Frontier Communications and Verizon have filed hundreds of pagesof testimony countering every criticism leveled at Frontier's planto buy Verizon's wire line business.
Frontier even got Billy Jack Gregg, the commission's formerconsumer advocate, to testify on the company's behalf to counter thetestimony of Byron Harris, the current consumer advocate, whoopposes the deal.
The testimony was filed with the West Virginia Public ServiceCommission late Tuesday and posted on the commission's Web siteWednesday.
The Communications Workers of America has argued that Frontier isbiting off more than it can chew and won't have the financialstrength to maintain and improve Verizon's West Virginia networkafter the transaction.
Stephen Smith and Kathy Buckley, testifying on behalf of Verizon,called Frontier "the ideal acquirer" of Verizon's wire line assetsin West Virginia. They argued that the concerns raised about thedeal are "misplaced."
Smith is vice president of business development for Verizon'sDomestic Telecommunications Group. Buckley is vice president forpublic policy for Verizon West Virginia.
"Despite the number of interveners, opposing witnesses, and thelength of their testimonies, the fact remains that this transaction -bargained for at arms-length by two large and sophisticatedtelecommunications providers - will benefit West Virginiacustomers," Smith and Buckley said. "Nothing in those testimoniesundermines the significant benefits of this transaction to WestVirginia consumers..."
Smith and Buckley claimed:
* Frontier will increase broadband availability in West Virginia.
* "Existing retail and wholesale customers will continue, at aminimum, to receive substantially the same services on the sameterms and conditions under their existing contracts, agreements, andtariffs."
* "Verizon's fiber and copper-based wire line network willcontinue to provide quality service in West Virginia, and Frontierwill continue to invest in it."
* Moving customers from Verizon's systems to Frontier's won't bea problem.
* "The same people that engineer, construct, maintain, andoperate Verizon's network and customer service operations willcontinue to do so after the transaction. Verizon WV will remainintact, and the new owner, Frontier, already has a proven trackrecord in West Virginia..."
David Whitehouse, Frontier's treasurer, said "the evidence isclear" that the transaction presents relatively little risk; "thereis no evidence of demonstrable harm" that will result from the deal;and there is "considerable evidence that the combined company willbe one of the most financially sound incumbent local exchangecarriers in the U.S.
"The contention by the (union) and (the consumer advocate) thatFrontier's business model is not sound or that Frontier is notfinancially fit to own and operate the business of Verizon in WestVirginia is contrary to the evidence," Whitehouse said.
Paul Vasington, a director of state public policy for Verizon,said critics' proposals that Verizon set aside money to guaranteethat the transaction will work "represent a bald attempt to placeonerous conditions on the deal."
Vasington said the argument that Verizon hasn't been investingenough in its network is "demonstrably false."
The number of Verizon's access lines has dropped by almost 30percent and local call volumes have dropped by half since 2002 butexpenditures declined during the period by a minimal amount, hesaid.
"It is not surprising that capital expenditures have decreased inrecent years because during periods of annual growth, capitalexpenditures were driven in large part by the need to construct morelines," Vasington said. "Verizon has lost that growth, plus 30percent of its existing lines."
Frontier executives Daniel McCarthy, Michael Swatts and StevenWard addressed systems issues. They said Frontier will ensure theirsystems operate as they do today and that Frontier will havesufficient personnel to operate their systems and process retail andwholesale orders.
The Public Service Commission's Consumer Advocate Division is anindependent operation. Harris, who heads the division, has urged thecommission to reject the proposed deal. He said last month thatVerizon is providing sub-standard service in West Virginia becauseof years of neglect.
Gregg headed the Consumer Advocate Division from 1981, when theposition was created, until his retirement in 2007. After retiringGregg opened a consulting business and has since testified inseveral cases.
Gregg said critics of the deal who argue that prior acquisitionsby Frontier resulted in a deterioration of service quality did notproperly analyze the data." I conclude there has been no decline inservice quality in service territories recently acquired byFrontier," he said.
"Based upon my review of the transaction and my previous historywith both providers, I believe the transfer of assets to Frontiercan provide a benefit to consumers in West Virginia and is in thepublic interest," Gregg said.
The $8.6 billion Frontier-Verizon deal must be approved by thePublic Service Commission to be completed. The commission hasscheduled hearings Jan. 12-14 in Charleston.
Frontier also plans to acquire Verizon wire lines in 13 otherstates. Frontier's target date to close the deal is April 30, 2010.If it is approved, West Virginia would be Frontier's largest market.
Contact writer George Hohmann at business@dailymail.com or 304-348-4836.
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