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Verizon's Hanging Up On Rural America
While pretending it's in your best interest
by Karl Bode 01:30PM Tuesday Nov 10 2009
Consumer Group Free Press takes a few shots at Verizon's inconsistent positions on rural broadband, noting that while the baby bell continually claims to support getting broadband into the nation's rural nooks and crannies, their actions of late say the complete opposite. Forget FiOS -- the new Verizon is uninterested in delivering even DSL or phone service to most rural markets, which is why they're continually selling off these markets in tricky tax loophole leaping deals that usually wind up badly for the consumer and the sold markets:
In sum, Verizon’s new business strategy is offloading its rural customers to small (now debt-ridden) companies tax free because it can't be bothered with rural America anymore, preferring to focus on those high-paying urban and suburban customers.
Verizon's justification of course is that rural America is costly to wire. That doesn't mean rural America can't be profitable -- it's just not profitable enough, quickly enough for impatient Verizon executives and shareholders. The telco is now trying to get regulatory approval for their latest sale of customers to Frontier Communications, and in a filing with the FCC essentially argues that Frontier will do a better job than Verizon ever did at treating rural customers well:
As of June 20, 2009, Verizon offered broadband service to approximately 62.5% of the customers in these service areas. By contrast, as of that time, Frontier offered broadband to about 92% of its customer base, even though those areas are on average even more rural than the new Frontier areas.
Of course Verizon couldn't care less about these markets post sale or whether they ever see service -- their interest is in the huge tax write off and debt dump these Reverse Morris Trust deals usually provide. The company gets it all with these deals -- they get to claim a deep respect for rural customers, yet fail to actually service them with broadband service.

After decades of neglecting the infrastructure in some of their less sexy states, Verizon now gets to use their own deployment failures as evidence why these deals make so much sense moving forward. As a nice little cherry on top, Verizon gets a huge tax break and debt relief.

But as Fairpoint and Hawaii Telcom customers found out, the companies that wind up buying these discarded Verizon markets are usually so laden with debt from Verizon's fancy financial footwork, they can't afford to upgrade the network. After deals are approved by lazy regulators (most of whom are in Verizon's pocket), the companies either slide into bankruptcy or stumble their way through mediocrity.

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