Hilliary’s Acquisition of Border to Border Gets Green Light
Medicine Park, OK based Hilliary Communications’ acquisition of Border to Border Communications, Inc. cleared a major regulatory hurdle today as the FCC approved the transfer of control. The FCC’s approval however came attached with restrictions to future recoverable expenses as the FCC aims to prevent cost shifting by companies that own ACAM and cost-based support properties.
Hilliary announced its agreement to acquire Zapata, TX based Border to Border in November 2018, a month after it struck deals to acquire a pair of other Texas RLECs—Tatum Telephone Company and Electra Telephone Company. The deals mark a geographic expansion for Hilliary which owns Oklahoma-based RLECs Oklahoma Western Telephone Company, Inc. and Medicine Park Telephone Company, Inc.
Border to Border serves an extremely remote service area defined by the Falcon exchange, covering 850 square miles south of Laredo near the Mexican Border. Border to Border serves 76 access lines according to FCC filings. Per USAC and Texas PUC filings, the company received $330,000 in federal high cost support, and approximately $1m in Texas USF during 2018, roughly $17,500 per access line.
Border to Border receives legacy cost-based support while Hilliary-owned Oklahoma Western receives fixed ACAM support, creating what the FCC refers to as a mixed support transaction. The FCC previously raised concerns that mixed support deals could lead to owners shifting costs from ACAM companies to cost-based support companies to inflate the amount of high cost support received. To combat cost shifting, the FCC’s approval of Hilliary’s acquisition of Border to Border is conditional upon caps to recoverable expenses that will apply to both high cost loop support and CAF-BLS—a precedent established in the FCC’s approval of Hargray’s proposed acquisition of ComSouth.