Fairpoint warning

Over the long term, AT&T and Verizon will slowly recede from rural areas, giving rise to rural consolidators — or so the story goes.

But watching Fairpoint Communications continue to struggle with the task of untangling the assets it bought from Verizon last year, it's hard to imagine much Bell asset divestiture happening any time soon.

Fairpoint now says it's turning a corner — that 98% of its billing procedures have been problem-free since March 9. But it is still targeting June for a return to normalcy, and some say that may be too optimistic. 

Even before the back-office integration issues, Fairpoint and Verizon alike had to crawl through such an expanse of regulatory red tape from state agencies approving the deal that Verizon execs later said they'd need to at least take a breather before repeating the exercise.

And even before the New England divestiture, Verizon's Hawaiian assets became such a disaster for the private-equity investors who acquired them that the tale is now told around campfires to scare small children.

Add to all this the fact that it's difficult to imagine this sort of Bell asset divestiture absent a fairly complicated deal structure — like the Reverse Morris Trust — and the fact that much of the aging assets Bells might like to unload could be unappealing to buyers for the same reasons — Consolidated Communications CEO Bob Currey told me last year that although he was open to buying Bell assets, "historically some of the stuff they wanted to get rid of, you wouldn't want or you wouldn't pay for because of the requirements to get those lines up to speed" — and it makes the Bells' retreat from rural America seem more distant than ever.

E-mail me at ed.gubbins@penton.com.

UPDATE (4/30/09): During their earnings call this week, Verizon executives made overtures about further rationalizing their non-FiOS footprint. When asked about this today on his own earnings call, Iowa Telecom CEO Alan Wells said he'll consider opportunities to buy Bell assets but added, "We'd have to look long and hard at it, in light of some of the recent transactions."