Back in December, news hit the wire about the telecommunications company, Frontier, buying the Connecticut-based wireline communications services from technology giant, AT&T. The Federal Communications Commission (FCC) also recently gave approval to the purchase which followed a similar blessing from the United States Department of Justice. All that is left from a regulatory approval standpoint is a final agreement from the Connecticut Public Utilities Regulatory Authority (PURA).
Frontier Buys AT&T Wireline Service: Closer Look
As previously mentioned, the first announcement of the purchase of AT&T’s Connecticut-based wireline business became public in December of last year. Frontier expects the sale to close in the fourth quarter of this year. The sale price is estimated to be around $2 billion for the services, branded as Southern New England Telephone and SNET America, Inc.
All current AT&T residential, wholesale, and commercial customers in Connecticut are covered by the deal. This includes customers of AT&T’s DSL service as well as their U-Verse television product. Over 415,000 broadband users, 900,000 voice service users, and 180,000 U-Verse customers will see their services transfer to Frontier’s ownership.
Frontier CEO, Maggie Wilderotter commented on the potential purchase in December. “We see an opportunity to enhance broadband capabilities in Connecticut,” said Wilderotter. She also noted that adding to their core service offerings in the Connecticut region ultimately increases shareholder value for Frontier.
AT&T Fighting Verizon
Ultimately, the decision by AT&T. to sell these services to Frontier reveals the scope of the company’s fight with Verizon over the still growing wireless communications market. Verizon has also been divesting itself from similar land-based communications services. Both companies don’t see the point in making the investments to upgrade the technology for wired services when it is obvious that wireless is where the real profits lie moving forward.
AT&T has been trying to sell older DSL markets since 2012 — in many cases unsuccessfully. The frustration for customers on these older DSL networks is the lack of upgrades which keeps their bandwidth challenged when compared to newer High Speed Internet services that leverage Cable modems or even fiber-optic networks. The potential massive profits of wireless networks have kept both AT&T and Verizon from expanding their U-Verse and FiOS television services as fast as customers want.
CenturyLink, Fairpoint, and Windstream are other smaller telecommunications firms like Frontier interested in increasing their customer bases by acquiring customers and markets that Verizon or AT&T don’t want to service or upgrade. Ultimately, these smaller companies also encounter the technical difficulties involved with upgrading older DSL lines to get them to speeds that allow higher-end features, like the flawless streaming of HD video.
Customer Considerations for the Frontier AT&T Deal
So if you are stuck on an older DSL network or you are waiting patiently for U-Verse or FiOS to come to your area, the news that Frontier buys AT&T should drive home the point that older wired communications technology isn’t the focus of giants like Verizon and AT&T moving forward. In addition to the higher profit margins offered by wireless telecommunications, wired networks traditionally offer more stringent regulations. So consider these points when deciding how to spent your hard-earned dollars allocated for High Speed Internet and Home Phone.
For smaller telecommunications firms like Frontier, the deal with AT&T allows them to grow a lot faster than by increasing their customer base without acquisitions. Back in 2009, the firm acquired nearly five million subscriber lines in a deal with Verizon valued at $8.6 billion and once the AT&T purchase is approved, Frontier will add nearly two million more.
End users in Connecticut only hope that Frontier makes the investment in upgrading the subscriber lines and related technology to allow them a similar bandwidth as enjoyed by High Speed Internet customers using Cable and fiber-optic networks.