Ohio Consumers' Counsel Says PUCO Should Deny Frontier, Verizon Telephone Merger without Consumer Protections

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A proposed merger of two telephone companies should be rejected, the Office of the Ohio Consumers' Counsel (OCC) announced today. If the merger of Frontier Communications Corporation and Verizon Communications, Inc. is to be approved by the Public Utilities Commission of Ohio (PUCO), conditions should be required.

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We are concerned that Frontier will not be able to afford to maintain and improve residential customers' service. We need a guarantee that consumers' needs will not be on the back burner.

A proposed merger of two telephone companies should be rejected, the Office of the Ohio Consumers' Counsel (OCC) announced today. If the merger of Frontier Communications Corporation and Verizon Communications, Inc. is to be approved by the Public Utilities Commission of Ohio (PUCO), conditions should be required.

In comments to be filed later today at the PUCO, the OCC will cite the lack of consumer benefits and potential pitfalls of a merger of the two companies' traditional landline telephone businesses. The OCC is concerned over whether Frontier is capable of maintaining and improving Verizon's Ohio residential local telephone service if the merger is approved at the state and federal levels.

"The lack of specific benefits for consumers fails to make this merger in the public interest," said Consumers' Counsel Janine Migden-Ostrander. "We are concerned that Frontier will not be able to afford to maintain and improve residential customers' service. We need a guarantee that consumers' needs will not be on the back burner."

Migden-Ostrander said merger approval should include:

  •     A commitment that the merged company will, within three years, make broadband service available to 90 percent of residential customers in its Ohio service areas. Within five years, 100 percent of residents should have broadband access through the merged company;
  •     Elimination of the $1.25 monthly Access Recovery Charge to Verizon's Ohio customers to ensure reasonable rates;
  •     Monitoring of service quality performance, with improvement of service quality in Verizon's Ohio communities.

In 2008, the PUCO imposed a $250,000 penalty based on Verizon's failure to meet its monthly obligation to restore customers' service outages within 24 hours at least 85 percent of the time in each of its four Ohio districts. The OCC believes there are significant questions regarding Frontier's ability to make much-needed improvements to Verizon's service areas in Ohio.

Frontier and Verizon filed their merger request May 29. The proposed merger involves the transfer of Verizon's Ohio operations, the second largest local telephone provider in Ohio with approximately 435,000 residential customers in 77 counties, to Frontier, which serves 480 residential customers in a small portion of Williams County.

On the national level, Frontier serves approximately 2.3 million customers in 24 states. The merger would add 4.8 million Verizon telephone lines in 14 states to Frontier's business.

On June 10, the OCC requested the merger be closely examined, including the holding of local public hearings to provide consumers with convenient opportunities to express their opinions. The PUCO suspended a 30-day automatic approval process, but has not held evidentiary hearings or local public hearings to determine whether the merger is in the public interest.

Under state law, the PUCO cannot approve a merger unless the companies demonstrate the transaction promotes the public convenience and will result in adequate service at reasonable rates.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC Web site at http://www.pickocc.org.

Contact:
Ryan Lippe
(614) 466-7269

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