D.C. Memo: Should Verizon Just Say FWA Isn't Broadband?

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Telecom Merger: In Washington, some like to say: "If it isn't fiber, it isn't broadband." Does that mean Verizon and Frontier Communications need to tell FCC and DOJ officials that Verizon's nation-leading Fixed Wireless Access service isn't broadband to sell their $20 billion merger that comes with competitive overlap? It might not be a bad idea: They could cite Charter CEO Christopher Winfrey, who routinely disparages FWA as "cell phone Internet" and "another form of DSL" destined to fail. Verizon can't acquire Frontier without regulatory approval, but the deal is unlikely to hit a wall with D.C. regulators working under a Trump or Harris White House, according to New Street Research analyst Blair Levin. Under Trump, the deal sails through. "If the deal were to occur under a Democratic Administration, … the FCC majority would seek to obtain commitments the majority would view as necessary to assure the transaction serves the public interest," he said. In lieu of blocking the deal, he said an FCC run by Democrats might react to a reduction in competition between Verizon's FWA service and Frontier's fiber Internet by forcing "Verizon to divest facilities and customers to maintain the current competitive dynamic." He indicated the deal could come with Net Neutrality conditions and with requirements to offer discounted Internet plans to low-income consumers in Frontier's current markets. Concerning deal synergies for Verizon, MoffettNathanson Senior Managing Director Craig Moffett was unimpressed. "For Verizon, this would be a bold step in the direction of convergence… which is, in our view, an absolutely atrocious idea." His point: the fiber map is too small relative to the wireless map to execute on such a blended strategy. But for Frontier, Moffett said, "The deal would represent an attractive exit and a very happy ending to the fiber-led strategy the company has pursued since exiting bankruptcy in April 2021."