News tagged: Fairpoint Communications
Fairpoint Communications employees in New England have been striking since the middle of October
, complaining that the company was looking for around $700 million in reduced health care coverage and frozen pensions. With striking employees losing their health coverage this week and no end to the strike in sight, Fairpoint has published an "open letter to customers and communities
blasting union workers -- and their high pay -- as bygones of a monopoly era:
To serve 21st century customers, however, we want to reduce our monopoly-era telephone company costs and have more flexibility to respond to customer needs. We want to be more efficient and nimble.
To understand the scope of our challenge, it is important to note that the old Union contracts are holdovers from the bygone days of Ma Bell monopolies. Today, the average annual wage and benefit costs for FairPoint's union represented employees in Maine, New Hampshire and Vermont are approximately $115,000 – not including the future costs of pensions and other post-retirement benefits. The average individual union employee's paycheck totaled $82,500 in 2013 – nearly twice the median personal income in the region.
Executive compensation is omitted from Fairpoint's analysis. If you remember when Fairpoint acquired Verizon's Maine, New Hampshire and Vermont assets from Verizon for $2.7 billion in 2007
, there were promises a plenty in regards to job creation and growth. Of course Fairpoint took on Verizon's debt and the company's flagging landline business knowing full well there might be a price to pay, and it now appears that it's primarily the workers who get to pay it.
The FCC today voted unanimously to begin conducting voluntary trials to ensure a relatively smooth and reasonable transition away from the PSTN and copper networks. The push for such trials began in earnest after Verizon refused to repair the DSL and copper POTS lines of hurricane Sandy victims, instead forcing them to instead use an inferior wireless-based product
known as VoiceLink, which doesn't work with alarm systems, has numerous glitches, and doesn't provide data connectivity.
We've noted several times how Verizon's sale of their DSL and landline assets to Fairpoint and Frontier was strategically brilliant (unless you're one of the impacted customers). Not only did Verizon sell both companies millions of neglected customers and lines they didn't want to maintain or upgrade, the deals offloaded huge amounts of Verizon debt onto these companies (driving Fairpoint into bankruptcy
) while netting Verizon a huge tax write off.
Both Fairpoint and Time Warner Cable say they're expanding broadband services in the state, which has struggled with connectivity even before Verizon decided to sell their infrastructure in the state. According to a Fairpoint press statement
, the company says they've spent around $450,000 to upgrade DSLAMS and other network gear in eleven central offices. The upgrades should allow users in those regions -- depending on their loop length -- to obtain speeds up to 14 Mbps downstream. Not to be outdone, Time Warner Cable tells the Bangor Daily News
that they're spending $5 million this year to add 150 miles to its 12,000-mile network in Maine, connecting roughly 3,000 more homes and businesses.
Anybody who warns of an unavoidable capacity crisis on wireline or wireless networks is lying in order to sell you something. That may be a blunt assessment to some, but it's the only conclusion you can draw as we see time and time again that claims about a looming network apocalypse (remember the Exaflood
?) violently overestimate future traffic loads and underestimate the ingenuity of modern network engineers.
After a few early glitches (like a company-wide implosion, broken support systems, bankruptcy and a total inability to provide people with basic service for a time), Fairpoint's acquisition of Verizon's New England DSL and landline assets had been going a little smoother, with the company saying they'd met broadband expansion conditions
in Maine, New Hampshire and Vermont. Maine's Office of the Public Advocate and two members of Maine's Public Utility Commission aren't quite sold on Fairpoint's math, however.
Last week we noted that Fairpoint creditors are suing Verizon for $2 billion
, claiming that the deal that unloaded Verizon networks and debt in New Hampshire, Vermont and Maine was essentially a massive con orchestrated by Verizon lawyers. As part of that deal, Fairpoint acquired some FiOS customers, the majority scattered around 24 communities in southern New Hampshire (FiOS was rebranded "FAST").
After the region was slammed by a surprise October Nor'easter and power outages last week, Fairpoint is wtill having a hard time getting those customers back online -- well after power to the region has been restored. According to the Nashua Telegraph
, the cause is a software bug at the CO that serves the users, compounded by Fairpoint's inability to give customers accurate answers or stick to appointment times:
FairPoint’s fiber-optic broadband service is struggling to recover from last week’s power outage due in large part to software issues at a central office in Nashua, with customers facing dead connections for the FAST service in a dozen communities, including Nashua, Hudson, Merrimack, Brookline and Pelham...Contacting FairPoint’s repair center has been a point of tension, however, for the dozen or so readers who contacted The Telegraph on Monday to discuss days without Internet service even after power returned.
The week long fiber to the home outages -- and subsequent inability to handle customer complaints -- comes as Fairpoint just finished settling with Vermont regulators
over outages and inability to handle customer complaints.
