NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate provides the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Thursday, May 30th, 2019

Frontier Communications to leave Cascadia; PNW assets sold to WaveDivision Capital

Telecom­mu­ni­ca­tions firm Fron­tier Com­mu­ni­ca­tions is say­ing adieu to Cascadia.

Nine years after tak­ing on debt to buy Ver­i­zon’s assets in the region, Fron­tier Com­mu­ni­ca­tions is offload­ing those same assets in a $1.35 bil­lion sale to Kirk­land-based Wave­Di­vi­sion Cap­i­tal, which must be approved by regulators.

If the sale goes through, Fron­tier will exit the each of the Wash­ing­ton, Ore­gon, Ida­ho, and Mon­tana mar­kets where it cur­rent­ly operates.

Frontier Communications' Northwest operations

Fron­tier Com­mu­ni­ca­tions’ North­west oper­a­tions (Image by DSLRe­ports’ Dark­ness­fall)

Fron­tier North­west was formed in 2010 from the merg­er of Ver­i­zon North­west (pre­vi­ous­ly GTE North­west) with Fron­tier’s rur­al Ida­ho operations.

“The sale of these prop­er­ties reduces Frontier’s debt and strength­ens liq­uid­i­ty,” said Dan McCarthy, Fron­tier Pres­i­dent and Chief Exec­u­tive Offi­cer, in a news release.

“We are pleased to have a buy­er with exten­sive expe­ri­ence build­ing and oper­at­ing advanced fiber-based com­mu­ni­ca­tions assets in these regions,” McCarthy added. “We will be work­ing very close­ly with the new own­ers to ensure a smooth, suc­cess­ful tran­si­tion for our cus­tomers and the com­mu­ni­ties we serve.”

“We are excit­ed to be part­ner­ing with Search­light on this oppor­tu­ni­ty to acquire Frontier’s oper­a­tions in the North­west,” said Steve Weed, CEO of WDC, and Founder and for­mer CEO of Wave Broad­band. “We have a proven track record of cus­tomer sat­is­fac­tion by pro­vid­ing fast, reli­able inter­net con­nec­tiv­i­ty com­bined with great ser­vice and sup­port. Hav­ing grown up in the North­west, I’m excit­ed to be able to con­tin­ue to serve my com­mu­ni­ty through this new venture.”

“Search­light” is Search­light Cap­i­tal Part­ners, which describes itself as a glob­al pri­vate invest­ment firm with offices in New York, Lon­don and Toron­to. The com­pa­ny lists Elec­tric Light­wave, Rack­space, and Cen­gage Learn­ing as some of its invest­ments. (Elec­tric Light­wave was recent­ly sub­sumed into Allstream.)

“Across the four states, Frontier’s net­work pass­es 1.7 mil­lion res­i­den­tial and busi­ness loca­tions, of which approx­i­mate­ly 500,000 are fiber-to-the-premis­es capa­ble,” Fron­tier’s news release notes, not men­tion­ing that many of those fiber-to-the-premis­es con­nec­tions were cre­at­ed under Ver­i­zon’s ownership.

“As of March 31st, 2019, Fron­tier served approx­i­mate­ly 150,000 fiber broad­band, 150,000 cop­per broad­band and 35,000 video con­nec­tions in these states.”

Wave­Di­vi­sion and Search­light have formed a new com­pa­ny to oper­ate Fron­tier’s North­west divi­sion. Weed says Fron­tier cus­tomers should not expect any changes.

“This announce­ment does not change any­thing for Frontier’s cus­tomers or the employ­ees who sup­port them,” Weed emphasized.

“All ser­vices [will] con­tin­ue with­out dis­rup­tion, all offices [will] remain open, and all con­tracts and rates will con­tin­ue to be honored.”

Reac­tion on DSLRe­ports, a pop­u­lar forum for dis­cussing ISPs, was mixed.

“Free at last!” cheered one com­menter.

“I think it’s a short­sight­ed move,” wrote anoth­er com­menter. “A quick bil­lion for a des­per­ate com­pa­ny. GTE/VZ/Frontier North­west has been a pro­duc­er for their respec­tive com­pa­nies for years. While there’s plen­ty of rur­al cop­per, they have a ful­ly deployed fiber net­work where it counts — sub­ur­ban Port­land and north­ern and east­ern Seat­tle. The demo­graph­i­cal­ly wealth­i­er parts of both of those cities. Enough to sub­si­dize the rur­al cop­per. These states are not like West Vir­ginia or some of the Mid­west lead weights which are pret­ty much a huge cop­per mess.”

“I also would­n’t be sur­prised to see every­thing out­side of Port­land and Seat­tle get sold off again to small inde­pen­dents and coop­er­a­tives in the region,” wrote a third DSLRe­ports com­menter, respond­ing to a remark char­ac­ter­iz­ing the deal as a pri­vate equi­ty play by “vul­tures pick­ing at the scraps of a dying telco.”

“The fiber assets in the Port­land and Seat­tle areas are much more valu­able. This will prob­a­bly look a lot like when GTE sold off Hawaii to the Car­lyle Group back in 2000, who pret­ty much ran it into the ground before sell­ing it off again. (I think there was even a bank­rupt­cy fil­ing back around 2008 or so.) I think Cincin­nati Bell or some sub­sidiary there­of actu­al­ly now owns Hawai­ian Tel­com now. Any­way, mark my words, they are going to sell off these rur­al areas, piece by piece.”

The com­pa­nies did not offer much in the way of details of what Fron­tier cus­tomers can expect after the sale close — if it goes through.

Promis­es that every­thing will be just fine and dandy have been made before… when Fron­tier was the new own­er to be and Ver­i­zon was bailing.

For instance, Fron­tier pro­vides email to its res­i­den­tial cus­tomers and many peo­ple in the Pacif­ic North­west have and use email address­es that end in Pre­sum­ably, the new com­pa­ny won’t be called Fron­tier. And will it even con­tin­ue to offer an email ser­vice? Or will it do what Ver­i­zon did and exit the email busi­ness entire­ly a few years ago in the mar­kets where it still oper­ates?

Hav­ing to change over to a new email address is a big has­sle. If cur­rent Fron­tier cus­tomers can’t con­tin­ue to use their email address­es after the sale clos­es, that will be very dis­rup­tive. Per­haps an accom­mo­da­tion can be worked out. After all, this time, the pro­posed new own­ers are based here in Wash­ing­ton State and not on the oth­er side of the coun­try in Con­necti­cut. That’s the sil­ver lining.

We’ll keep you post­ed on what reg­u­la­tors have to say about this pro­posed sale. The FCC has to clear the deal and so does the Depart­ment of Jus­tice and state reg­u­la­tors — a process that will take many months, if not longer.

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