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Verizon is now outright lying about net neutrality

Lowell McAdam, CEO of Verizon, claimed that net neutrality rules "influenced" their recent $10.5B wireline asset sale to Frontier Communications.

Published onFebruary 9, 2015

Lowell McAdam

As I have discussed on many occasions, Verizon can’t seem to make up their mind about whether to publicly bash or praise Title II classification. In the last few weeks, Verizon’s CFO has publicly stated how little Title II classification would hurt any future investment. After his comments got national attention, the CFO claimed that his words were really taken out of context and that Title II would in fact hurt future investment.

In reality, the truth isn’t hard to figure out. Verizon privately loves Title II classification as it saves them billions in tax credits and subsidies. But Verizon hates Title II classification publicly as it would give the FCC the power to punish carriers who put forward plans that are completely anti-consumer and based on monopolistic power.

But, this recent story about Verizon and net neutrality is truly ridiculous.

In a Wall Street Journal article, Lowell McAdam, CEO of Verizon, claimed that net neutrality rules “influenced” their recent $10.5B wireline asset sale to Frontier Communications. The sale will allow Verizon to step back in its role of selling telephone and Internet service to residential customers and businesses in Texas, California and Florida.

“An important consideration was the current regulatory uncertainty and the potential impacts on future investments of a reclassification of broadband under Title II.” – Wall Street Journal

But the notion that this move was in any way influenced by the upcoming Title II classification of Verizon is laughable. For starters, Verizon has been selling off large parts of their wireline business for years now. In fact, Verizon has not even been hiding their desire to sell landline assets for almost a decade.

In 2007, Verizon sold their aging landline networks to Fairpoint for $2.7 billion. The move was terrible for everyone except Verizon. Although FairPoint said it planned to increase jobs and invest $200 million on infrastructure improvements, they never got around to either of those things because Fairpoint would soon file for bankruptcy due to the ridiculous amount of debt that they took on. Customers were therefore subject to abhorrent amounts of service interruptions. Since this deal, Fairpoint has consistently been cutting jobs.


In 2009, Verizon sold off $8.5 billion worth of wireline assets to Frontier who also struggled with the debt obligations that came from the purchase. In fact, Frontier struggled so much with this debt that their $8.5 billion purchase of AT&T wireline areas in 2010 was almost rejected by regulators who noticed just how terrible Frontier’s service was to customers after the Verizon/Frontier deal from the previous year.

In September of 2013, Lowell McAdam had the following exchange on CNBC (courtesy of DSLReports):

Jim Cramer, CNBC: “[Under former Verizon CEO Ivan Seidenberg, Verizon] took areas that really weren’t growth areas and sold them to Frontier and other players. Would you be able to get rid of some of your underperforming landline businesses to be able to increase [Verizon’s] growth even further?”
Lowell McAdam, Verizon: “That is a possibility. […] If you talk about opportunities here, now that we have One Verizon, […] we are going to trim some limbs around the tree here. Things that aren’t performing will not be a part of our portfolio so we can invest in things that will drive the kind of growth we are excited to be able to tap here.”

But why is Verizon selling off these wireline areas? Money, Money, Money.

It allows Verizon to pay off debt that is currently on their books. In the last year, Verizon spent $130 billion acquiring the U.S. wireless side of the Vodafone Group and $10.4 billion in wireless licenses from the recent spectrum auction.

In fact, Verizon isn’t just selling off their business in wireline areas. Recently, Verizon agreed to a deal that netted them $5 billion in exchange for giving control of 11,000 Verizon cell towers to American Tower Corp. This gives American Tower the exclusive rights to lease and operate the towers but allows Verizon to still have access to reserve capacity on the towers.


Maybe most importantly, these types of wireline deals allow Verizon, like AT&T, to back away from fixed-line customers in markets they don’t want to upgrade in order to focus primarily on more profitable wireless service. Then there is the massive tax write off that Verizon receives all the while shedding debt and coming back into those markets to sell fixed line LTE services to many who can’t stand their aging, debt-ridden DSL service.

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