Cebridge Telecom Wv, Llc, Cequel Communications
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84 35 M S’EP 21 B‘h B& $Et bpj JOSEPH J. STARSICK, JR. Associate General Counsel - Southeast Region Frontier Communications u Communications 1500 MacCorkle Ave., S.E. Charleston, West Virginia 25396 (304) 344-7644 Joseph .Star [email protected] September 21,2012 Via Hand Delivery Sandra S. Squire Executive Secretary Public Service Commission 201 Brooks Street Charleston, West Virginia 25323 Re: 12-1040-T-PC CEBRIDGE TELECOM WV, LLC, CEQUEL COMMUNICATIONS HOLDINGS, LLC, and NESPRESSO ACQUISITION CORPORATION Joint Application for authority to complete a Transaction resulting in an indirect change of control. Dear Ms. Squire: Please find enclosed for filing in the original plus 12 copies of the Reply to Suddenlink’s Opposition to Frontier’s Petition to Intervene in the above-referenced matter. Thank you for your attention to this matter. Sincerely, (State Bar No. 3576) JJSirf sc Enclosure cc: David B. Hanna, Esq. Thomas N. Hanna, Esq. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. 12-1040-T-PC CEBFUDGE ACQUISITION, LLC, DBA SUDDENLINK COMMUNICATIONS, Joint Application for authority to complete a transaction resulting in an indirect change of control. REPLY TO SUDDENLINK’S OPPOSITION TO FRONTIER’S PETITION TO INTERVENE Frontier West Virginia, Inc. and Citizens Telecommunications Company of West Virginia d/b/a Frontier Communications of West Virginia (collectively “Frontier”) hereby respond to the Opposition of Cebridge Telecom WV, LLC, (“Cebridge Telecom”), Cequel Communications Holdings, LLC and Nespresso Acquisition Corporation (“Nespresso”) (collectively, “Suddenlink”) to Frontier’s Petition to Intervene. As explained below, Suddenlink previously waxed philosophical on the benefits of the 90-day early termination fee (“ET,”) waivers by Frontier and FiberNetNtelos. Now, when Frontier requests that Suddenlink honor the very same waiver when foreign interests are acquiring ownership in Suddenlink, Suddenlink balks at doing so. To put it simply, it appears that Suddenlink can dish it out, but it can’t take it. It was not Suddenlink alone that benefitted fiom the prior ETF waivers fiom which it now shirks when turnabout is only fair play. It was West Virginia customers ‘ Cebridge Acquisition , LLC d/b/a Suddenlink Communications v. FiberNet, LLC and NTELOS Inc., Case No. 10-188&T-C, “Complaint” (December 17,2010). 1 who benefitted fiom the earlier waivers, and it is West Virginia customers who will benefit fiom an ETF waiver in this case. As explained below, a 90-day ‘‘fiesh look” waiver in the present case is reasonable and fair to competitors and consumers alike. Suddenlink tries to avoid this result by claiming that Frontier has no legal interest in advocating a fiesh look, by trying to distinguish the prior ETF waivers, by arguing that the Commission has no reason to order a waiver in this case, and by claiming that the new ownership by foreign investors somehow is a red herring. For the reasons explained below, Suddenlink is wrong on all counts. I. Frontier has a Legal Interest in Advocating an ETF Waiver, for the Same Reasons that Suddenlink Itself Previously Has Advocated. Suddenlink cannot credibly assert that a competitor, such as Frontier, has no legal interest in seeking an ETF waiver. Suddenlink itself certainly took the position that it had standing to assert its own formal complaint to enforce the ETF waiver by a competitor, namely, FiberNet (now Lumos).2 Ironically, in Suddenlink’s testimony in support of its complaint against FiberNet, Suddenlink pithily captured the very reasons that Frontier has a legal interest here: Suddenlink is an integrated communications company that provides voice, video and data services to residential and business customers in West Virginia. We compete directly with other providers of voice services in the state, including the incumbent telephone company, Frontier; and several competitive local exchange carriers operating in West Virginia. When our competitors merge, or otherwise engage in significant transactions that can affect our competitive position in the state, we take notices3 See Suddenlink Complaint, supra, footnote 3. Direct Testimony of Dave Bach on behalf of Suddenlink Communications, Case No. 10-1886-T-C (August 1,201l), p. 2. 2 Suddenlink is engaging in a significant transaction under which it will have new and foreign ownership that will affect Frontier’s competitive position in the state, and as outlined below, West Virginia customers have a number of other reasons justifLing granting them an opportunity to select a new provider. As a competitor previously subject to an ETF waiver, and as one of the state’s largest employers and taxpayers, Frontier, too, has every legitimate right and reason to be heard to ask for competitive equity and customer choice. 