New Hampshire Regulators Say Fairpoint and Verizon Should Restructure Their Deal

The terms of the deal between Verizon and Fairpoint as filed in New Hampshire are pretty clear cut.

Fairpoint would buy Verizon’s three state phone network for slightly more than 2.7 billion dollars.

And the newly expanded company would borrow 1.6 billion dollars to complete the transaction.

The three members of New Hampshire’s Public Utility Commission met earlier this week to discuss the deal.

Meredith Hatfield, the state’s Consumer Advocate attended the meeting.

She says Chairman Thomas Getz indicated the deal as proposed was unacceptable.

You know, he didn’t say these words, but I think if he had to decide today he would say that the transaction as proposed is not in the public interest.

According to meeting transcripts, the three commissioners found many details of the deal objectionable.

For instance, they said they thought Fairpoint would carry too much debt if the deal remained unchanged.

They also said if they approved the deal as is, Verizon would leave the state without updating the system they had neglected for a long time.

In this vein, they mentioned that Verizon had a duty to remove thousands of telephone poles in the state that are essentially duplicates.

Don Kreis of the PUC said that at the meeting, there were suggestions that Verizon could help pay for their removal if the company ends up leaving New Hampshire.

One possibility that the chairman raised would be Verizon placing some sum of money in escrow that Fairpoint would be able to draw on if there were problems with the land line network that Verizon really should have been responsible for before it left the state, before it gave up the network.

Verizon officials say they hope to settle the concerns of New Hampshire commissioners by giving them the side deal they announced last week in Maine.

The deal lowered the price Fairpoint would pay by 235 million dollars.

And Fairpoint officials agreed they would lower the dividend they pay shareholders by about 35 percent.

Verizon spokesman Jill Wurm says the new deal may have been struck in one state, but it’s relevant to all three.

We certainly look forward to sharing that agreement that we put forward in Maine with the regulators in New Hampshire and Vermont in the hope that they’ll see that the concerns that they were raise, you know separately, were largely accommodated in the terms of that settlement.

Another issue that came up at New Hampshire’s PUC meeting was the fact that Fairpoint intends to only offer DSL technology to its customers.

One commissioner said he thought the state would lose out if technically superior fiber optic technology weren’t deployed in the more settled parts of the state.

Labor unions that have been fighting to stop the deal between Verizon and Fairpoint have voiced similar worries.

And members have said they’re concerned that their jobs may be in jeopardy if the sale is allowed to go through.

Glenn Brackett of the International Brotherhood of Electrical workers #2320 says those worries have not disappeared.

Fairpoint’s own business plan as discussed up in Vermont at the public service board shows that they plan to have a four percent attrition rate until the year 2015. If you extrapolate that out over the life of their business plan they’re actually going to lose half of the workplace that’s in place today minus what jobs they’re allegedly going to ax. They can say what they want but their business plan speaks to what they want to do.

Fairpoint officials have said they’re going to keep every Verizon employee who wants to continue working in Maine, Vermont and New Hampshire.

Both Verizon and Fairpoint officials say they hope the new deal they struck will end up being the final settlement between the two companies.

But New Hampshire regulators say they won’t have a chance to talk about the Maine offering until it is officially filed.