TimesArgus.com - We Are Vermont

State is concerned about FairPoint's financial condition



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BY Louis Porter VERMONT PRESS BUREAU - Published: May 13, 2009

MONTPELIER — State regulators made it clear Tuesday that the executives of FairPoint Communications have work to do to allay concerns about the company's viability.

FairPoint, which borrowed substantially to buy the assets and territory of Verizon's landline business in Vermont, New Hampshire and Maine in March of 2008, has had difficulties during the transition and takeover. Its stock, now at about $1.40 a share, has dropped as low as 35 cents a share within the last year.

The company's revenue declined 2.4 percent from the final quarter of last year and FairPoint has lost about 8.8 percent of its telephone line customers over the last year, according to the company's filings. Verizon had around 1.3 million landline customers when the sale was announced.

Members of the Public Service Board and officials and consultants with the Department of Public Service, the two entities primarily responsible for regulating utilities in Vermont, questioned the company during a workshop Tuesday on everything from executive bonuses to whether the company will meet its debt repayment requirements and what it's doing about customer service and billing problems in Vermont.

One of the requirements imposed on FairPoint when it took over Verizon's business was that it expand broadband Internet over the next two years in Vermont. The expansion of broadband is also central to the company's strategy, but officials are concerned whether the company's problems raise roadblocks.

Asked if it was possible under some circumstances that the company would seek to scale back its plans, FairPoint Chief Financial Officer Alfred Giammarino said that could happen.

"There is certainly that possibility," he said, talking to the board members by speaker phone.

Beth Fastiggi, spokeswoman for the company, pointed out that FairPoint expanded its broadband service more than required by the end of 2008 — to 76 percent — and only has to increase that amount by one percentage point more by the end of this year. However, by the end of 2010 the company must offer broadband to 80 percent of its customers, and fully cover half of its telephone phone exchanges in the state.

The company has until early August before its next financial testing point. Then it will have to demonstrate to its creditors that it is on track, Giammarino said.

Asked about executive pay, Giammarino said the compensation packages were smaller than they would have been otherwise.

But board member John Burke told Giammarino that he was talking to a hearing full of state officials who have had pay freezes and pay cuts as state revenues have declined and they were likely to play "a pretty small violin" for executives.

There also remain problems for customers, said Tamera Pariseau, who works for the Department of Public Service's consumer affairs division.

The department has gotten about 120 complaints about FairPoint so far this month, up substantially from a year ago when Verizon still ran the phone system. And, she said, the volume of calls to the department has not declined dramatically since earlier this year.

FairPoint officials said that the number of calls to their service centers has declined since they took over. However, since their call centers — one of which is in Vermont — handle calls from all over Northern New England, it is hard to tell how many are coming from each state.

Another problem has been that seasonal residents and businesses are having a hard time — and long waits — to get their phone service reinstated, Pariseau said.

One FairPoint business customer told the department that the phone connection came too late for his business, Pariseau said.

"He is having to file for bankruptcy," she said.

One member of the Public Service Board had a personal experience connected to the problems facing FairPoint. Administrators at the elementary school in South Strafford were having trouble getting in touch with FairPoint about its Internet service.

"They called me," Burke said.







READER COMMENTS


I've also had Vonage, and that was a gobbley-mess, in terms of sound quality. It's easy to switch into Vonage, but I am not sure how easy it would be to get your phone number switched back out. I would not trust Vonage with a phone number I cared about (like a business line). Sovernet is sadly no longer Vermont-owned, but it does still have its primary service center in Bellows Falls. I'm just really glad I'm not in the Fairpoint whirl.
-- Posted by Montpelier Vermont on Thu, May 14, 2009, 8:08 pm EST

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The Public Service Board and the Governor were warned and warned and warned ! No one listened when numerous people stated that FairPoint bit off way more than they could chew.

Dave O'Brien and Jim Douglas - This is your mess. You guys were so cocky that this was going to work out. WRONG ! You should have listened to the many, many people that told you this was a mistake.

.
-- Posted by Olde Man on Thu, May 14, 2009, 6:29 pm EST

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if you have a broadband connection switch to vonage, it's only 24.99 a month with all the feature of what the verizon freedom plan had. I have had this company for 2 years and the only problem I have ever had was when my internet went out. You can keep your phone number you have, no need to change it.
-- Posted by None None on Thu, May 14, 2009, 2:10 pm EST

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Warning flags were raised during the courtship, and numerous utility professionals, economists and members of the public said, Fairpoint doesn't have the goods to take on the Verizon territories in Maine, New Hampshire and Vermont. Business and residential customers are the ones who will pay, both literally and figuratively, for a failed chunk of essential infrastructure. Is it any wonder that Vermont's rural areas find it difficult to grow with such failure of leadership, oversight and vision? Where were the federal regulators? Where was Vermont's PSB? Where was the governor? When a big company such as Verizon with all of its assets wants to abandon the land line business in Vermont because other pastures are greener, doesn't that raise a huge question mark? How can a little company such as Fairpoint with comparatively limited resources possibly mount a successful takeover of something that Verizon recognized as a costly dead end road? And, how did Verizon, who made tons of dough when land lines were the norm, so easily get off the hook? Talk about a disconnect. DUH.

