April 2010

The Illinois Commerce Commission Wednesday voted to approve Frontier Communications' petition to acquire Verizon North and Verizon South service areas as part of a major reorganization, as long as the company complies with specific conditions aimed at improving service quality and expands broadband service to all parts of the company's territory. Finding the company met the financial, managerial and technical qualifications to provide the service, the Commission agreed to allow Frontier to acquire and operate Verizon North and Verizon South's service area. Frontier's total access lines will increase from 97,000 in Illinois currently to more than 670,000 access lines as Verizon leaves the state. The Commission determined that the reorganization would not harm competition in the service area, but added a number of conditions to the terms of the reorganization to ensure that service quality to customers does not erode as a result of the acquisition of the Verizon access lines.

Among the conditions in the order are requirements that Frontier:

• Be prohibited from paying dividends or otherwise transferring any Illinois cash balances to its parent company if Frontier Illinois fails to meet or exceed service quality standards such as toll and assistance answer time, information answer time, repair office response, installation requests greater than five business days, interruptions of service greater than 24 hours and trouble reports per 100 lines;
• Keep available exclusively for Illinois operations an aggregate amount equal to or higher than $50 million;
• Shall deploy digital subscriber line (DSL) broadband facilities so that by December 31, 2013 85 percent of households within the service territory are able to access broadband service provided by the company at speeds of 3 Mbps download speed;
• Cap all regulated noncompetitive retail rates for the former Verizon operating companies for three years from the date of the closing of the transaction. After three years, Frontier may propose non-competitive retail rate increases; and
• Assume all obligations under Verizon's current interconnection agreements, interstate special access tariffs and intrastate tariffs, commercial agreements, line sharing agreements and other existing arrangements with wholesale customers, and shall not change the rates, terms or conditions, nor terminate those agreements for the term of those agreements or 30 months from the closing of the reorganization.
• Conduct an annual internal audit to document the procedures performed and conclusions to determine that cost allocations between regulated and non-regulated activities are in compliance with Frontier's cost allocation manual filed with the Commission and that the cost allocation manual is correct and complete.

The Commission tightened up the company's reporting requirements. Rather than annual reports, Frontier is required to report in January and July of each year on compliance measures for service quality and on its financial commitment to ensure that cash is available to meet the operational needs of the company in Illinois.

The Commission will continuously monitor the company's compliance with the order to ensure that Illinois telephone customers receive better service as a result of the merger.

In the first weeks of the iPad launch, retailers have been largely left out of the conversation. But industry executives believe the device could have a major impact on everything from retailers' catalogs to e-commerce to enhancing the in-store experience.

So far, few retailers have embraced the new Apple device even though many already have iPhone apps. The first, most logical applications include e-commerce and interactive catalogs. But in time, the iPad could be used as a virtual sales assistant, allowing sales staff in the dress department to pull up coordinating accessories from the jewelry or shoe department. Car dealers could customize a vehicle, showing customers colors and finishes, all while standing in the parking lot. Transactions could be completed without visiting a register and special orders could be placed on the spot. Cumbersome, expensive kiosks could also be replaced. In-store uses of the iPad are where the real opportunity is, said several executives, though expense will be a hurdle initially.

Representatives of top telecommunication companies, industry stakeholders and some government officials gathered on Capitol Hill Wednesday to discuss mobile Internet communications with much debate focused on how to ensure future growth and innovation is not stifled by limits on the availability of spectrum.

At the second annual State of the Mobile Net Conference, telecom experts chewed over the possibilities and constraints of the wireless industry, one of the fastest-changing sectors of the U.S. economy. "We are just scratching the surface of what you can wireless enable," Glenn Lurie, president of emerging devices at AT&T, said during a keynote address. Lurie outlined some of the mobile products AT&T will provide networking capacity for including a pet-tracking collar and a pill-bottle cap that will remind the user to take their medication. Much of the discussion, however, circled back to the growing demand for spectrum to accommodate the growth of the mobile Internet. "Integrating market mechanisms into the spectrum allocation process" is critical for the future, Blair Levin, executive director of the FCC's broadband task force, said. Allocating spectrum based on history, rather than markets, Levin stated, has been the traditional practice of government.