Consumer advocates, unions and state regulators are worried that Verizon's plan to sell a massive chunk of their DSL and landline networks to Frontier Communications won't go very well. The $8.5 billion deal, if approved, would infuse Frontier with 4.8 million new residential and small-business phone lines across 14 states, 1 million broadband connections, and 11,000 former Verizon employees. Frontier, who currently has just 2.3 million customers, would become a giant player literally overnight, and fears that they'll struggle with the load seem legitimate.

The fear is the deal will end just as Verizon's Fairpoint and Hawaii Telcom deals did: bankrupt carriers, outdated networks, and shoddy service. Unions are worried about layoffs and pay reductions, and have been running a series of ads illuminating how Verizon's particular method of offloading unwanted customers doesn't usually work out well for the customers.

At the same time, Frontier has been traveling state to assure regulators that they're far more financially stable than Hawaii Telcom and Fairpoint. West Virginia state PSC consumer Advocate Division for one isn't buying it, this week advising against the deal. Why? The PSC argues that Frontier's financial projections are based on "overly optimistic assumptions," they won't have the funds to handle network problems, and that they haven't laid out concrete plans to deal with increased complaint volume.

Regulators in both Washington and Oregon see Verizon's sale of their networks in the states to Frontier as a deal that carries "lots of risk, but very little upside," according to The Oregonian. Staffers in both states are recommending that utility commissioners reject the massive deal, which would triple Frontier’s size and impose $3 billion in debt. Frontier tells the paper that they're being "too pessimistic" about the deal, saying they hope to create "a very stable, moderately (indebted) company." Frontier executives have been on a country-wide tour trying to convince state regulators that they won't be another Fairpoint Communications.

Verizon gave us a nudge today to note that the first hurdle in their mega-deal with Frontier has been jumped -- namely Frontier received shareholder approval. The $8.5 billion deal would infuse Frontier (which currently has 2.3 million customers) with 4.8 million new residential and small-business phone lines across 14 states, 1 million broadband connections, and 11,000 former Verizon employees. That huge sudden growth in subscribers and debt is what killed the last two major Verizon efforts to offload their rural subscribers in Hawaii and New England, meaning regulators will be under serious pressure not to rubber stamp the deal.

Back in May, Verizon announced that they'd be selling a laundry list of rural DSL markets in a deal worth around $8.5 billion. The deal, if approved, would infuse Frontier (which currently has 2.3 million customers) with 4.8 million new residential and small-business phone lines across 14 states, 1 million broadband connections, and 11,000 former Verizon employees.

When Verizon divested their landline networks in Hawaii, the result was a largely dysfunctional company named Hawaii Telcom that struggled under the load and filed for bankruptcy last December. When Verizon divested their landline networks in Maine, New Hampshire and Vermont last year, the result was a largely dysfunctional company named Fairpoint Communications that struggled under the load and has very serious problems.

With the problems that have plagued Verizon customers in New England, all eyes turn to the regulators who'll rule on Verizon's latest plan to offload of a huge swath of rural customers to Frontier Communications. The $8.5 billion deal immediately infuses Frontier, which has 2.3 million customers, with 4.8 million new residential and small-business phone lines and 1 million broadband connections.

If it's anything like their rocky deal with Fairpoint, Verizon's recent decision to sell a massive chunk of their less profitable DSL and landline networks to Frontier Communications is going to be very good for Verizon. The deals allow Verizon to ignore areas they don't want to upgrade, offload a huge chunk of debt, while providing significant tax breaks.

Verizon recently announced they'd be selling a huge swath of rural and under-served markets to Frontier Communications, who'll pay $5.3 billion in common stock and take on $3.3 billion in debt. The Greenville News highlights the 20,000 line communities of Simpsonville and Woodruff -- which Verizon never upgraded with DSL functionality because they were deemed unprofitable. Locals there now only have the choice of broadband service from bankrupt Charter Communications. Frontier tells locals they may upgrade the area with broadband "within three to four years," after the eight to twelve months the deal is expected to take to complete.