11. The Very Rationale that Suddenlink Itself Has Offered for an ETF Waiver Applies Here. Suddenlink itself well explained the underlying reasons for an ETF waiver in Suddenlink’s complaint against FiberNet (now Lumos) in Case No. 10-1886-T-C: West Virginia consumers have become increasingly sophisticated in their understanding and selection of the provision of telephone, cable, internet, and other telecommunications services. As such, they have specific expectations with respect to the services that they receive. This includes receiving local and long-distance voice services as a bundled package. FiberNet’s violation of the Commission’s order and egregious actions in continuing to charge customers these termination fees damage the competitive nature of communication services that has been upheld and supported on both the federal and state levels by severely restricting the rights to freely select and change providers of these important telecommunications service^.^ In Suddenlink’s testimony in the same case, it more pointedly applauded the Commission’s imposition of ETF waivers: Cebridge Acquisition , LLC d/b/a Suddenlink Communications v. FiberNet, LLC and NTELOS Inc., Case No. 10-1886-T-C, “Complaint” (December 17, 2010), 7 7.e. Any questions of interpretation of the waiver easily can be resolved by adopting Suddenlink’s own interpretations proposed in that case. 3 Based upon Suddenlink’s experience, I believe that condition helped West Virginia consumers that were interested in purchasing new competitive service offerings provided by Suddenlink, and other competitive providers, without fear of incurring ETFs fiom Frontier (after they acquired Verizon’s customers in West Virginia). During the period after Frontier’s notices were issued, we received a significant amount of interest in our services from former Verizon / Frontier customers. Indeed, Frontier recognized that during the last ten days of the 90 day waiver period a number of customers wished to terminate their relationship with Frontier without incurring any ETFs so they could move to Suddenlink’s service. To Frontier’s credit, the company continued to honor those requests all the way up to the 90th and final, day of the Commission-mandated waiver period. Frontier’s actions complied with both the spirit, and the letter, of the law. Thus, it seems clear to me that the PSC’s decision to impose that condition was the right one because it increased competitive choices for a significant number of West Virginians.’ Suddenlink’s rebuttal testimony in Case No. 10-1886-T-C even more concisely stated that ‘?he purpose of the initial ETF waiver was to provide West Virginians an opportunity to exercise their right to take a ‘fiesh look’ and seek competitive alternatives.”6 West Virginians should have that same opportunity for a &esh look here, The reasons for an ETF waiver go beyond competitive equity. They include customer choice. The Commission has sound reasons for imposing an ETF waiver on Suddenlink. First, foreign interests will be major new owners of Suddenlink, and many customers are adherents to “Buy American” and oppose company profits being shipped outside the United state^.^ Second, questions about Suddenlink’s financial viability and its need for Direct Testimony of Dave Bach on behalf of Suddenlink Communications, Case No. 10-1886-T-C (August 1,201l), p. 3. (Emphasis added.) Rebuttal Testimony of Dave Bach on behalf of Suddenlink Communications, Case No. 10-1886-T-C (August 12,201I), p. 8. (Emphasis added.) According to Suddenlink’s FCC filing, Nepresso’s foreign interests will acquire control of Suddenlink, in part, as follows: 4 an equity infusion may have customers worried about Suddenlink’s ability to continue to provide adequate service, or to continue to provide service with the same terms, conditions and pricingq8For example, Suddenlink’s own financial statements show that it has produced net income losses every year of its existence, that its debt currently exceeds the total assets of the company, and that the book value of Suddenlink’s equity has steadily shrunk.9 Third, many telecommunications customers in West Virginia, having lived through Suddenlink’s service outages following the derecho on June 29, 2012, may want to opt for a provider that can supply service even when commercial power is interrupted for an extended period. According to a Suddenlink official quoted in the Charleston Gazette, 150,000 of Suddenlink’s 180,000 West Virginia customers had A to-be-formed Delaware limited partnership (“CPP LP”) will hold approximately 48% of the equity of Nespresso. Substantially all of the equity of CPP LP will be held by CPP Investment Board (USRE 11) Inc., a corporation formed under the laws of Canada. CPP Investment Board (USRE 11) Inc. is wholly owned by CPP Investment Board, which was incorporated as a Canadian federal Crown corporation by an Act of Parliament in December 1997. CPP Investment Board is a professional investment management organization that invests the assets of the Canada Pension Plan. The address for both CPP Investment Board (USRE 11) Inc. and CPP Investment Board is One Queen Street East, Suite 2600, P.O. Box 101, Toronto, Ontario M5C 2W5 Canada. ... A group of limited partnerships formed under the laws of England and associated with BC Partners (collectively, the “BCP Funds”) will hold, in the aggregate, approximately 48% of the equity of Nespresso.