Hardball 11/18/09: One Last Kick in Pants from WV to VZ Before Parting

The gloves are coming off one final time between Verizon and West Virginia.  The state is probably going to be so relieved to get Verizon out that it will likely play ball with Frontier.  It would hardly be an exaggeration to say that the relationship over the years between the two parties has been acrimonious.

Frontier may be in for a few surprises.  For example, there is a good chance that there will be some demonstrations of who is in charge. It was right after divesture in 1984, and the president of West VA company that was part of the original C&P Telephone had to testify before the PUC on a rate increase.  The commissions and the attorneys ask many complex questions in these hearings.  In all of the cases, they have inquiries that executives cannot answer right then and there.  The response always is they will get back with that information within one to two days.  At that time, there was a question on a remote item that the president could not answer, but he promised to respond within 48 hours.  The head of the commission said that was fine but that he would have to spend the time in jail until they received an answer.  Suffice it to say that the Bell-heads worked all night to come up with an answer in record time – but the president was behind bars for about 12 hours.

 

Also, during strikes, there tends to be a disproportionate amount of vandalism by employees in the state.  Gunfire from the hills would literally shoot down cables running along the roadway.  Verizon is certainly saying, “good riddance.”

 

The regulatory hurdles in selling lines to Frontier in WV may turn out to be the most stringent of all of the states in play. The other lines were mostly originally ex-GTE lines. It is only in WV where a flash cut of the network will be necessary. Verizon is also heavily unionized in WV. The state political structure heavily supports all unions. There is also concern that Frontier will end up like FairPoint, and that the government may be forced to take it over as a state-run utility. Another reason is to just badger Verizon one more time. They simply both despise each other.

The request for $300 million from Verizon before takeover is probably a stretch. It is very possible that it is more than was spent by the RBOC in the last five years. 

Verizon can also point to its purchase awhile back of West Virginia Wireless. As we said back in early 2007, it would be helpful in unloading the state. We wrote: “Verizon will probably assert that it has not given up on its desire to provide communications services in the state.” The service provider can also promise a certain amount of LTE deployment.