Public Advocate offers conditions for Fairpoint acquisition

    At the conclusion of formal hearings before the Maine Public Utilities Commission on the proposed Fairpoint acquisition of Verizon’s northern New England landline business, the Public Advocate has issued a list of 23 proposed conditions on the deal — all of which are designed to protect ratepayers and the public interest against otherwise likely adverse conditions resulting from this historic telephone utility acquisition.
    These conditions were developed based on examination of thousands of pages of documents, as well as testimonies, by the Public Advocate attorneys and its four expert witnesses. During the just-concluded public hearings, Public Advocate attorneys cross-examined Verizon and Fairpoint witnesses, including Fairpoint’s top management, and introduced evidence that paints a clear picture of the implications of the proposal from the viewpoint of the telephone customers.
    Under Maine law, the acquisition may only be approved if it is proved to be consistent with the interests of ratepayers and investors.
    “The conditions that we recommended are essential if this proposal is to serve the interests of the Maine people,” said Public Advocate Dick Davies.
    The Public Advocate will recommend that the Commission not approve this acquisition unless it adopts all 23 specific conditions which fall into seven general categories. Those include Fairpoint’s financial viability, Fairpoint’s obligation to provide high-quality services, prices for telephone and broadband services, Fairpoint’s technical ability to successfully create and implement new operational systems, Fairpoint’s ability and commitment to deliver DSL broadband service throughout Maine, their continued delivery of all necessary wholesale  network services to competitive carriers and Fairpoint’s obligations to maximize federal support to keep telephone rates as low as possible.
    A key element of the recommendations also requires a restructuring of the agreement between Fairpoint and Verizon so that Verizon, in effect, is paid a lower price. That change would allow Fairpoint to operate with less debt.
    “Because, under Maine law, Verizon does not have the right to abandon service without the Commission’s approval, the Public Advocate believes it is appropriate for the commission to require Verizon to lower its price to ensure Fairpoint’s long-term financial viability. Without a significant reduction in price, this proposal will not work for Maine’s residential and small business customers,” Davies emphasized.
    If Fairpoint and Verizon are unable or unwilling to perform on all these conditions, the Public Advocate will recommend that the transaction be rejected by the PUC.
    Fairpoint currently serves about 300,000 lines in 18 states and seeks to acquire another 1.6 million lines now served by Verizon in Maine, New Hampshire and Vermont.