State Wants Commitment From FairPoint Purchaser To Upgrade System

May 26, 2017

While their counterparts in New Hampshire and Maine have approved the sale of FairPoint Communications, the Vermont Public Service Board is still reviewing it. 

Among the requirements New Hampshire and Maine regulators placed on the merger with Illinois-based Consolidated Communications is a stipulation that the company re-invest a set amount of its revenue in their states. Vermont is asking for something similar.

“We’ve recommended approval but with certain conditions," says Clay Purvis, director of the telecommunications and connectivity division at the Department of Public Service. "One condition being that the new company invest 14 percent of all of its Vermont-based revenue back into the network."

Purvis says a 14 percent re-investment would represent an increase over the amount FairPoint has been spending to make improvements in Vermont.

In Maine, the re-invested money will be used primarily to upgrade internet service. Purvis says his department’s concern is service quality.

“Our hope is that they’ll make network upgrades and do basic maintenance to the network that will keep telephone service where it should be,” he says.

Vermont officials are also seeking assurances that Consolidated, which currently operates in 11 states, can avoid the kind of chaotic transition that occurred when FairPoint took over the Verizon system in 2008.   

Unions representing FairPoint workers in Vermont told regulators that Consolidated’s cost-cutting plans could hurt service. And they raised questions about whether the company can financially handle the purchase.

FairPoint declared bankruptcy a year after it bought the system from Verizon.

Mike Spillane, business manager of Local 2326 of the International Brotherhood of Electrical Workers in Vermont, says the union is not opposing the sale to Consolidated, as it did when FairPoint purchased the system from Verizon.

But Spillane says there are still too many unanswered questions about the company’s finances and its plans.

“We don’t have enough facts to say whether Consolidated is going to be bad or good,” says Spillane. “I don’t believe that the board has enough information to approve the sale.”

Purvis says his department has had experts review Consolidated Communications’ financial ability to purchase FairPoint.

“We think the merged company will be financially much more healthy going forward. It’s not without risk, but we believe, on balance, that this will be an improvement over FairPoint,” he says.