Verizon Submits $20 Billion Frontier Merger for FCC Approval

WASHINGTON, Oct. 16, 2024 – Verizon said its $20 billion acquisition of Frontier Communications won’t harm competition in the broadband market. 

The company filed a joint application with the Federal Communications Commission on Oct. 11, seeking approval for the deal which would integrate Frontier’s 7.2 million fiber passings and 2.2 million fiber subscribers into Verizon’s already substantial fiber footprint.

In the application posted Tuesday, Verizon argued that the deal will “benefit Frontier customers” by strengthening and expanding Frontier’s fiber network, while also improving service offerings that Frontier alone cannot sustain due to financial difficulties.

“Frontier does not have funding in place for further investment or additional fiber buildouts. The transaction will ensure that Frontier’s current planned buildout [to 10 million homes by 2026] is completed.” As of June 30, the company had debt of approximately $12 billion, of which approximately $11 billion was secured. 

Verizon also claimed the merger will introduce new low-cost options and bundled services for Frontier customers, who currently lack access to these offerings. Post-transaction, consumers in the Frontier territories will have access to the full range of Verizon service plans, including Verizon Forward, which provides 300 Megabit per second (Mbps) at $20 per month for eligible residential customers who qualify for Lifeline.

Another key claim was that the deal would not diminish competition because Frontier and Verizon have minimal overlap in their service areas.

“Due to the complementary nature of their geographic service areas, with only de minimis exceptions, Frontier and Verizon do not compete for customers in the provision of wired mass-market services,” Verizon explained. Furthermore, the application emphasized that “none of the Frontier ILEC facilities to be acquired by Verizon materially overlap with Verizon’s existing ILEC exchanges.”

Analysts have said the government was unlikely to find that mobile service competes directly with fixed broadband, and that Verizon’s fixed wireless offering – provided via excess capacity on its 5G network – likely only minimally overlaps with Frontier’s fiber territory.

Still, there is worry that Verizon could prioritize fixed wireless, a technology it can deploy more cheaply and quickly than fiber. Verizon CEO Hans Vestberg echoed this stance earlier in September, stating that the acquisition of the fiber provider “won’t change anything" about Verizon's commitment to fixed wireless, a service that currently serves 3.8 million subscribers.

Regulators at the FCC and Department of Justice, who will now review the transaction, will likely examine whether the deal could lead to higher prices for fiber or fixed wireless services, particularly for low-income users who were reliant on the Affordable Connectivity Program, which ran out of full ending in May.

If approved, Verizon and Frontier would together represent less than 10 percent of the 115 million wireline subscribers in the U.S., with Verizon already serving 7.4 million FiOS customers and having nearly 18 million fiber passings, the companies said. The companies expect the merger to close within 18 months, assuming approval from Frontier shareholders and regulators.