FairPoint to renege on deal

The Concord (NH) Monitor reports:

FairPoint Communications told regulators yesterday that it will not meet its commitment to expand broadband internet access to 75 percent of its access lines by the beginning of October . . . FairPoint Communications bought Verizon's landline network in the three states in April 2008. In a settlement that allowed the sale to move forward in New Hampshire, FairPoint agreed to expand its broadband reach from 62 percent of access lines to 75 percent within 18 months of the sale, 85 percent within two years and 95 percent within five years. That commitment to invest in the infrastructure was a major selling point. The company could be fined $500,000 for every percentage point it falls short, according to the settlement agreement.

Seven months is a blink of an eye in telco planning time (which is the opposite of Internet time). In other words, they had to have known seven months ago where they'd be now.

[FairPoint] Executives faced some stern words from regulators.

Oh, my goodness, stern words.

[FairPoint] CEO David Hauser said he would not "set an arbitrary deadline of when something's going to be fixed without knowing the amount of work to go into it." He also declined to set service benchmarks, saying too many metrics create confusion.

. . . strange, now that Fairpoint has violated the original "arbitrary deadline" when it promised a specific "amount of work to go into it."

I wonder what Verizon thought it was selling in April 2008. I wonder what FairPoint thought it was buying. I wonder if anybody in Maine, New Hampshire or Vermont, said, "Oh goody goody, we'll love our phone company now."

The article continues:

Eyebrows raised among union representatives when, asked about company morale, Hauser said employees are "very excited about this business" and its potential.

The article continues:

[Fairpoint CEO Hauser] was open in talking about the possibility of Chapter 11 bankruptcy. He said it would be in no one's interest to liquidate the company because FairPoint has a steady stream of revenue with which to repay its lenders over time.

Note: There is cellular telephony in Vermont, New Hampshire and Maine, but FairPoint doesn't have any cellular offering. "Steady stream of revenue," my anatomy.

The article continues:

FairPoint admitted to falling short on at least three other criteria laid out in the settlement agreement. It has not added a resident of northern New England to be a member of the board, set up a trust to pay for the medical benefits and life insurance of its New Hampshire retirees, or fully staffed a call center in Littleton.

The article concludes by quoting Hauser:

"Northern New England is what makes or breaks FairPoint, now or tomorrow or next week or as far as I can see," he said.

No further comment needed.

Technorati Tags: Telco, Verizon