PSB Head Explains Why FairPoint

Bid Rejected

The Vermont Public Service Board last week released its long-awaited order on the request by FairPoint Communication to acquire all of Verizon’s landline telephone system in Vermont. The decision rejected FairPoint’s overture at this time, because it thought the acquisition might strain the resources of FairPoint, a much smaller company than Verizon. However, it left the door open for the acquisition if the terms of the sale can be substantially changed.

FairPoint has applied to purchase all of Verizon’s land lines in New Hampshire and Maine, as well. Permission from the regulators in all three states will be required for the sale to go through.

Below are the comments of the chairman of the Public Service Board, explaining the reasons for the Board’s decision.

By David J. O'Brien

We begin with our sincere thanks to the members of the Public Service Board and its staff for their thoughtful and innovative work in this case. As you know, the proposed transaction involved three states, presenting numerous challenges. The Board did an excellent job with one of the most complicated cases we have had to deal with in recent years. It is no exaggeration that this case goes to the very heart of Vermont’s telecommunications future, and the Board has rendered a decision that acknowledges the challenges we face, while providing guidance for future developments.

I would also like to recognize the diligent efforts of FairPoint Communications for its persistence in crafting a proposal for the purchase of Verizon’s system, and its willingness to engage the Department during this case in a highly transparent manner. We echo the Board’s praise for FairPoint’s sincerity and responsiveness. 

It is also important to recognize the significant challenges that Verizon’s ownership has presented to Vermont consumers. In their order, the Board has highlighted Verizon’s relatively low availability of broadband service, as well as its consistent failure to meet Service Quality Standards set by the Board.

In particular, Verizon’s inability to meet the obligation to repair residential services within 24 hours concerned the Board, and we amplify that concern. It is abundantly clear that Verizon’s deferred maintenance of its outside plant and reduction in workforce appear to have contributed to the diminishing quality of service to Vermonters. 

We remain open to the potential for a modified proposal that would better meet the needs of Vermont consumers, as outlined in the Board’s order. We welcome the opportunity to work with a telecommunications provider that has interest and expertise in serving rural customers.

I would like to highlight the key points of the Board’s decision:

• The Board concluded that the risks of the transaction as proposed are not acceptable for consumers.

• The Board invited FairPoint and Verizon to come back and address Vermonters’ legitimate concerns.

• The Board recognized, as did the Department, the need for strong financial safeguards.

• The Board affirmed the need for better performance on service quality from FairPoint than Vermont has received from Verizon, and stated its willingness to adopt many of the service quality conditions recommended by the Department.

• In a related order released today, the Board also made clear that it will investigate significant problems Verizon has allowed to develop with its facilities, even if this transaction is not ultimately approved.

• The Board endorsed the Department’s broadband proposal, which will move Vermont forward toward meeting its "e-state" goals. We were pleased to see the order recognized the need for third party monitoring of the massive systems conversion that any transaction will entail.

While the decision does not approve such a sale today, we remain hopeful that FairPoint and Verizon will return with a proposal that satisfies the needs of Vermonters. I would like to close by saying "thank you" to the many people who have worked so hard and capably on this case.