I always wonder how come telephone companies can’t seem to stay in business. After reading an article in the Seattle PI about the pending sale of 4.8 million users and their phone service from Verizon to Frontier Communications for $8.6 billion, I now know why. At that price, Frontier is paying $1,791.67 per user line. While it’s a deal of some kind, I don’t see how you can consider it a good deal.

Sure, I’m not a high paid telecom CEO or CFO, but from what I’ve seen happening to the wireline telecom industry over the last few years, you’d have to give me the customers before I’d take them. Here are a few random reasons why I wouldn’t touch the deal with a ten foot pole:

1. Verizon is losing money on these customers now!
2. People are canceling their local wireline phone service at a rate of around 10% per year or higher.
3. Qwest is selling a basic local phone service account for $13.50 per month, with a full blown unlimited local and long distance calling plan for less than $50.00 per month.  The problem with that, is that Frontier would have to make $50 per month in profit, off of each of their customers, for 3 years, just to break even, and that’s not going to happen.
4. VoIP and cell phones are set to completely replace wireline service over the next 10-20 years, so why would you pay for these customers, when you know statistically that they’re going to jump ship in the near future anyway?

There’s a whole bunch of other reasons, but the main point is that this “New Telecom Math” just isn’t going to do anything but put Frontier out of business.