Yesterday, Frontier officially took over Verizon’s wireline infrastructure in 14 states. The transaction began brewing in May of 2009 when Verizon announced that it was planning to sell off its dated, overwhelmingly-copper infrastructure in "predominantly rural areas" in 14 states. Verizon relied on a tax loophole known as a Reverse Morris Trust to gain $8.6 billion from the deal. The area Frontier is acquiring includes nearly 5 million phone customers and more than a million broadband customers. Part of the reason there is such a disparity between the number of broadband and phone customers is because Verizon did an awful job building its broadband network in these areas. In fact, almost forty percent of households in the areas affected by the deal do not have access to broadband. The issue at the heart of this transaction is how to ensure that the deal results in broadband access for the millions of unserved consumers.

To get the transaction approved by the FCC, Verizon actually argued that it had done a poor job serving rural areas and that the new company, Frontier, would do far better. But Verizon said this before when it made a deal with a small phone company called Fairpoint. In order for a Reverse Morris Trust to work, the receiving company has to be much smaller. The problem is that the smaller company’s customer base and debt levels balloon post transaction. This was just the case with Fairpoint. The deal overwhelmed the company and it filed for bankruptcy last year.

Last September, Free Press asked the FCC to consider the outcome of Fairpoint when reviewing the Verizon-Frontier deal: How can the FCC ensure these areas get broadband as Verizon cashes out and the new provider is bogged down with debt? One solution could have been to make Verizon cough up a bit of that $8.6 billion and put it toward the broadband networks. It turns out that this was a requirement imposed by West Virginia’s Public Utility Commission before it was comfortable approving the deal for the state. The FCC on the other hand, let Verizon off the hook and simply set broadband build out benchmarks that were mutually agreed upon. To their credit, the FCC asked for data to monitor Frontier’s progress.

Nonetheless, it is unclear what the FCC can do if this data shows that Frontier isn’t fulfilling its commitments because of its enormous debt load. This is what happened with Fairpoint, and state regulators couldn’t decide what to do beyond threatening to pull the company’s license to operate in the state and allow for delays in broadband buildout. I mean, you can’t exactly fine a company whose problem is not being able to pay off its debt. On that deal, Verizon made 2.7 billion, on the Frontier deal it is making $8.4 billion. Many other questions exist about how Frontier will serve customers. Here are a few to keep your eye on:

Price Increases: Verizon has charged lower rates than Frontier for its DSL service and it is unclear how long these new Frontier customers will hold onto these lower rates. Will customers in the new areas be forced to pay significantly higher monthly broadband bills?

20th Century Infrastructure: As part of the deal, Frontier committed to offering DSL service at speeds of 4 Mbps -- far from a future-proof speed. Will these consumers be permanently stuck in the broadband backwater?

Net Neutrality: Strangely, the FCC failed to put a condition on Frontier to operate a neutral network until the FCC passes its open Internet rules. Will the company begin monetizing the Internet to pay-off all this debt?

Usage Caps: Frontier has previously forced customers to adhere to usage caps. These plans were put on hold but could return, will Frontier reimpose limits that were clearly meant to line the company’s pockets?

Fiber Customers: Approximately 600,000 of the new homes served by Frontier were in Verizon’s FiOS territory. This deal will raise a whole slew of additional questions for these areas. Will Frontier continue to build out fiber in the neighborhoods where Verizon had promised to? Will existing customers see TV or broadband rate increases? Does Frontier intend to build fiber in additional areas?

Customer Base: Along with lots of debt, Frontier also adds million of new customers. Verizon seems to be betting that its 4G wireless network will be able to compete for Frontier’s existing and newly acquired DSL customers. How will Frontier stem phone customer losses but also compete with Verizon for low-speed broadband subscribers?

Unfortunately, the FCC did not address many of these important questions. Instead, it touts Frontier’s backward-looking buildout commitments and takes credit for the money West Virginia forced Verizon to put towards its former customers. Millions of customers, including many who have no access to broadband at all, and many more who have access at exhorbant prices, face an uncertain future. At the moment, it looks like Verizon has, once again, cashed-in on customers that are still waiting for broadband and left them with a company ill-equipped to meet their needs. Here’s to hoping this story has a happy ending and Frontier doesn’t end up as the next FairPoint.