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Connecticut exacts price for AT&T takeover

HARTFORD — The state of Connecticut has reached a settlement agreement with Frontier Communications Corp. in connection with its acquisition of AT&T’s phone, broadband Internet and television services in Connecticut.

The negotiated agreement was filed Aug. 12 with the state Public Utilities Regulatory Authority and requires the authority’s approval. It provides for significant capital improvements and other investments and programs as well as a rate freeze for certain service offerings for at least three years.

The agreement was announced by Attorney General George Jepsen and Consumer Counsel Elin Swanson Katz.

Jepsen said, “The consumer protections in this agreement — including provisions on service pricing and reliability — will help to provide continuity of service for current and new customers. Additionally, $63 million in improvements to broadband service and capability over three years will have a significant impact not only on the quality of service for current customers but also on expanding broadband service to those currently underserved or unserved by AT&T.”

Jepsen also noted that Frontier made commitments to benefit veterans and charities.

Frontier Communications, a publicly traded company (FTR) headquartered in Stamford, was founded in 1927 and was known as Citizens Communications Company until 2008. At year-end 2013 it had more than 3 million residential and business customers and almost 2 million broadband subscribers. As part of the proposed $2 billion acquisition, Frontier would gain 900,000 “voice connections” plus hundreds of thousands of broadband, U-Verse and DSL customers.

These businesses represent about $1.2 billion in annual revenue and Frontier, in announcing the plan, said it would boost the company’s dividend and confer cost advantages.

Katz said that Frontier would replace AT&T as the sole provider of traditional landline phone service in the state, with the exception of Verizon’s territory in Greenwich. She said Frontier would provide price protection for customers who rely on basic phone service, and would make a significant investment in broadband expansion, including $3 million to help consumers who only can access dial-up Internet service.

Katz added, “Frontier has also agreed to support an important change in how the state’s utility poles are managed, with its support of key provisions of a proposed ‘single pole administrator’ system.”

The agreement with the state provides that Frontier:

• Will not increase the basic landline residential rate for at least three years. Additionally, Frontier will offer its basic broadband bundle and stand-alone basic broadband product at or below current prices for at least three years·

• Will invest $63 million in capital improvements over three years (from 2015 to 2017) to improve and expand broadband capabilities in Connecticut. This investment will be used both to increase the speed of its broadband service and to expand its broadband availability to areas that are currently not served. The company has agreed to dedicate at least $3 million to projects focused on expanding to areas that are currently unserved or underserved.

• Will not pass through its transactional costs. Connecticut customers will not fund any portion of the AT&T acquisition premium or purchase price or any financial, legal, severance payments, regulatory fees or investment services.

• Will institute a Connecticut-based pilot program, in collaboration with the Department of Veterans Affairs, to improve the adoption and use of the VA’s My HealtheVet and Home Telehealth programs. Frontier will support the pilot program with a combination of subsidized broadband service and a $50,000 donation per year to be used for VA-selected computer tablets and other telehealth-capable devices. The program will begin in 2015 and Frontier will participate for a least three years.

• Will provide Connecticut’s low-income veteran population with reduced price broadband service. Eligible veterans will qualify for $19.99 per month basic broadband service (reduced from $34.99), without a contract or an autopay requirement, and will receive a free modem and free first-month service. The company will work in the coming months with the attorney general and consumer counsel to determine eligibility.

• Will host at least one veteran-focused job fair per year for three years beginning in 2015 to identify veterans for employment by the company.

• Will maintain charitable contributions in Connecticut in an annual amount of $500,000 beginning in 2015. In 2014, Frontier agreed to a $75,000 sponsorship of a tennis tournament, the Connecticut Open Presented by United Technologies. It also made a two-year commitment to support UConn football and men’s and women’s basketball in the total amount of $512,500.

• Will, in the event of widespread outages, improve and ensure the accuracy of its outage reporting to the public utility authority.

• Will accelerate pole inspections by two years and seek to coordinate inspections with electric utilities. Frontier will fund repairs to poles without tapping into its $63 million capital commitment. Frontier also agreed to designate a single point of contact for parties seeking a license to install a pole attachment or to relocate attachments, and agreed to comply with any final order or decision by the utility authority (PURA).

Assistant Attorneys General Michael Wertheimer and John Wright and Associate Attorney General Joseph Rubin worked on the agreement, along with William Vallee, the state’s broadband policy coordinator, and another lawyer, Joseph Rosenthal, who assisted the consumer counsel.

— Offices of the Connecticut Attorney General and Consumer Counsel; The Sun staff.

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