When Verizon divested their landline networks in Hawaii, the result was a largely dysfunctional company named Hawaii Telcom that struggled under the load and filed for bankruptcy last December. When Verizon divested their landline networks in Maine, New Hampshire and Vermont last year, the result was a largely dysfunctional company named Fairpoint Communications that struggled under the load and has very serious problems.

We've always wondered where precisely Verizon would stop deploying FiOS, as the company reached neighborhoods their number crunchers deemed unprofitable or poor investments. That determination is based on the carrier's ultra-secret statistical analysis -- which for obvious reasons they've never felt compelled to share since it digs into a wide variety of potentially sensitive demographic determinations.

Frontier Communications will pay $5.3 billion in common stock and take on $3.3 billion in debt in order to acquire Verizon's DSL and landline networks in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin -- and some rural assets in California. Roughly 11,000 Verizon employees will be transferred to Frontier as part of the transaction, according to the companies.

We noted last week that a leaked memo at Frontier Communications suggested the company would be abandoning plans to cap all users at 5GB a month and charge overage fees. After spending most of last year strongly hinting at the idea via comments to the press and website FAQs, Frontier apparently figured it made better business sense to soak up customers that are angry at Time Warner Cable over their metered billing trials. The Associated Press talked to the carrier this week and confirms that at least in Rochester, caps are no more. "We have gotten hundreds of calls from Time Warner customers into our call centers," says Frontier's Ann Burr. "I guess it's been a public relations crisis for Time Warner," she says.

Last year, customers of Frontier Communications learned that the company was considering imposing 5GB monthly caps on all DSL tiers. The company's handling of this announcement was sloppy, the language first showing up in Frontier's service TOS, before even company support employees were notified.

Last year, customers of Rochester, NY based DSL provider Frontier learned about the company's plans to employ 5GB caps for all tiers after the carrier slipped references to the plan into their service TOS. After some initial public backlash, Frontier said they might look at higher caps, which were supposed to officially arrive sometime this winter.

Centurytel recently acquired Sprint spinoff Embarq in an $5.8 billion dollar deal, though filings indicate that Embarq rejected a higher offer. CenturyTel’s offer valued Embarq at $40.42 per share, a 36% premium, while the other mystery bidder offered $40.86, a 37% premium.

Earlier this year, customers of Frontier were annoyed to find that the carrier was planning to implement 5GB per month caps for their DSL services starting this winter. Customers discovered the plans due to references in the company's acceptable use policy, though the company really wasn't willing to talk in detail about their cap plans.

Reuters suggests that rural America will be the next hotspot for telecom mergers. Players like Windstream Communications, Embarq, Centurytel, Consolidated Communications Holdings and Iowa Telecommunications Services could all play parts. One deal mentioned is the possibility of Windstream Communications acquiring Frontier. "The most likely takeout candidate for Windstream would be Frontier because of Frontier's size," said Stanford Group analyst Michael Nelson, who sees a $4 billion deal in about six months. Given that Frontier has been hinting at 5GB usage caps starting this fall and Windstream has no such plans, that might be good news for Frontier customers.

My conversations with Frontier insiders indicate that company executives really hadn't fully cooked their cap plans before burying a reference to a 5GB monthly usage cap into their customer acceptable use policy, and the company's website and support seem to confirm this. Customers concerned about the cap get a different answer from company support depending who they talk to.

Last week a user alerted me that Rochester, NY based DSL operator Frontier added a 5GB per month cap to their acceptable use policy, declaring that anything more than this was unreasonable usage. One of our users has taken it upon themselves to launch a new blog dubbed "stop the cap," which takes aim at metered billing and caps (the blog's "talking points" are worth a read).

User older dog writes in to note that Rochester, NY based DSL provider Frontier (see our user reviews) has decided to implement a 5 GB monthly cap for all of their residential DSL users. According to an updated acceptable use policy, Frontier now declares that any monthly usage above 5 GB (bi-directional) is an unreasonable amount of usage.