Northwest Fiber buys Frontier Communications Idaho market

HAYDEN — Frontier Communications, the financially troubled telecommunications company, is selling its Idaho, Montana, Oregon and Washington operations in a $1.35 billion transaction to Northwest Fiber, which will operate the company as Ziply Fiber.

The company’s Idaho office will be based in Hayden, and its headquarters will be in Kirkland, Washington, said CEO Harold Zeitz. Ziply Fiber will provide service to Coeur d’Alene out to Spokane, Hayden, Post Falls, Moscow, Sandpoint, Rathdrum, Cascade and McCall.

“You shouldn’t have to live in a big city to get internet,” Zeitz said.

Regulatory concerns

While the deal was actually signed on May 29, it has taken this long for all the regulatory approvals through the various agencies, Zeitz said. That actually took less time than expected, and the deal may close by as early as late April, he said.

Northwest Fiber took the initiative on the deal, Zeitz said.

“The principals here — myself, the chairman and the CFO — knocked on Frontier’s door and asked if we could look at these,” Zeitz said.

They grew up in the Northwest and wanted to be able to bring broadband to their friends and neighbors, he said.

The company is partnering with Searchlight Capital. The deal is half equity and half bank debt and bonds, he said.

The company covers 1.6 million residential and commercial locations and currently has about 270,000 residential and 25,000 commercial internet subscribers, according to company documents.

‘No customer disruption’

Northwest Fiber’s first intention is to ensure continuity of the existing service, Zeitz said. After that, the company hopes to improve fiber access in the cities it serves and has committed $100 million toward the project. Currently, Frontier offers fiber optic networking in 31% of the areas that it services. Ziply would like to increase that to 80%, according to company documents.

“There’s so much opportunity in the areas that we’re acquiring now, and so much work to build fiber and improve the network,” Zeitz said.

However, the company doesn’t currently have any plans to build its network beyond the existing cities it serves, he said.

A number of North Idaho cities already have high-speed broadband service using fiber, but Zeitz didn’t see that as a problem.

“Competition is good for customers,” Zeitz said, adding that Ziply would be operating its own fiber optic network as opposed to offering service on top of another company’s network.

“We would generally do our own,” he said. “We’re acquiring the phone company. We already have copper that goes from poles or in conduits.”

Zeitz wouldn’t say how much service on a fiber optic network would cost.

Expansion

Part of that effort would be continuing Frontier’s $5 million commitment to the Connect America Fund Phase II grant program through the Federal Communications Commission (FCC) to provide 10 megabit per second service to more than 10,000 rural areas in Idaho. Frontier had told the FCC in January that it had met its 80% completion deadline for the project in Idaho but had failed to do so in 13 other states. The project started in 2015.

“We will take over and finish the last little bit,” Zeitz said. “We will finish on time.”

Expanding the fiber optic network in that area could potentially make it easier for cellular companies to offer 5G high-speed wireless service as well.

“They would be customers of ours,” Zeitz explained. “They need fiber connecting that back. We will be a provider to 5G companies and they’ll use our fiber.”

Northwest Fiber has talked with cellular carriers that will be doing 5G and has partnered with them, but Zeitz said he couldn’t provide specifics.

Earlier this year, Frontier had reportedly told some organizations, such as the Utah Public Utilities Commission, that it was considering filing bankruptcy, but it has not done so.