Boston, MA 03/31/2014 (wallstreetpr) – One of the beneficiaries of Michigan’s Senate Bill 636, signed by Governor Rick Snyder last week, (the so-called landline phone bill, which makes it easier for telephone companies to stop traditional landline servies) is Frontier Communications Corp (NASDAQ:FTR); FTR is one of the major landline service providers in Michigan, along with AT&T Inc. (NYSE:T).
FTR’s presence in Michigan
FTR took over Verizon Communications Inc. (NYSE:VZ) 4.8 million landlines leased to residential and small business customers in July 2010; Verizon’s Michigan wireline assets were also included in the deal. The total number of people using landlines in Michigan was estimated at around 2.6 million in 2012.
New law makes it easier for phone companies to migrate to newer systems
The new law proposes that phone companies would have to give customers 90-days notice before discontinuing the landline service; however, the Michigan Public Service Commission (MPSC) could require the existing company to continue their services in a particular area in case there are no alternate providers available. The new service would not necessarily have to be a traditional “landline” but would have to provide reliable access to 911 services, allaying the fears of senior citizens and public safety and law enforcement officials.
Given the declining number of landline customers, the costs associated with maintaining the landline network are too expensive. The new law, proposed to come into effect from 2017, would reduce the expenses associated with maintaining the old systems that the phone companies could invest in new technology.
FTR’s costs could go down significantly if similar laws are enacted in other states
Allaying the fears of Michigan residents, Mr. Bob Stewart of Frontier Communications, told WNEM TV that the company is not looking to get rid of landlines and that they just want to upgrade the technology. “This law sets up a process for us to ask permission to transition your phone line from an analog world to a digital”, said Mr. Stewart.
If similar laws are enacted in other states served by FTR, it could lead to tremendous cost savings for the company going forward, given that Frontier Communications Corp (NASDAQ:FTR)’s core focus is on serving rural areas and smaller communities. FTR’s stock closed at $5.62 on March 28, registering a gain of 19.57% YTD.
