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Regulators Say Fairpoint Fibbing About Broadband Coverage
As Regulators Grow a Spine Several Years Too Late
by Karl Bode 02:10PM Friday Dec 02 2011
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.

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Maine merger conditions required that Fairpoint make DSL available to 87% of phone customers in the state, something Fairpoint says they've achieved. Except regulators in the state say Fairpoint's definition of providing broadband isn't quite in line with their own: namely that, oh, a person should actually be able to get it:
quote:
...the technical definition that Fairpoint used to define a customer with access to broadband, included customers who would, in reality, be unable to access broadband. That's because even though they have the physical connection, they live too far from the central office to get proper broadband. "So even though they're technically connected to broadband equipment they can't get the service. So we argued it makes no sense to count customers like that because they don't actually get the service," Jortner said.
In other words, Fairpoint's getting the CO ready and then insisting that their job is done. Fairpoint's already in troubled financial water post-bankruptcy, something that's largely their own fault for signing off on a deal with Verizon that saddled the small telco with unmanageable debt, antiquated networks, and insufficient support infrastructure. Fairpoint creditors are currently suing Verizon claiming the company was effectively conned by Verizon lawyers. Meanwhile, in New Hampshire Fairpoint is having efforts blocked by regulators who won't let the company charge a new 99 cent fee to offset having to now pay property tax:
quote:
he company told the state Public Utilities Commission earlier this month that the fee, a “municipal property tax surcharge,” would appear on phone bills starting Thursday. All residential and business customers would pay an extra 99 cents a month per line for up to 25 lines on each account, regardless of whether their town or city actually levies property taxes on telephone poles.
But the PUC issued an order Monday blocking the fee from going into effect. In its order, the commission said the new fee represents a general rate increase rather than a tariff for services, and so it warrants an investigation by the PUC.
It's rather interesting that New England regulators are getting aggressive after the fact, when such due diligence and a willingness to actually regulate could have proven useful before the deal -- when everyone was warning them about the deal's pitfalls. This sudden courage is due in part to the fact that Fairpoint doesn't have the same legal and political power as Verizon, who very likely would have gotten the PUC to back off their fee blockade -- or would have paid lawmakers to ensure they didn't have to pay property taxes to begin with.

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tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

only way out..

upgrade the network to fiber.. starting in the highest customer dense locations.... this starts with getting more bundles of fiber from tier-1 to the central offices. if you can't transition the telecom to a service consumers might actually pay more money per month for service, they might as well pack it in & go out of business. go big or close up shop.

JasonOD

@comcast.net

Re: only way out..

That's too expensive unless it starts and ends with their most customer dense locations, everything else is unfeasible.

At this stage in the game, Fairpoint needs a reverse Morris-Trust type strategy of their own to offload their never to be profitable areas onto a subsidiary or local co-ops (tele-coops) if any exist.

TelcoGuy

@telus.net

Re: only way out..

People will choose cable triple-play until FairPoint upgrades to FTTH. Future is dire for rural telcos.
Skippy25

join:2000-09-13
Hazelwood, MO
In all your wisdom in this you make stupid comments.

So Fairpoint, or someone at one point, was cost justified to roll out copper to these locations and support that for many many years and now all of a sudden it is not cost effective to rollout the next technology that is cheaper to support, gives them the ability to actually compete and will last a whole lot longer?

That is just short term greed that equates to long term stupidity.

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: only way out..

said by Skippy25:

That is just short term greed that equates to long term stupidity.

No, it is short term "no one will Lend them money" to upgrade infrastructure that can't repay the investment for a decade or two. Will you take YOUR hard earned savings and lend it to them knowing you may not get any back for 10 yrs or more? I thought not. But I am sure you won't mind if taxpayers do it.
--
The nine most terrifying words in the English language are, I'm from the government and I'm here to help.
»www.politico.com/rss/2012-election-blog.xml


The Limit
Premium
join:2007-09-25
Greensboro, NC
kudos:2
Reviews:
·Windstream

Re: only way out..

Actually, this mindset is the reason why Wall Street is the way it is.

No short-term gain? No lending out the money. If I had to wait 10 years or more for a ROI, that would actually be ok with me. What wouldn't be ok with me is if I wasn't guaranteed a ROI 10-20 years from now.

Also, as long as it wouldn't put me into financial trouble, I would be ok with it. I mean, why not invest just because the short-term profit isn't there? Sometimes you have to look at the big picture, and in this case the big picture for this telecom is trying to make good on the promises they've already made, which they aren't doing.

The first comment is a little far fetched, I think this should be the end result after the bottom line has been strengthened a bit, in other words focus on the elimination of debt and gear the business with the customer in mind. As of late, this hasn't been happening.

This is why I hate the phrase "whatever the market will bear." It shouldn't be about what the market "will bear", but about whether the customer sees value in the purchase. Instead of setting a smoke screen to produce the illusion of value, actually produce value. Make it worthwhile.
--
Do or do not, there is no try! - Yoda
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
said by FFH5:

said by Skippy25:

That is just short term greed that equates to long term stupidity.

No, it is short term "no one will Lend them money" to upgrade infrastructure that can't repay the investment for a decade or two. Will you take YOUR hard earned savings and lend it to them knowing you may not get any back for 10 yrs or more? I thought not. But I am sure you won't mind if taxpayers do it.

