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Vermont Fairpoint Regulators Show A Little Backbone
As Fairpoint attempts to wiggle out of Verizon deal conditions...
by Karl Bode Tuesday 29-Jun-2010 tags: dsl · legal · competition · business · bandwidth · Op/Ed · Politics · consumers
We've well discussed how the Fairpoint disaster is as much the fault of placating 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 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.

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. Of course while looking to get out of merger conditions, Fairpoint's been busily lobbying to crush private/public efforts to improve broadband connectivity in New England. The Vermont Public Service Board appears poised to finally stand up to Fairpoint, refusing its reorganization plan, effectively saying they don't believe the carrier's being honest about projections:

In a 96-page order, the Vermont board said that "based upon the record before us, we cannot find that FairPoint has demonstrated the financial capability to meet its obligations under Vermont law and its (state license) as a telecommunications carrier." The board said the company's projections about its near-term future performance appeared to be too rosy, given recent history: "FairPoint has provided virtually no explanation as to why its projections are reasonable."

At least one Vermont Senator seems to have noticed that regulators are showing backbone a bit after the fact:

"It's interesting that the Public Service Board is now being tough on FairPoint. It should have been tough on FairPoint when it first proposed purchasing the assets from Verizon," Vermont state Sen. Vincent Illuzzi, a consistent critic from the outset of the telecom deal, said after the board's order Monday. "The proposed purchase and sale was entered into when it seemed like most in the telecommunications industry knew that FairPoint was paying way too much for a slowly dying land line business with lots of antiquated equipment and systems."

Of course with a few handshakes Fairpoint lobbyists can probably still get all of their original merger promises obliterated and their reorganization deal approved. That won't necessarily help the telco, who not only can't afford to really upgrade and expand Verizon's unwanted DSL networks -- but likely has to deal with Verizon coming back in down the road and leeching away Fairpoint customers using LTE technology. As we've said all along -- the only winner this deal ever had was Verizon.

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spewak
R.I.P Dadkins
Premium
join:2001-08-07
Elk Grove, CA
kudos:1

Et tu Frontier....

Just change the name of the Regulators' states.
--
The weekend is here, grab a can of beer!

cableties
Premium
join:2005-01-27

And Cap Gemini

don't forget them. They wrote the inferior software for the call centers, billing and support. And they are still making $$$$ from Failpoint...

But I don't know what I am talking about...
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Splat

Van
Premium
join:2009-07-08
New Orleans, LA

I apologize to Fairpoint for having to deal with

this shakedown

Romney2012
Defeat Obama 2012-Chg we can believe in
Premium
join:2002-03-03
USA
kudos:4

Ultimately court will overrule the state

In the end the bankruptcy court will have the final say and can ignore the states wishes and refusal to accept the reorg plan.
--
Are you happy with your rep in Washington, DC?
guppy_fish
Premium
join:2003-12-09
Lakeland, FL
kudos:1

Re: Ultimately court will overrule the state

What he said ^^^^^

AMDUSER
Premium
join:2003-05-28
Earth
kudos:1

Re: Ultimately court will overrule the state

The problem with that, is if Fairpoint doesn't go along with the state, is the Vermont can revoke the companies license to do business there. [At that point the phone system could end up for sale.]

Romney2012
Defeat Obama 2012-Chg we can believe in
Premium
join:2002-03-03
USA
kudos:4

Re: Ultimately court will overrule the state

said by AMDUSER:

The problem with that, is if Fairpoint doesn't go along with the state, is the Vermont can revoke the companies license to do business there. [At that point the phone system could end up for sale.]
To who?
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Are you happy with your rep in Washington, DC?

AMDUSER
Premium
join:2003-05-28
Earth
kudos:1

Re: Ultimately court will overrule the state

I'm not sure who would want to buy those rural phone systems..
rahvin112

join:2002-05-24
Sandy, UT
Well they won't be selling it for what they paid for it. They terminate their license to do business in the state and the value of the lines is whatever the market will pay. Someone will buy it, even if the price gets down to $1. Fairpoint will lose a LOT of money on the deal and the fair market price for the lines will validate that they paid to much for the system. It will cause a lot of pain in Vermont and may even mean the land line system is turned off for a few days but if they are willing to stomach the pain of the sale it the sale could really pay dividends to the state.
Dolgan
Premium
join:2005-10-01
Sun Prairie, WI
The court can handle the financial side, but they can not force the state to ease its oversight and change its regulatory policies.
rahvin112

join:2002-05-24
Sandy, UT

Re: Ultimately court will overrule the state

Or to phrase it slightly differently, BK court can only affect the company, the BK court can't re-rewrite the policies or laws of the state of Vermont in favor of a Bankrupt company.
old_wiz_60

join:2005-06-03
Bedford, MA

is Fairpoint..

slipping money under the table to the regulators?

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