Maine Owl

Finally, the PUC acts on some theory other than "trust us" or "believe us":

AUGUSTA -- Utility regulators Tuesday ordered FairPoint Communications to pay more than $400,000 it owes in penalties for failing to provide adequate service to local carriers.

Errrr, maybe not

But the Public Utilities Commission also extended a deadline allowing FairPoint to reapply for a waiver that prevents it from paying an additional $1 million in penalties.

It remains to be seen what will be done about this disaster, but overall this should be seen as a sign of the PUC awaking from its long slumber on FairPoint.

Previous stories may be found in the list, HERE.

In light of THIS item from Huffington Post, "Real Health Care Reform -- Not Short-Sighted Take Backs", by Edwin D. Hill, International President of the International Brotherhood of Electrical Workers (IBEW), and THIS diary at Turn Maine Blue, I'm posting below a detailed article on the labor situation at CMP from the Summer 2009 issue of Solidarity News (published by Food AND Medicine/Eastern Maine Labor Council, May 20, 2009). H/T "The Electrical Worker" for posting and Gerald for promoting the diary at Turn Maine Blue.

Union workers balk at benefit cuts at CMP
Solidarity News | Summer 2009

Both the Kennebec Journal and the Bangor Daily News have called on FairPoint to pay its fines for providing lousy service to its wholesale telcom customers:

Fair for FairPoint
By BDN Staff | July 10, 2009

The intersection of private enterprise and public service is often problematic and messy, but the troubles that FairPoint Communications has encountered since taking over land-based telephone service in Maine, New Hampshire and Vermont should not weaken the resolve of regulators to protect consumer interests. ...

The BDN makes the observation that there is no case for a wavier of fines for poor service, because "as far as is now known, a lack of staffing, planning and customer service response seems to be at fault."

FairPoint's relief shouldn't cost its customers
July 9, 2009

The news that FairPoint Communications has asked Maine, Vermont and New Hampshire regulators to waive almost $3 million in fines for poor service adds to the uneasy feeling that the company simply isn't up to the task of providing phone and internet service to millions of New Englanders. While FairPoint has asked for the waiver in order to strengthen its finances, the desperate request is more likely to lead to the conclusion that the company is edging toward disaster. ...

Short version: there is no reason to penalize customers because FairPoint tells the funny joke that its issues were "unprecedented and unforeseen." No disagreement here.

This is the key fact--FairPoint was unprepared to service its customers, contrary to its solemn promises during regulatory hearings prior to the sale.

It just keeps coming.

FairPoint actually is an essential interconnect for a lot of telecommunications service providers. They are now owed $hundreds of thousands in fines due to poor performance on the part of FairPoint. For example, "GWI, which has 20,000 customers in Maine, stands to receive more than $350,000 in penalties from FairPoint."

The cable ip phone providers have to connect to FairPoint too. You can't escape them.

This is a potential emergency situation. I do not wish any ill to our phone system or the workers who run it. Being one, I certainly want to see good service for Maine telephone customers. There better be a serious mitigation plan to avoid a collapse. PUC, are you listening?

Told you so


Jack McKay and Steve Husson of Food AND Medicine warn against FairPoint in September 2007

A cloud of doom hangs over the northern New England land-line telephone carrier. Today in the news a changing of the guard is reported "amid money problems." According to a story in the Montpelier Times Argus, Vermont has "hired a law firm with experience in corporate bankruptcy cases" to prepare to deal with the shaky company.

Meanwhile, in a June 24 filing with the SEC, FairPoint itself seems to counter its own happy talk about improving service with a dose of heavy reality,

Form 8-K for FAIRPOINT COMMUNICATIONS INC, 24-Jun-2009
Regulation FD Disclosure, Other Events, Financial Statements and Exh
Item 7.01 Regulation FD Disclosure

The Company has a highly leveraged capital structure and has essentially fully drawn all borrowings available under the Credit Facility. In the future, the Company expects that its primary sources of liquidity will be cash flow from operations and cash on hand. Because of Cutover issues that have prevented the Company from executing fully on its operating plan for 2009, the Company's revenue has continued to decline. In addition, cash collections have remained below pre-Cutover levels, causing further stress on the Company's liquidity position. Should these factors persist, the Company may be unable or unwilling to make the October 1, 2009 interest payment on the Notes. If the Company is unable or unwilling to make the October 1, 2009 interest payment on the Notes, such failure would constitute an event of default under the Indenture as well as under the Credit Facility, in each case following the expiration of the 30-day cure period contained in the Indenture with respect to such payment. In such case the holders of the Notes and the lenders under the Credit Facility would be permitted to accelerate the obligations under the Notes and the Credit Facility, resulting in most or all of the Company's long-term debt becoming due and payable. In that event, the Company would be unable to fund these obligations.

None of this has stopped FairPoint from blitzing the media with cheerful ads, many about the great broadband service remote small businesses can get. Executives have been available as well, in THIS June 25 MPBN phone-in, for example.

I do not doubt the sincerity of FairPoint's desire to be a good phone/internet provider. We use them. I don't have many complaints about the dsl service we receive. The bills have been very messed up for months, but that has yet to require much effort on our part to straighten out. They do seem to be working on it without us bugging them.

But, as many critics warned in 2007, the financial terms under which the company was ushered in look to be exactly the losing proposition we all feared.

Update: Jeff Inglis at The Phoenix just now has out a new piece on FairPoint, "FairPoint watch: Making a quiet killing ? of itself and Maine's economy." Portland businesses can't get simple service orders fulfilled without a wait of "more than a month to transfer phone connections to their new locations." Oy.

Jeff also spoke with public advocate Dick Davies, leading to this interesting hint about what the future may hold if FairPoint does fail.

While Davies says bankruptcy is "clearly ... more than a remote possibility," he is hoping that FairPoint will be able to "stop those losses and get people to come back," so as to avoid another transition to a new owner, or the involvement of a federal bankruptcy court in the state's telecommunications industry.

Previous posts on FairPoint:

• FairPoint struggling with debt payment
• Vermont takes right step in blocking phone deal