Verizon, Frontier ask FCC to back license transfers

WASHINGTON Fri May 29, 2009 5:01pm EDT

WASHINGTON May 29 (Reuters) - Verizon Communications Inc (VZ.N) and Frontier Communications Corp FTR.N on Friday asked U.S. regulators to approve the transfers of phone line licenses as part of the companies' $5.25 billion deal.

Under a deal announced earlier this month, Verizon would sell 4.8 million rural phone lines to Frontier, which would become the largest rural-only service provider in the United States.

The deal came amid a wave of consolidation in the rural phone market, as providers seek to cut costs and more consumers cancel landlines.

"The proposed transaction will not cause competitive harm and will bring significant public interest benefits, including the increased deployment of broadband to rural areas, which both the President and Congress have identified as a national priority," the joint filing with Federal Communications Commission said.

Bringing broadband to rural parts of the United States has been a key part of President Barack Obama's efforts to bring equitable Internet access to underserved communities.

In the Obama administration's nearly $800 billion stimulus package, about $7.2 billion has been set aside for expanding broadband access to about half of the U.S. population -- many in low-income and rural areas currently without it.

As part of the deal, Frontier will acquire Verizon's local wirelines operating in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin.

The transaction also includes a small number of Verizon's exchanges in California.

The deal would involve about 4.8 million local access lines, 2.2 million long-distance customers and 1 million high-speed data customers, according to Verizon.

In their filing with the FCC, the companies asked for a "favorable and expedited" action by the panel of commissioners.

They also reassured regulators that the change would be seamless for both retail and wholesale customers, and Frontier will honor existing tariffs and contracts.

However, the commission is without a permanent chairman. Obama has chosen Julius Genachowski to lead the FCC. The Senate is considering Genachowski and other nominations to fill that seat and one vacancy set aside for a Republican. (Reporting by John Poirier; Editing by Gary Hill)