Interesting - as you said this was predicted at the time of the sale.
They also have competition from competitive local exchange carriers (CLEC). I just discovered G4 Communication has very attractive residential rates for POTS and ADSL. They took over Vitts bankruptcy assets in 2000 and have been in the commercial space for years. They also seem to being buying up some of the local dial up companies, but hard to imagine that is still a viable business. They are not just a reseller but colocate equipment in the FairPoint COs so they are taking advantage of UNE to serve the last mile. I don't know when they began offering aggressive residential pricing - hope they are prepared to support non-technical users.
I'm thinking seriously about switching our POTS voice and ADSL to G4: more features, higher speed (probably) and lower price to boot.
Plus they are a local company and I try, within reason, to support local companies.