NJ Board Clears Apollo/Lumen With Fiber, Copper Conditions
Lumen received its final state approval for its sale of ILEC assets to Apollo in 20 states. Only FCC approval remains. The New Jersey Board of Public Utilities voted 5-0 Wednesday to clear the $7.6 billion deal with fiber buildout, copper maintenance and other conditions. "We're making the lives of thousands of people better by providing them with the opportunity to utilize high-speed internet service," said New Jersey Board President Joseph Fiordaliso at the livestreamed meeting.
“The FCC review of this deal is pending,” a commission spokesperson said. When the companies announced the deal last August, they said they expected to complete the transaction in the second half of 2022.
Wednesday's decision is "the final state-required approval of the deal," said Lumen and Apollo's Brightspeed. "These approvals support the expansion of new broadband investment to consumers in 20 states." The companies said they expect to close the deal in early Q4 this calendar year.
Meanwhile, a long-delayed state probe into incumbent telcos could soon whir back into motion. The COVID-19 pandemic had forced the New Jersey BPU to postpone several spring 2020 hearings in Verizon, Lumen and Warwick Valley Telephone territories (see 2003270054 and 2003020038). The hearings were part of a comprehensive review opened in December 2018. “It is our plan to resume the ILEC service quality hearings,” a BPU spokesperson emailed Wednesday. “We will be coming out with a schedule in the near future.”
The New Jersey Board conditioned the Lumen deal on Apollo bringing fiber to 72,000 premises over five years -- half the number that Lumen currently services, said New Jersey BPU Cable Television and Telecommunications Director Lawanda Gilbert at the livestreamed meeting. The company will spend tens of millions of dollars in capital to expand 1 Gbps symmetrical fiber-to-the-premises. Lumen’s current network is mostly copper DSL, with only 1% of residences and 4.5% of businesses having access to higher speed services, Gilbert said.
Apollo and Lumen made other commitments, including to provide low-income services through the federal affordable connectivity program, sell standalone voice and broadband services and maintain the copper network, Gilbert said. And the company must report on employment decreases and pension and 401(k) plan protection, she said. “While staff was concerned about Apollo’s lack of experience as a utility provider,” said Gilbert, Apollo “has recruited an experienced management team” that includes former Verizon senior executives that previously handled New Jersey operations.
Fiordaliso raised concerns about seeing non-utility entities in a growing number of transactions before the board. But the BPU president said he sees Apollo/Lumen as “vital for the people who are going to get this service.”
Lumen and Apollo “made a number of concessions” that pleased New Jersey Rate Counsel, said Director Brian Lipman in an interview. Fiber conditions will bring New Jersey consumers “into the 21st century,” said Lipman, who also highlighted copper maintenance and affordability provisions as important. Rate Counsel participated in “long and arduous” talks with the parties, which may have contributed to New Jersey finishing last among states that reviewed the deal, he said. Apollo is green to the utility space, but it hired experienced people, he said.
The board didn’t need to review the related transfer of Lumen's CenturyTel Broadband Services (CTBS) to Apollo’s Connect Holding, Lumen clarified May 19. CTBS withdrew a request May 18 seeking authority to operate in New Jersey as a CLEC and interexchange carrier (IXC). CTBS initially “believed securing CLEC/IXC authority would position it to respond rapidly to any new business development opportunities that might arise for Connect Holding requiring the provision of facilities-based services in New Jersey,” Lumen said in docket TM21091142. “With the passage of time, however, CTBS concluded that Connect Holding’s business plan was unlikely to require CLEC/IXC status in New Jersey in the near future.” BPU staff advised CTBS that the board didn’t need to approve the transfer if the company “operated only as a reseller -- which is CTBS’s present intention for the foreseeable future.”