In 2008 Verizon offloaded their New Hampshire, Maine and Vermont DSL and landline networks to Fairpoint Communications for $2.7 billion. The deal was a crafty and complicated one for Verizon, company lawyers using a Reverse Morris Trust
to not only offload networks they had no interest in upgrading -- but to saddle Fairpoint with $1.7 billion in Verizon debt while netting a nifty $600 million tax write off.
To get their $2.7 billion acquisition of Verizon's New England networks approved by regulators, in 2007 Fairpoint promised they'd create 675 jobs
, but immediately following the deal Fairpoint collapsed into bankruptcy amidst a wave of significant service disruption. While the company has righted the ship somewhat and has been meeting broadband build out conditions
, Fairpoint remains financially strained by the heavy debt-burden of the deal -- and the constant erosion of traditional landline customers. Roughly four years after making job creation promises, Fairpoint has announced
that the company will be slashing their job force by around 400 workers to save $34 million. "We are making this decision after careful evaluation to ensure that FairPoint is staffed appropriately to serve our customers well, while prudently managing expenses," says company CEO Paul Sunu.
Fairpoint Communications acquired Verizon's unwanted New England DSL network in 2008, then subsequently imploded
under the not so watchful eye of New England regulators. Fairpoint's trying to make a comeback, recently exiting from bankruptcy
and so far successfully adhering to merger conditions that require they deliver DSL to 87% of their phone customers in the state.
It has been interesting to watch Vermont's broadband fortunes, given the largely rural state is a ROI nightmare for large ISP bean counters. Fairpoint Communications acquired Verizon's unwanted New England DSL network, then subsequently imploded
under the not so watchful eye of Vermont regulators. Fairpoint's trying to make a comeback, recently exiting from bankruptcy
and trying to adhere to merger conditions that require they deliver DSL to 87% of their phone customers in the state. Several readers have sent in this interesting report
by Vermont NBC affiliate WCIE noting that Fairpoint's using horses to help them deploy roughly 1,000 miles of fiber line across Vermont by June.
Despite both Fairpoint Communications and New England regulators being unsure
at the end of 2010 if they'd meet Verizon deal broadband deployment conditions, Fairpoint accelerated their effort and managed to meet their goal of delivering DSL to 83% of their customers. As a condition with their deal with Verizon (one Verizon's tried to wiggle out of several times now), Fairpoint promised to deliver DSL to 83% by the end of 2010, 85% by July of 2012, and 87 percent of its New England customers in five years.
We've well discussed
how the Fairpoint disaster is as much the fault of incompetent regulators as it is Fairpoint. Regulators in Vermont, New Hampshire and Maine completely ignored concerns that Verizon's sale of unwanted DSL and landline customers across New England to Fairpoint wasn't a good idea -- then when Fairpoint collapsed (at times completely unable to offer even 911 service) regulators allowed the company to essentially craft its own improvement timeline in private.
A significant number of Fairpoint customers are getting refunds for some fairly horrific stretches of service last year, as the company struggled to integrate Verizon's New England DSL and landline networks (and more importantly, $2.3 billion in Verizon debt from the deal). At points, Fairpoint couldn't even answer the phone or provide working 911 service -- much less provide a good voice or data connection. story continues..
Fairpoint Communications utterly imploded after regulators rubber stamped their acquisition of Verizon's unwanted New England (Maine, Vermont and New Hampshire) DSL and landline networks, though the company insists they should be able to exit bankruptcy by the end of the summer. With everyone watching closely to see if the company can overcome its own dysfunction and provide things like reliable 911 service, Fairpoint has decided that now's a good time to ask for government favors. After missing their broadband expansion commitments
completely, Fairpoint recently stated they wanted to weaken previous broadband expansion promises
. Fairpoint's also now asking regulators to weaken their oversight of the company
once they emerge from bankruptcy.
Three of Verizon's biggest divestitures in the last few years haven't turned out too well -- at least for companies not named Verizon. Both Fairpoint Communications and Hawaiian Telcom went bankrupt, after the debt incurred by their deals with Verizon resulted in the companies simply imploding. story continues..
After acquiring Verizon's Maine, New Hampshire and Vermont DSL and landline networks for $2.3 billion, Fairpoint Communications subsequently imploded under the debt load, created a multi-state crisis by bungling 911 service for months, missed all agreed to broadband expansion promises
, could barely provide dial tone or broadband service to thousands of customers, couldn't answer the phone when they called, and then stumbled into bankruptcy
Despite bankruptcy and their laundry list of problems, Fairpoint still found the time and funds to lobby Maine lawmakers
to try and derail a public-private partnership between the University of Maine and Biddleford Internet Corporation
(also known as GWI) aimed at trying to shore up the significant rural broadband coverage gaps across Maine.
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