FairPoint awaits Maine decision after Vermont rejects Verizon sale

FairPoint Communications continues to battle resistance in its bid to acquire 1.6 million access lines in the New England area from Verizon Communications. Regulators from Maine’s Public Utility Commission delayed a scheduled hearing today until some time next year.

 

This comes five days after regulators in Vermont outright rejected the sale of lines in its state. On December 21^st, Vermont regulators said the $2.7 billion transaction would load FairPoint with too much debt. Regulators fear the debt would cause the company to slow investment in broadband for its residents. Vermont regulators could reverse their decision if certain financial benchmarks are met.

 

FairPoint offers service in 18 states. The purchase of Verizon’s 1.6 million lines in Vermont, New Hampshire and Connecticut would more than triple the size of the company.

 

Analysts and the companies still expect the deal to close eventually, but perhaps not by its anticipated date at the end of January.  FairPoint’s stock took a 7.6% hit last week on the news.

 

The Communications Workers of America (CWA) applauded the decision by Vermont’s PUC, saying,  the Board "got it exactly right" in concluding that the sale to FairPoint is financially risky for Vermont consumers and "has the potential to lead to a reduction in service quality, in less investment in the Vermont infrastructure and to slower deployment of broadband services than is acceptable."

 

The Union claims in comparing the promised bandwidth rates of FairPoint to those being promised in places such as Singapore, that residents and businesses will be put at a competitive disadvantage. The CWA said Singapore recently announced it will provide 1 Gbps Internet service to every home, compared to FairPoint’s 1.5 Mbps speed. The CWA did not mention a timeline for Singapore’s deployment.

 

CWA President Larry Cohen said, “In rejecting this deal, the Board recognized the critical importance of keeping Vermont residents on the information highway.”

 

CWA, together with the AFL-CIO and the International Brotherhood of Electrical Workers, are urging governors and lawmakers to consider an alternative to create a stronger communications network for northern New England residents.  They have proposed establishing an independent telephone company that would create a stronger, more viable network that would not be burdened by $2.3 billion in debt and would be operated by local management.