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FCC Must Require Fair Asset Allocation in Merger
In comments filed with the Federal Communications Commission, CWA called on regulators to ensure that the public interest is met in the proposed Sprint-Nextel merger by requiring that Sprint's local telephone division receive an equitable distribution of the company's assets and debt.
Sprint said it will spin off its local telephone operations, which now serve about 8 million customers in mostly rural and suburban communities in 18 states, "to focus on its vision of the wireless future."
CWA and the IBEW represent about 10,000 workers at Sprint local telephone units.
The FCC should require a written commitment from Sprint Nextel that it will fairly and equitably allocate assets and debt at the time of the spin-off. This is necessary because Sprint has been using profits from the local division to pay down debt and subsidize its long-distance and Internet businesses, putting local customers and ratepayers at a serious disadvantage, CWA said.
Sprint's FON group, which includes three categories - local division, global markets and other businesses - paid down $2.7 billion in debt between 1998 and 2003. A review of Sprint's financial filings indicates that the local division, which earned $8.7 billion in that period, was the only source of earnings to pay that debt, CWA pointed out.
This use of local division revenue already has had a negative effect on service quality for local customers the filing noted. Service is poor, as determined by repeat trouble reports, repair intervals and other measures, and will likely deteriorate even further. Broadband deployment to these mostly rural areas also will be delayed.
The only way to prevent further deterioration of service and a widening digital divide is for regulators to condition approval of the Sprint-Nextel merger on commitment to an equitable debt and asset allocation at the time of the spin-off, CWA concluded.
Sprint said it will spin off its local telephone operations, which now serve about 8 million customers in mostly rural and suburban communities in 18 states, "to focus on its vision of the wireless future."
CWA and the IBEW represent about 10,000 workers at Sprint local telephone units.
The FCC should require a written commitment from Sprint Nextel that it will fairly and equitably allocate assets and debt at the time of the spin-off. This is necessary because Sprint has been using profits from the local division to pay down debt and subsidize its long-distance and Internet businesses, putting local customers and ratepayers at a serious disadvantage, CWA said.
Sprint's FON group, which includes three categories - local division, global markets and other businesses - paid down $2.7 billion in debt between 1998 and 2003. A review of Sprint's financial filings indicates that the local division, which earned $8.7 billion in that period, was the only source of earnings to pay that debt, CWA pointed out.
This use of local division revenue already has had a negative effect on service quality for local customers the filing noted. Service is poor, as determined by repeat trouble reports, repair intervals and other measures, and will likely deteriorate even further. Broadband deployment to these mostly rural areas also will be delayed.
The only way to prevent further deterioration of service and a widening digital divide is for regulators to condition approval of the Sprint-Nextel merger on commitment to an equitable debt and asset allocation at the time of the spin-off, CWA concluded.