Soo... then explain to me again why people are buying up US treasuries at negative real interest rates?

This indicates the government should build its own network.
Skippy25

join:2000-09-13
Hazelwood, MO
Really? How did they do it in the beginning? Did they just crap out the money they invested?

Sure, most stock jockeys today wont want anyone to lend someone money that they wont see a return on an hour later, but smart and unselfish people (people like me) will gladly contribute for long term benefit for myself, my children, my grand children and my great grand children.

cwa

@optonline.net
A lot of people likes to shit on unions, but it was CWA that told the regulators that this purchase to Fairpoint was a very very bad deal for all the consumers. They told regulators that the company wouldn't be able to manage the debt. Blame the state regulators of Maine,Vermont and New Hampshire's they fucked there own people, because they believed the bullshit that Verizon and Fairpoint were telling them.

Dolgan
Premium
join:2005-10-01
Sun Prairie, WI

Re: only way out..

True, but now CWA supports the AT&T lie that the Merger with T-mobile will create jobs. What a sleazy way to gain new membership. CWA needs/has needed new leadership for quite a while now to take the Union in a positive direction.
overand

join:2011-12-06
There's a big population density issue here.

Brooklyn, NY has 2.5 million people, in 71 square miles.

All of Maine has 1.3 million people - spread out through 35,000 square miles.

That's a *lot* of fiber to go to the end users - a lot of copper to replace. And just the labor costs of threading new cable on telephone poles is quite expensive - and Maine doesn't have the most thriving economy.

Would I prefer fiber-to-the-premesis? For sure. Is it "economical?" Not really at this point. I'm not holding my breath.

S_engineer
Premium
join:2007-05-16
Chicago, IL

Idiots...

I feel for the poor souls that have to rely on this "service". I certainly hope all of the morons that approved this aquisition have been terminated!
--
"Thanks for the dance... and cut yourself a slice'a throat! "
- Curly (HOI POLLOI, 1935)

woody7
Premium
join:2000-10-13
Torrance, CA

Re: Idiots...

yea, where are all the fanboys that said this is great and the govt should step aside. I rest my case............................
--
BlooMe

AnonMe

@comcastbusiness.net

Grow a spine several years too late...

Can't speak for the other states, but NH PUC is useless. State employees who could care less about the job they do (or if it gets done effectively), as long as they get their heavy state pension when they retire.

NH PUC needs to actually get a clue and understand that they are preventing the competition, and costing consumers lots of money in the state. They make regulations difficult for any potential telecom/Internet competitor in the state.
chgo_man99

join:2010-01-01
San Jose, CA

has anyone's 3g service suffered once lte popped out in your

city?

This seems to happen in Chicago area.

Looks like at&t decommissions something every-time they install something new :/
BiggA

join:2005-11-23
EARTH

Shady

They have rolled out a lot more DSL up there, but that metric is pretty darn shady. I wonder what the economic feasibility of the 87% number is when you look at locations where RDSLAMs would be needed and such. It really is pretty shameful overall that we're not at 100% in this country. We still treat rural areas like third-world countries in many cases.

tim_k
Buttons, Bows, Beamer, Shadow, Kasey
Premium,VIP
join:2002-02-02
Stewartstown, PA
kudos:40

they all do it

I live in Verizon territory and it's the same thing. I believe they consider everyone served by a CO as being able to get broadband as long as that CO has the equipment. It makes no difference if the customer is too far away. A look at a coverage map shows everyone near me as being able to get DSL, yet no one on my street or anywhere further can get it.
--
RIP my babies Buttons 1/15/94-2/9/07, Beamer 7/24/08, & Bows 12/17/94-10/11/09

blohner

join:2002-06-26
Cortlandt Manor, NY
Reviews:
·ooma
·Google Voice
·Optimum Online

No sympathy

I have no sympathy for Fairpoint in this case. They are a business. They where not handcuffed into the deal with Verizon. They thought they can make profit with it... I guess the fuzzy math didn't work... I also see no ground for the investors to sue Verizon. Sue the Fairpoint CEO that signed the deal if you must - and give parise for Verizon to fantastic marketing in a deal...
--
I am addicted to speed --- Boost + speed that is ---

cork1958
Cork
Premium
join:2000-02-26

Re: No sympathy

said by blohner:

I have no sympathy for Fairpoint in this case. They are a business. They where not handcuffed into the deal with Verizon. They thought they can make profit with it... I guess the fuzzy math didn't work... I also see no ground for the investors to sue Verizon. Sue the Fairpoint CEO that signed the deal if you must - and give parise for Verizon to fantastic marketing in a deal...

Amen and +1
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/
old_wiz_60

join:2005-06-03
Bedford, MA

The regulators...

were too busy counting the bribes they received from Fairpoint to approve the sale, so they didn't pay attention to what would happen.
jadziedzic
Premium
join:2005-12-12
Nashua, NH

Re: The regulators...

said by old_wiz_60:

were too busy counting the bribes they received from Fairpoint to approve the sale, so they didn't pay attention to what would happen.

In fairness, there actually WAS one NH PUC member who voted to oppose the sale - the only member of the PUC who had any actual industry experience.