Maine regulators approve revised Verizon-FairPoint deal
The Maine Public Utilities Commission has settled with FairPoint Communications on its attempt to purchase Verizon's Northern New England telephone lines. The regulators had previously deemed the deal to be "partial, contested" due to concerns that the financially unstable and out-of-state FairPoint would be unable to maintain current levels of service quality or expand high speed Internet to rural and other underserved parts of the state.
The new agreement, reached last night after hours of deliberations, requires FairPoint to address its debt problems by 2011 or face a mandatory $150 million debt reduction by the following year. This deal was approved after Verizon rejected another proposal that would have required the telecom giant to help reduce FairPoint's debt by reducing the fees it collects from FairPoint.
Despite this deal's attempts to resolve FairPoint's financial troubles, the end result would likely be counter-productive for Maine consumers. That's because the debt reduction requirements would put significant pressure on FairPoint to cut costs in order to meet its debt ratio targets in 2011. To do so, FairPoint could cut capital expenditures, workforce levels, high speed Internet build-out, and service quality -- moves that would hurt Maine consumers and the state's economy.
The settlement approved by Maine's Public Utilities Commission still fails to fully address the range of problems plaguing the Verizon-FairPoint deal, from FairPoint's propensity to pay big shareholder dividends instead of making capital investment to its inability to guarantee steady workforce levels and retirement benefits for its workers.
The fate of the deal now rests with regulatory boards in New Hampshire and Vermont, which have both already expressed their doubts about the deal. For the sake of consumers and workers in the region, New Hampshire and Vermont must not follow Maine's lead and should continue their opposition to this bad deal for Northern New England.
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