Despite Blessing The Deal, FCC Panel Splits On FairPoint/Verizon

Telecom Policy Report, Jan 14, 2008

He continues, "Inexplicably, there are no special measures in this Order to address the concerns about broadband deployment, wholesale service or service quality for customers in these three states. The Order itself does not wrestle in any serious way with the ultimate question for consumers, as posed by the consumer commenters, of what level of service these new customers will be receiving and at what price. Instead, this Order takes at face value assertion after assertion without engaging in meaningful analysis. I might have been persuaded that, with the proper analysis and conditions, this merger could serve the public interest. Sadly, neither is offered in this Order."

More On FairPoint's Efforts

Meanwhile, back at the state level, prior to the commission releasing its decision last week, FairPoint had reached an agreement with Covad Communications Company and its affiliate DIECA Communications Inc. on issues relating to the proposed purchase in New Hampshire. Covad had petitioned as an intervener in the New Hampshire Public Utilities Commission review of FairPoint's application, and it now supports the measure. Adds Johnson, "Our joint collaboration with Covad on a go-forward basis will ensure that all of our respective customers continue to receive a consistent level of high-quality service."

The carrier also came to terms with the Maine Public Utilities Commission, which gave the deal its nod when FairPoint, Verizon, Maine's public advocate, PUC support staff and smaller local telephone companies agreed to some changes in the original purchase application. The PUC had asked Verizon to cut FairPoint's debt by $100 million by cutting the cost of the fees it will charge FairPoint for services rendered during the transition from Verizon to FairPoint. Local news reports out of Maine said that after Verizon refused to do this, the PUC adopted FairPoint's alternative proposal to pay down its debt by $150 million in 2012 if the company does not meet a certain debt ratio by the end of 2011.

Unions were not pleased with this development. "The commission had it right when it initially asked Verizon to cut FairPoint's fees by about $100 million. That would have been an upfront cash infusion taking pressure off FairPoint. Instead, the commission placed more pressure on FairPoint to cut its investment in capital, service quality or the labor force," commented Pete McLaughlin, business manager of IBEW Local 2327, in a written statement following the PUC decision. "Sadly, our commissioners made a compromise that falls far short of what telephone customers and the public need."

As things stand now, FairPoint now has to win over regulators in New Hampshire and Vermont.

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