NH's Changing TELECOM Landscape

Business NH Magazine, Jun 2008 by Wailgum, Thomas

Neil Giarratana could have lived anywhere in the United States. In 1999, he and his wife, with a newborn born in the crib, undertook a nationwide search to find the "perfect place to raise their family," he says. Giarratana had grown up in Northern Virginia and as an adult had tired of the eight-lane highways and hour-and-a-half commutes.

He and his young family settled on Keene, NH. "We fell in love with this city," he says. Giarratana found a job with a network engineering firm in Keene, and today he is president of Lucidus Corp., an Internet strategy and services company spun off from that engineering firm in 2002. "I'm absolutely blessed," he says of his 20-minute commute, by foot, to work each day. "[The Keene area] has got all those 'way of life things' you want."

But while he will gladly wax on about the quality of life he now enjoys, Giarratana, like many other NH business owners located outside urban areas such as Manchester and Nashua, worries about the state's telecommunications infrastructure and the lack of statewide broadband access for all.

For example, while Lucidus and other businesses in downtown Keene have access to broadband services, many of the surrounding communities in the Monadnock region, where employees live, do not, making working from a home an issue. They either have a painfully slow dial-up connection or nothing. Mary Ann Kristiansen, founder and executive director of Keene's Hannah Grimes Center,-which helps local entrepreneurs get on their feet, estimates that more than 50 percent of the homes in the Monadnock region do not have access to broadband. "We have people doing e-commerce, and graphic and Web site design on dial-up," Kristtartsen says. "And where it used to be a pain, it's now starting to become impossible."

To Giarratana, the only thing missing in his idyllic NH life are those thick telecommunications pipes and wireless services that make broadband available to everyone. "You put the technical infrastructure in place," he says, "and there is no more perfect place in this country than this region, because you would have everything."

The State of the State

Today, the Granite State's telecommunications infrastructure, including the array of companies offering voice and data services, is in flux. Verizon had long been the sole telecom option for NH businesses. But by 2006, it was clear to those living and working in non-urban areas that Verizon had no interest in expanding broadband to the underserved masses in the North Country and other rural areas clamoring for faster-than-dial-up connections.

"Verizon was not focused on New Hampshire, Vermont and Maine, and one of the main reasons was that there's not a lot of business up here," says Bruce Leichtman, an expert on the broadband industry and president of Leichtman Research Group in Durham. Leichtman calls the trio of states, with their lack of access to broad-band in non-urban areas,"he poor sisters"

Surveys completed in 2004 and 2006 by the NH Department of Resources and Bconomic Development (DRED) on Internet availability for NH businesses revealed the bleakness of the situation for the have-nots: 67 percent of communities in Coos County were without cable or DSL; in Cheshire County, the number was 32 percent; and in Grafton County, it was 19 percent.

"It isn't just a North Country or Western New Hampshire discussion, or a rural versus urban discussion," says Michael Vlacich, the director of NH's Division of Economic Development. "There is affordable broadband access in areas of those regions, but it's not where the people in those regions expect it to be if we want to have continued economic growth."

Verizon's highly publicized $2.4 billion proposed sale of its Northern New England assets to FairPoint Communications in 2007 created unrest among some NH residents, business owners and Verizon employee union representatives.

The scale of the transaction, including the amount of back-office technological change that would have to occur in the transfer, as well as the debt that FairPoint would be taking on, were also concerns. Before the sale, FairPoint had 300,000 access line equivalents - telecom terminology for telephone lines. After the sale finalized, FairPoint expected to have roughly 1.8 million access lines to manage and service. Two union groups mounted a noisy campaign to ensure they protected the 2,500 Verizon employees they represented.

"It was also fear," says Leichtman. "We had one of the biggest brands in the business serving us. So who is this unknown company from North Carolina? But it was absolutely seeing the glass as half empty, rather than half full." And that's because unlike Verizon (whose wireline business across all three states represented less than 4 percent of its annual revenues), FairPoint wanted to be here. Where Verizon didn't invest in expanding the telecom infrastructure and clearly saw no future, FairPoint saw only growth and possibilities.

"The three states will represent over 85 percent of our revenues, over 85 percent of our customers and over 85 percent of our assets," says Walter Leach, FairPoint's executive vice president of corporate development in charge of its mergers and acquisitions. "So when we had an opportunity from Verizon to acquire their business, we jumped at it."