The proposed sale of Verizon's landline system in 14 states to Frontier Communications is running into stiff opposition from union members, consumer advocates and political leaders across the country.

In West Virginia and Washington, state consumer advocates are urging officials to reject the deal, while in Illinois, Attorney General Lisa Madigan is suggesting that the Federal Communications Commission give the transaction a thumbs down.

The sale would affect more than 4,000 IBEW members at Verizon, in addition to the approximately 1,000 members currently working for Frontier. In addition to those already mentioned, the states that would be affected are Minnesota, Ohio, Michigan, Indiana, Wisconsin, South Carolina, North Carolina and Arkansas.

"People are getting the full story about how the sale is a bad deal for customers and workers," said IBEW Telecommunications Department Director Martha Pultar. "The disasters at FairPoint and Hawaiian Telecom say it all."

Pultar is referring to two transactions that ended badly for the companies that purchased Verizon's assets. Hawaiian Telecom bought more than 700,000 landlines from Verizon in 2005, which saddled the Honolulu-based company with more than $1 billion in debt. It declared bankruptcy last year.

And last fall, FairPoint Communications declared bankruptcy after accumulating $2 billion in debt after acquiring more than 1 million landlines from Verizon in northern New England (See "Damaging Deals Worry More Telecom Workers," September 2009, the Electrical Worker).
"Our members know what happened at FairPoint and with a potential deal with Frontier, we're worried that's it going to be déjà vu all over again," said Norwalk, Ohio, Local 986 Business Manager Fred Sabol.

Local 986 represents nearly 200 Verizon employees—mostly in rural north-central Ohio—who would go over to Frontier if sale goes through.

"I've got nothing against Frontier, but I don't think it is in a strong enough financial position to responsibly take over these lines," Sabol said.

Verizon is hoping to sell off 4.8 million phone lines, mainly in rural parts of the country where the company fears it will be too expensive to expand its next generation of fiber optic networks, including its bundled high-speed communications package, FiOS.

The IBEW and the Communication Workers of America have been mobilizing their members against the sale, flooding elected officials with letters and e-mails and packing public commission hearings.

"The sale puts the economic future of our region at risk," said Seattle Local 89 Business Manager Ray Egelhoff. Local 89 represents more than 1,500 Verizon employees who would be affected by the sale. "Frontier can't take on this much debt and hope to maintain and expand operations."

Opponents of the sale are also criticizing Verizon's plan to use an obscure financial loophole to avoid paying taxes on the $3.3 billion sale. Using what is known as a "Reverse Morris Trust," Verizon plans to shift its spun-off assets to a subsidiary that will then merge with Frontier, all tax-free.

A similar scheme was used by Verizon for its FairPoint deal.

In nine of the states the deal will have to be approved by state regulatory boards. It will also need to be approved by the FCC.

For more information go to www.ibew.org/verizon-frontier