Michael Thurston
-- Posted by Michael Thurston on Thu, May 14, 2009, 10:39 am EST

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Update: For the record, I still have *issues* with unFairpoint, but to be fair, today the aforementioned lineman came out and fixed our DSL. He was apologetic for screwing up the line. I wonder if my conversation with a manager last week had anything to do with the sudden movement in my direction, or if it was all a matter of time...
-- Posted by Kenric Kite on Thu, May 14, 2009, 10:36 am EST

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Cell phones are the way to go anyway and other companies offer broadband, whether cable or dsl. Am still amazed that the DPS let themselves be hoodwinked by Fairpoint. Wonder how much Fairpoint's lobbyists wined and dined them to get this through. They will fail long before August.

I like Bill's idea about Vermonters stuck working for Fairpoint buying the company and running it for Vermonters by Vermonters. That is probably what we need, like Sovernet. Good idea.
-- Posted by Watercloset on Wed, May 13, 2009, 11:22 pm EST

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Depending on where you live, you may have another choice for telephone service. I have regular (not internet) phone service through Sovernet. Sovernet's customer service is awesome. You talk to a real person, based in Bellows Falls. You can call back with the same extension to talk to the same real person. The real person remembers who you are and solves your problem. The most complicated "problem" is actually signing up for service where they have to switch your line away from Fairpoint. This is done with good communication, but does take a few days and a service person coming out to your house. I've had telephone service through Sovernet (both business and residential) since 2003, and I could not be more pleased. I also have DSL through Sovernet - also good. If you want to see if they offer service in your area - check out corp.sover.net
(I have no affiliation with Sovernet other than being a happy customer.)
-- Posted by Montpelier Vermont on Wed, May 13, 2009, 2:16 pm EST

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Where's the kaboom, the earth-shattering kaboom?

This company has the absolutely worst customer service for any company with which I have previously dealt. I have told them this. One department doesn't always know what another is doing.

We moved five weeks ago. The switchover of the number was supposed to happen on moving day, but when it did not happen by the following day, I called (the number I had been instructed to call if there was a problem by that day) from my mobile, only to wait on hold for two hours, using up minutes, never talking to some one before I gave up. The upshot is that there was no phone for a week.

When it was finally working, only then did we find that they had not switched over the DSL. We called, were told to wait "48 to 72 hours" and were told it "should" be working by then. Four weeks later, repeated calls, being told to wait 2-3 more days, no result, and finally 5/11 they called to tell us someone would be out on 5/12. Someone indeed went to the pole and promptly screwed up the line so that we can not make or receive calls. Last night I called repair service again, and was told they would have it working by 6:00 tonight. Hmm.

It's nice that you can call on a weekend and get repair to listen to your problems, but it really rots that the personnel that are responsible for the technical aspects of customer switchovers go home on weekends, and there is no one who can actually do anything until Monday. The CSRs keep telling me there is a backlog of customers waiting. Seems to me that a company wanting to stay in business would hire extra help and pay overtime so that work could get caught up; that's a no-brainer!

No wonder shareholder confidence is at the bottom of the well.
-- Posted by Kenric Kite on Wed, May 13, 2009, 9:00 am EST

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Solution: Vermonters who are working for Fairpoint should buy the business and redesign it as a full partnership for all working there.
All Vermonters could purchase stock as a means of funding. Last thing that should be done is associate the new business with wall street and the bankers.

Vermonters are a free and sovereign. Our state responsibilities to the US Constitution are not be followed because the criminal congress doesnt follow the rule of law.
Article 1 section 8
Congress shall coin money regulate the value thereof and of foreign coin.
Article 1 section 10
No State shall make anything but gold and silver coin a tender in payment of debts.
The bankers cant manipulate the money system if Congress disobeys the Constitution and eliminates the gold and silver standards. The states cant follow the US Const. unless the R and D's in congress order the printing of gold and silver coin.


Can't do any worse than the current executives but the State must be kept out of the deal they have no constitutional authority to promote economic development.

VT Constitution section 61

As all persons of full age, to preserve their independence (if without a sufficient estate) ought to have some proffession, calling, trade, or farm, whereby they may honestly subsist,

"t must be conceded that there are rights (and property) in every free government beyond the control of the State (or any judge or jury). A government which recognized no such rights, which held the lives, liberty and property of its citizens, subject at all times to the disposition and unlimited control of even the most democratic depository of power, is after all a despotism. It is true that is a despotism of the many--of the majority, if you choose to call it so --but it is not the less a despotism."
(LOan Ass'n v. Topeka, 87 U.S. (20 Wall.) 655, 665 (1874)

Government interference with our lives, liberty and property is despotism. Find your won profession in partnership with others rather than becoming an indentured servants of corporations and government.

Buy a corporation and redesign it as a full partnership.

Rebel against the criminal govenrment and corporations who hold us a workforce subservient to their needs in a livetime of peonage.
-- Posted by Bill Brueckner on Wed, May 13, 2009, 6:41 am EST

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DPS the public advocate ?
Reliable phone service and broadband are necessities for Vermont' economy. It appears the David O'Brien's DPS has no plan should FairPoint fail (which seems likely)to live up to it's agreements.The DPS signed off on the Verizon take-over plan and now seems poised to sit on it's hands as a major link in the communication infrastructure crumbles .
-- Posted by None None on Wed, May 13, 2009, 6:10 am EST

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