State Wants To Eliminate Service Quality Requirements For Most FairPoint Customers

Aug 21, 2015

Under an agreement announced this week, FairPoint Communications moves a step closer to winning changes to regulations that got the company in trouble for long repair delays in Vermont.

For nearly nine months, FairPoint has been before the Public Service Board over an excessive number of delays in residential phone repairs, and a network outage last November that affected E-911 service.

The board’s investigation was scheduled to continue next month, but this week FairPoint and the Department of Public Service reached a settlement, which they’re asking the board to approve.

In a Memorandum of Understanding (MOU), the department accepts that improvements made this year to FairPoint’s network have addressed the November network failure. It also says changes to the company’s operations and protocols have helped FairPoint reduce the number of residential phone repair delays.

Jim Porter, the director of the state’s Division of Telecom and Connectivity, says while the numbers are down from previous highs, FairPoint is still not meeting the metric for repair delays.

However, in this week’s settlement, the Department of Public Service agreed to join FairPoint to ask the Public Service Board to eliminate service quality requirements for 80 to 90 percent of of the company's customers.

The reason, says Porter, is those people have alternatives like cable and wireless companies and can drop FairPoint if they’re unhappy.

The department is most concerned about the 10 to 20 percent of the company’s "captive" customers who have no telephone provider but FairPoint.

In this week's settlement, the Department of Public Service agrees to join FairPoint to ask the Public Service Board to eliminate service quality requirements for 80 to 90 percent of of the company's customers.

“That’s certainly what our focus is. Quite frankly, if there’s a FairPoint customer in Burlington or Montpelier, they can very easily change to another landline provider if they would like to,” Porter says.

There’s also the question of what the service quality benchmarks will be in the future, if they apply only to the company’s captive customers.

“I certainly don’t think the department will support anything less rigorous than we have today,” says Porter.

The MOU also says FairPoint would no longer be required to report service quality issues affecting non-captive customers.

FairPoint has been pushing for less regulation for some time as it attempts to compete in an environment that is a far cry from the days of telephone monopolies.

"Quite frankly, if there's a FairPoint customer in Burlington or Montpelier, they can very easily change to another landline provider if they would like to." - Jim Porter, Division of Telecom and Connectivity director

In recent years, an incentive regulation plan approved by the Public Service Board has given the company the freedom to set all but basic telephone rates without board approval.

A new incentive regulation plan is currently before the board and contains performance benchmarks that would be in effect through 2019, if the plan is approved. The plan would have to be amended if the board agrees to the changes in service metrics.

Maine FairPoint President Mike Reed, who speaks for the company on regulatory issues, told VPR earlier this year that the service quality rules put the company at a disadvantage as it competes with less regulated cable and wireless businesses.

“The very fact that we answer to the Public Service Department for service quality issues, or, in fact, there’s a proceeding at the Public Service Board; none of our competitors are subject to any of that regulation,” Reed said.

"The very fact that we answer to the Public Service Department for service quality issues ... none of our competitors are subject to any of that regulation." - Mike Reed, Maine FairPoint president

It might appear the Department of Public Service is rewarding FairPoint by agreeing to support it before the board, even while the company continues having trouble meeting residential service standards.

Commissioner Chris Recchia says he recognizes this is not a situation where the company should be rewarded.

“It is one thing for anyone to come in and say, ‘I’ve done really well on this particular thing but I don’t think it’s the best measure, can we talk about it?’  It’s another thing to say, ‘I consistently don’t meet this standard, could we change it?’ Our approach is to make sure we get exemplary customer service from this company,” he says.

The Public Service Board will likely be asked to take up the issue of to what extent FairPoint should be regulated in the near future.