Vyto Starinskas / Staff File Photo
FairPoint’s improved customer service and broadband access are two accomplishments cited by Michael Smith.
A lot has changed in the 3½ years since Michael Smith stepped into the job as head of the largest phone company in the state.
When Smith took over as Vermont president of FairPoint Communications, he faced three challenges: too many unhappy customers, expanding high-speed Internet service and coping with a regulatory system that hamstrung the company from competing effectively.
Today, with the improvement in service quality, the avalanche of complaints is down to a fraction of what it was, said Smith, who will step down in August as president. Beth Fastiggi, the company’s vice president for government relations, was named his successor.
FairPoint’s problems began a year after the regional phone company’s $2.4 billion purchase of Verizon’s northern New England landline business (Maine, New Hampshire, Vermont). The transition in early 2009 was anything but smooth, with billing problems and customers encountering glitches when trying to access their email. At the time, calls to customer service resulted in long delays.
But Smith said those days are a distant memory,
“Our service quality is at levels we haven’t seen in years,” Smith said. “So on an operational basis, there’s been a complete turnaround in terms of what has happened at FairPoint.”
Smith credited the company’s 500 employees with the 180-degree turnaround.
The company also has made significant strides in expanding broadband throughout its service territory, spending nearly $100 million on a state-of-the-art fiber-optic network.
The company, more than any other, has contributed the most to Gov. Peter Shumlin’s plan to deliver broadband to Vermonters, said Smith, who was secretary of administration under former Gov. James Douglas.
“We have contributed mightily to the governor’s agenda and we’re very proud of that,” Smith said. “And the commitment we made monetarily, the commitment that we brought broadband to people who had never had broadband before, the commitment we made to Vermont businesses in providing them with a network that is unsurpassed, I’m pretty proud of.”
‘Regulated like a monopoly’
As a traditional phone company, FairPoint has seen a steady erosion in its landline business to the unregulated mobile phone and cable industries. But Smith said FairPoint remained saddled with having to go through a time-consuming regulatory review process by the state Public Service Board, even when it wanted to reduce rates to meet the competition.
Although the telecommunications landscape had been altered dramatically, Smith said the same rules that governed landline companies in 1965 remained in place.
“The whole industry had changed,” Smith said. “We were being regulated like a monopoly in an environment that was no longer a monopoly,”
In response, the Legislature and the Public Service Board loosened the rules, allowing FairPoint to compete more freely.
“I am confident with that more level playing field, we can compete with the cable companies or the wireless companies in this era,” he said.
Smith said FairPoint has enormous growth potential when it comes to serving business customers with voice and broadband.
Another growth area is serving wireless carriers because Smith said cell phone companies are “heavily dependent on the wired industry.”
“We provide services to all the major wireless carriers and that’s a growing business for us,” he said.
Smith explained that a wireless call is transmitted to the closest cellular tower then relayed across a wired network to another tower before being transmitted to the receiving cellphone.
Still room for improvement
From the perspective of Public Service Commissioner Chris Recchia, there is no disagreement that FairPoint has made significant strides in rectifying its early problems.
“In terms of the actual FairPoint customer service and things like that, it has improved tremendously since the really dark days,” he said. “Then again, they really had to.”
The service problems reached the point where the state was threatening to pull FairPoint’s certificate of public good.
While FairPoint has come a long way, Recchia also said there remain issues with customers having service orders or billing questions handled in a timely fashion.
“I think they are on a trajectory to address those and improve that and they have been,” he said. “It is much better than it was.”
Recchia was generous in his praise for the company’s broadband expansion, serving people who otherwise would not have access to the Internet.
“They have really been an outstanding partner for (broadband) rollout,” Recchia said.
One criticism Smith has of the state’s broadband policy is that the Vermont Telecommunications Authority has spent too much time and money on duplicating the “middle mile” section of the network. Those resources would be far better allocated to building the “last mile” to bring broadband service to hard-to-reach areas of the state, he said.
Recchia ,too, said the department had concerns about middle-mile redundancy.
“I think we observed some decisions that were made by VTA along those lines that were of concern to us,” he said.
Chris Campbell, VTA executive director, said his organization believes it is “incredibly important” to provide broadband to every Vermonter.
“In our current broadband grant round, we are focused squarely on last mile broadband service and funding projects for the very last unserved locations in the state,” Campbell said, “that don’t already have a project in the works funded with private, state or federal dollars.”
Familiar face, new place
Fastiggi, who has spent 25 years with Verizon and FairPoint, takes over as Vermont president next month.
Because the company has invested heavily in its next generation network, Fastiggi said there is ample opportunity to add residential and business broadband customers.
For business customers, she said FairPoint offers broadband products, that are scalable to meet a company’s growing demand to send and receive data.
And as a local exchange carrier, Fastiggi said, the company is the “provider of last resort.”
“We are the company that provides service in those rural areas where no other companies want to go, voice service as well as broadband service, and we take that obligation very seriously” she said.
She said changes at the federal level will reduce the financial support for rural phone service.
Fastiggi said the company will ask the Legislature to create a high-cost fund to serve rural areas as part of the existing state universal service charge.
The universal service charge, assessed to all phone customers, pays for lifeline service for low-income residents, 911 emergency service calls and relay service for the hearing impaired.
“Most rural states already have high-cost funds and the Legislature seems to be very supportive of that concept,” Fastiggi said.
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