FairPoint urges less regulation
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By DANIEL BARLOW VERMONT PRESS BUREAU - Published: June 10, 2010
MONTPELIER – FairPoint Communications said this week that the company should be less regulated by Vermont officials once it emerges from bankruptcy restructuring, citing an unfair playing field with newer telecommunication companies.
FairPoint Communications hopes to emerge from Chapter 11 bankruptcy by the end of the summer or early fall with $1.7 billion less debt, according to executives with the telephone company.
Mike Smith, the president of FairPoint's Vermont operations, said Wednesday it is time to begin talking with Vermont regulators about decreasing some of the requirements the state puts on traditional telecommunication companies.
"We're operating now in a highly competitive business environment," Smith said. "And the problem we are running up against is that we are competing against many companies that are not regulated by the state of Vermont."
These companies include the new generation of telecommunication firms: Wireless providers and cellular and cable companies.
These firms are regulated mostly on the federal level, whereas FairPoint Communications – known as a "legacy" company because it deals mostly in traditional phone and Internet lines – is regulated both by the federal and state governments.
David O'Brien, the commissioner of the Vermont Department of Public Service, said FairPoint may have a point about the lack of regulatory parity, but he would not favor less regulation for the company until it finishes restructuring and until it faces competition in all regions of Vermont.
O'Brien, who represents Vermont customers before the state's quasi-judicial regulatory body, the Public Service Board, said in some parts of the state FairPoint is still the only company to turn to for certain telecommunication services.
"There are parts of this state where they are essentially still a monopoly," he said. "Until we get to a true competitive landscape, where there are a number of different options for customers, I don't see that happening."
Smith acknowledged that there are parts of Vermont where FairPoint is the only company offering certain services. He said he would like to see the state regulate the company specifically in those areas; but be less regulated in the parts of the state where there is competition.
The state regulates the rates FairPoint charges customers and its expansion of Internet broadband in rural areas.
"We're looking to the future," Smith said. "We wanted to get this conversation started."
Sen. Vince Illuzzi, the Essex/Orleans Republican who chairs the Senate Economic Development Committee, has been a critic of FairPoint. But he said this week the company makes a valid point about the inequity in regulation.
"The cell companies and the cable companies have very little regulation from the state," Illuzzi said. "Meawhile, a Verizon or a FairPoint have to jump through hoops."
FairPoint filed for Chapter 11 bankruptcy protection in October 2009 after a disastrous debut in northern New England. Originally a small North Carolina telephone company, FairPoint bought Verizon's landlines and Internet services in Vermont, New Hampshire and Maine in 2008.
Smith said FairPoint's problems stemmed from its switchover to a faulty new computer system – causing a rush of customer complaints – combined with a poor economy, which hurt it and similar companies that had loads of debt.
The restructuring plan, which will essentially see FairPoint owned by its creditors, still needs approval from the Federal Communications Commission and regulators in the three northern New England states. In Vermont, the Public Service Board held three days of hearings on the plan last month.
FairPoint officials said they have come a long way from the problems of 2009, noting they are meeting nearly all of the standards that the state laid out for them.
"It's like night and day," Smith said.
O'Brien said there have been improvements, but FairPoint still has work to do.
"They are doing better than they ever have," he said. "But there is still a gap between where they are now and what I would consider business as usual quality."
daniel.barlow@rutlandherald.com
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