subject to conditions created by the agency.
Indeed, now that the FCC has new leadership under Chairman Brendan Carr, the Commission should look to reform its merger review process to address prior bad agency transaction review practices: imposing conditions that are extraneous to the specific transaction under review, meant to extract concessions for the benefit of outside special interest groups, or that serve as a pretense for expanding the agency's jurisdiction beyond what Congress set by law. The Commission also should consider reforms that will prevent the agency from designating mergers or other transactions under review by the agency to its administrative law judge for a hearing and thereby put the matter into suspended animation and deny the parties a timely agency decision on the merits.
In any event, the FCC should complete its review of the Verizon/Frontier merger well before the end of the 180-day shot clock. The shot clock should not become – and should never have intended to be – the routine date by which the agency commits to acting on transactions that do not raise substantial concerns. Decision-making delays are unjustifiable and can undermine the potential benefits of the proposed transaction and instead harm competition through lost economic opportunity costs and damage to the soon-to-be-acquired party's subscribership and finances while its future, unnecessarily, is kept on hold.
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