California’s Public Utilities Commission (CPUC) recently signed off on Verizon’s $20 billion merger with telecom giant Frontier with some notable conditions. As part of Verizon’s settlement with the CPUC, they’re being required to offer affordable broadband, improve network resilience, and expand fiber and cellular access into long-neglected portions of the Golden State.
According to the CPUC approval announcement, the agency voted 5-0 to approve the merger after months of deliberation and negotiation with Verizon.
One cornerstone of the CPUC’s agreement is that Verizon will be required to offer significant support for its "Verizon Forward" service, which offers home Internet access for as low as $20 a month (either 300 megabit per second (Mbps) symmetrical fiber or 100/20 Mbps wireless) to California homes that qualify for existing low-income assistance programs.
Under that part of the arrangement, Verizon pledges to maintain that $20 per month price point for the next decade.
Verizon’s Frontier Deal Comes With Strings Attached
This comes on the heels of a recent CPUC study that found “the average monthly price for a plan at or above 100 megabits per second (Mbps) download and 20 Mbps upload – the Federal Communications Commission’s benchmark for broadband speeds – is $116.68” – “far above what many households can afford.” The study further indicates that in large swaths of the state “low-income households spend more than 15% of their discretionary income on broadband service.”
Verizon’s also pledging to notably expand access to the company’s fiber and wireless network to California communities still stuck on the wrong side of the digital divide.
The company says it has pledged to deploy fiber to 75,000 new California locations within five years, prioritizing census blocks with income levels at or below 90 percent of the county median. Verizon also promises to deploy 250 new cell sites with 5G and fixed wireless capability to areas eligible for state broadband grants and areas with high fire threats.
Verizon has long been criticized for failing to upgrade its aging DSL networks in regions it deems unprofitable, despite a generation of taxpayer subsidies. The company also found itself under fire in 2018 for throttling – and then attempting to upsell to more expensive plans – firefighters that had been busy battling the Mendocino Complex fire.
The telecom giant says it had committed to an audit of Frontier’s acquired fiber and copper networks in order to bring those networks up to the CPUC’s existing wireline service quality standards, improving reliability. As part of these copper-to-fiber upgrades, Verizon must also provide a 24-hour battery backup at no extra charge (72 hour in high fire risk areas).
The agreement also mandates that Tribal areas be provided with maps of infrastructure within ancestral territories and given a right of first offer on properties being discarded by the companies. Verizon is also required to hire 600 new union employees over the next six years, and provide layoff protection to existing union employees for 48 months.
Many states approved Verizon’s $20 billion merger without a single public interest concession. The Trump administration approved the merger under the sole condition that Verizon eliminate company gender and racial diversity initiatives and scrub mention of diversity and equity initiatives from the company’s website – moves broadly derided as racist and sexist.
While the concessions extracted from Verizon by the CPUC are promising, they’ll require consistent monitoring and enforcement, something that hasn’t always been a strong suit when it comes to state and federal oversight of politically powerful regional telecom monopolies.
As such, the deal requires the creation of a CPUC enforcement program with violation citation authority, overseen by an independent compliance monitor paid for by Verizon but hired by the commission.
“California isn’t just approving a merger, we’re securing real commitments that will connect communities, lower costs for families who need it most, and strengthen workforce and supplier diversity protections,” CPUC Commissioner John Reynolds said in a statement. “With robust conditions and independent oversight, we’re ensuring these commitments translate into real improvements for California families and standing up for California values to support our diverse communities.”
The larger company will have an expanded reach of almost 30 million fiber passings across 31 states and Washington, DC. While Verizon and Frontier didn’t directly compete, the latest market consolidation will still have a significant, harmful impact on U.S. telecom market health, consumer welfare, and the labor market, consumer advocates say.
California Lauded For Ignoring Trump Administration Threats On Telecom Oversight
California’s actions come as the Trump administration has not only given up on digital inclusion efforts among left-behind communities and affordability in broadband access, they’ve also threatened states that attempt to engage in meaningful oversight of the nation’s broadly unpopular telecom monopolies.
Recent Trump administration changes to programs like BEAD (Broadband, Equity, Access, and Deployment) have lowered standards for broadband access, shifted the focus away from affordability and equity, and redirected billions of dollars away from future-proof fiber networks toward slower, more expensive satellite options unlikely to fix U.S. broadband woes.
Starting last fall, the Trump administration and the NTIA ignored existing law and threatened to withhold billions in already-awarded BEAD broadband expansion grants from states that try to mandate any sort of broadband affordability requirements – or enforce any consumer protection standards at all. Legal experts have repeatedly told ILSR these threats are on extremely shaky legal ground.
With that as a backdrop, consumer groups were quick to praise California leaders for refusing to buckle on equity and affordability.
“California has shown that states can stand up for workers and consumers and resist Trump’s efforts to undermine employees’ and customers’ rights,” Lisa Graves, founder and executive director of True North Research, said in a statement. “More states and companies should follow suit to show they won’t be bullied into abandoning equal opportunity.”
California’s decision to buck the Trump administration’s threats and pay more than empty lip service to diversity and affordability will again depend heavily on enforcement. Verizon has a long history of promises that ultimately don’t amount to much, and it will require consistent diligence by state regulators to hold the company’s feet to the fire.
State equity coalitions like the California Alliance for Digital Equity (CADE) lauded the work activists and organizers did in protecting the public interest, but were quick to also note that no amount of merger conditions can address the problems caused by ongoing telecom consolidation and the steady degradation of meaningful competition.
“CADE remains concerned about the long-term impacts of major telecommunications mergers on the broadband landscape in California,” the group stated. “We know that much of what drives broadband prices in California is set by the state’s “Big 5” providers: Comcast, Charter, AT&T, Frontier, and Cox. These providers serve approximately 97% of the state's 10.7 million broadband subscribers. Should the Charter/Cox merger also be approved later this year, four companies could soon dominate the landscape.”
“Recognizing that declining competition in the marketplace ultimately leads to increased concentration of power over broadband pricing and service offerings, this potential outcome is deeply worrisome, especially in the midst of California's affordability crisis.”
Header imager of the California Public Utilities Commission building courtesy of Wikimedia Commons, CC BY-SA 3.0, Attribution-ShareAlike 3.0 Unported
Inline image of Verizon headquarters in New York courtesy of Wikimedia Commons, CC BY-SA 3.0, Attribution-ShareAlike 3.0 Unported
Inline graphic of California broadband market concentration courtesy of California Public Utilities Commission study "Broadband in California: Pricing, Affordability, and Adoption Trends"
