FairPoint faces regulators today
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By CLARKE CANFIELD The Associated Press - Published: September 9, 2009
PORTLAND, Maine — Executives with FairPoint Communications Inc. will have plenty of questions to answer Wednesday when they face the utility regulatory boards from Maine, New Hampshire and Vermont — at the same time.
It's highly unusual — if not unprecedented — to have all three states' regulatory boards hold a joint meeting, but it speaks to the gravity of the situation for FairPoint, which has been plagued by ongoing order-fulfillment, customer service, billing and other problems in the three states.
FairPoint last year bought Verizon Communications' landline telephone and Internet business in Maine, New Hampshire and Vermont for $2.3 billion. The problems surfaced almost immediately when FairPoint officially took over the phone and Internet system seven months ago.
"This level of service and operational and financial problems is unprecedented, at least in the last 20 years, especially in a company of this size," said Anne Ross, general counsel for the New Hampshire Public Utilities Commission. "It's not unusual to have problems in smaller companies, but for a company with this size network and customer base, it's unusual to see problems of this magnitude."
The Vermont Public Service Board, the New Hampshire Public Utilities Commission, and the Maine Public Utilities Commission are conducting the meeting, which is being labeled a joint status conference, in Derry, N.H. The meeting is open to the public, but the public won't be allowed to speak.
Regulators are seeking an update on FairPoint's efforts to stabilize its troubled operations systems, as well as on organizational changes and financial matters.
Attending for FairPoint will be Chief Executive Officer David Hauser, President Peter Nixon, Executive Vice President Jeff Allen and Vicky Weatherwax, who in July was appointed to the new position of vice president of business solutions.
FairPoint, which is based in Charlotte, N.C., owns and operates phone companies in 18 states with a total of 1.65 million access lines, but its largest holdings by far are in northern New England.
The company welcomes the opportunity to meet with all three regulatory boards in a single session, rather than in three meetings in three locations on three separate dates, said spokesman Jeff Nevins.
Already, the company participates in phone conferences with regulatory staff in the three states, and has been submitting reports on its progress in fixing the problems.
"Nobody would say we haven't been responsive to the questions," Nevins said. "Our focus going forward is fixing the remaining problems we have with the system."
FairPoint continues to have ongoing billing problems with its wholesale and business customers, Nevins said, but has made progress elsewhere.
The company had a backlog of 2,500 new business orders at the beginning of July, but it's since been cut down to 500. The company is also exceeding regulatory benchmark standards for customer service; last month, FairPoint answered 89 percent of its calls from retail customers and 80 percent of calls from business customers within 20 seconds, Nevins said.
Nonetheless, FairPoint hasn't remedied the overall situation and continues to use a Band-Aid approach rather than getting at the root of its problems, said Maine Public Advocate Richard Davies.
"It's a little bit like a garden hose. The water comes from the faucet and comes out the nozzle, and it should take place automatically without further intervention," Davies said. "In this case, the hose has a lot of holes in it and the company has to engage a lot of people whose fingers have to be put over these holes to keep the water from leaking out."
Also troubling for regulators are FairPoint's financial problems.
In its Aug. 5 quarterly earnings report, FairPoint said it had reorganized some of its debt, allowing it to reduce its interest expenses by $14.4 million for the second quarter of 2009. But it also reported that the number of phone and Internet customers had dropped by 9 percent.
Revenues for the three-month period ending June 30 totaled about $300 million, down 13 percent from the same period in 2008, when Verizon was still in charge.
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