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During a telephone press conference Monday, unions representing telephone workers throughout New England vowed to continue their efforts to persuade utility regulators in Vermont and New Hampshire to reject the deal, which would allow Verizon to sell its Internet and telephone land lines in all three states to Charlotte, N.C.-based FairPoint in a deal worth $2.7 billion.
Late Thursday night the PUC approved a settlement stipulation brought forth by Verizon, FairPoint, Maine's public advocate, PUC support staff and smaller local telephone companies. The Communication Workers of America and the International Brotherhood of Electrical Workers had urged commissioners to reject the stipulation, calling it "contrary to the public good."
The PUC initially asked Verizon to reduce FairPoint's debt by $100 million by cutting the cost of the fees it will charge FairPoint for services rendered during the transition from Verizon to FairPoint. After Verizon refused to do this, the PUC adopted FairPoint's alternative proposal to pay down its debt by $150 million in 2012 if the company does not meet a certain debt ratio by the end of 2011.
"The commission had it right when it initially asked Verizon to cut FairPoint's fees by about $100 million. That would have been an upfront cash infusion taking pressure off FairPoint. Instead, the commission placed more pressure on FairPoint to cut its investment in capital, service quality or the labor force," Pete McLaughlin, business manager of IBEW Local 2327, said in a statement issued Friday. "Sadly, our commissioners made a compromise that falls far short of what telephone customers and the public need."
In response, FairPoint spokesman Jeff Nevins said Monday that the company remains focused on the approval process in New Hampshire and Vermont.
"We feel FairPoint is in a strong financial position to handle this transaction. We have been prudent and conservative in developing our financial models, and we have provided projections that reflect a financially sound business plan," Nevins said.
Based on their own financial calculations, the unions believe FairPoint pays out too much in common stock dividends compared with its net income, and that the company will not be able to fund any of the projected retiree health care liabilities it will incur through 2015.
One of the conditions imposed by the PUC would not allow FairPoint to make any financial commitments in Vermont or New Hampshire that would increase its debt. That led unions to question how the company would satisfy the need for more broadband Internet service upgrades in those states.
"I have to wonder why Maine is getting something of that value and the other states are getting nothing. I would expect the New Hampshire regulators to ask that question," Scott Rubin, an attorney representing CWA and IBEW, said Monday. Rubin was referring to the millions of dollars in service upgrades that FairPoint has promised to make in Maine.
Verizon and FairPoint are expected to submit revised versions of the deal to New Hampshire and Vermont regulators, as both states rejected initial proposals for the acquisition.
"There are alternatives to this particular deal. Neither the New Hampshire nor Vermont public service board has to accept this deal," said Ken Peres, an economist for the CWA. "We don't feel that FairPoint, with all its deficiencies, can be made into an operation that can truly meet the needs of the residents of the three states."
aravana@bangordailynews.net
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