Low-Balling Verizon

HALLOWELL, MAINE — After months of litigation, Maine's Public Utilities Commission wrapped up its formal hearings last week on the proposed acquisition of Verizon's northern New England phone lines by FairPoint Communications. But before the deal gets regulatory approval in Maine, that state's public advocate has asked the PUC to impose 23 conditions on both companies, chief among them that Verizon lower its asking price by $600 million.

"The conditions that we recommend are essential if this proposal is to serve the interests of Maine people," said Public Advocate Dick Davies. In a written statement last week, Davies expressed concern about FairPoint's future financial viability and the impact the deal would have on phone and Internet rates if the company takes on too much debt.

FairPoint [1], of Charlotte, N.C., currently serves about 300,000 phone lines in 18 states and is looking to acquire another 1.6 million lines served by Verizon [2] in Maine, Vermont and New Hampshire. If the deal goes through, FairPoint would jump from being the 14th largest telecom company in the country to the eighth largest.

The public advocate also asked for a guarantee that FairPoint will expand its broadband service to at least 90 percent of its customers in Maine. He wants assurances that FairPoint will keep its phone and DSL rates as low as Verizon's are now. Further, Verizon must ensure that it will not "abandon" its responsibilities in the state until FairPoint's new billing and customer service systems are up and running properly. If Verizon and/or FairPoint are unwilling or unable to meet any of the 23 conditions, Davies said he will recommend that the PUC reject the deal.

The $2.7 billion transaction requires the regulatory approval of all three states' public utilities boards, as well as the Federal Communications Commission, or the entire deal is off. FairPoint is poised to become Vermont's largest phone company and the default provider of telephone services. Vermont's Public Service Board has yet to issue its decision.