Summary
After the fiasco at Hawaii Telcom and the problems in Northern New England with Fairpoint, the sale of Verizon's phone lines to Frontier appears at first sight to have a better chance for a smooth transition.
Analysis
Several aspects of Frontier's acquisition of 4.8 million access lines from Verizon are more promising for an efficient and smooth transition than have been the two previous sales of some of Verizon's local phone assets. 1. Even though this acquisition will triple the size of Frontier's telephone customer base, it does already serve well over 2 million lines, so it should be better capable of taking over former Verizon customers without the glitches that have plagued the new systems and customer service at Hawaii Telecom (HT) and in Northern New England; 2. Frontier's senior management includes much more real world experience and understanding of what it takes to operate networks and network services - to balance skills in financial engineering - than the new owners of Hawaii Telecom (the private equity firm Carlyle Group) or the senior ranks and Board of Fairpoint (Northern New England), which are dominated by experience from the financial industry and academia; and 3. Since Verizon's stockholders will acquire a significant proportion of Frontier stock, then as long as this ownership persists Verizon will have an added incentive to help make sure that the transition is accomplished as efficiently as possible. Furthermore Frontier does not have to take on the large debt loads that raised concerns about HT's and Fairpoint's financial health, and it is already active in most of the states in which it is acquiring Verizon lines, in contrast to Fairpoint's move into New England. In short, this acquisition seems to be founded on a broader and more solid set of strategic and operational business considerations than were the previous sales of Verizon's rural phone assets, at least from the perspectives of their buyers.
