Maine Owl

The Attorney General will not investigate. According to the cited Bangor Daily News article, she said "the latest e-mail clearly indicated that 'David Undeliverable' has no firsthand knowledge of any improprieties in the testing process and based his allegations on the alleged knowledge of some unidentified person."

I don't think this fully exonerates FairPoint of fudging its readiness to handle our phones.

Previous post: FairPoint alleged to have faked system demo

This keeps getting stranger:

Tip: FairPoint faked readiness

(Aug. 25, AP) ... state regulators are reviewing an anonymous e-mail from someone believed by a Maine regulator to be a FairPoint insider who charges that during tests leading up to the Feb. 1 “cutover,” FairPoint created a computer program “to deceive the audience into believing they were watching a real demonstration” of its readiness. ...

In his original e-mail, sent Aug. 14 to regulators, the writer, who called himself “David Unavailable,” wrote:

“As January neared and it appeared to everyone on site in Atlanta that there would be another delay, suddenly Peter Nixon [FairPoint’s president] and Gene Johnson [its then-CEO] made the announcement that the cut to the new systems would take place at the end of January and the relationship with Verizon would end. Most people were stunned as it did not appear feasible.” ...

In his later note to the AP, the writer said FairPoint had a strong incentive to complete the cutover: It was paying monthly fees to Verizon for continuing to use its system after the sale between the two companies closed. This was confirmed by a report filed by Liberty with state regulators.

The writer told regulators that “when Liberty [a consulting firm] was watching what they thought was ‘flow thru’ within a system and from one system to another, they were really only seeing a small program that was created to assimilate what they wanted the systems to do. They were not actually in the systems at the time nor were they in the test systems. They were in a newly created small program that used screen shots from the real system to deceive the audience into believing that they were watching a real demonstration.”

Incredible if true. And it's certainly plausible, given the horrors that followed. What was it FairPoint officials have said over the last few weeks, "I believe in transparency" and that its service issues were "unprecedented and unforeseen." Sheeeesh.

What did we learn from this week's FairPoint hearing before members of the Legislature's Utilities and Energy Committee?

"I believe in transparency," was the message of Peter Nixon, FairPoint's president.

In a striking burst of this "transparency," FairPoint spokesman Jeff Nevins said, "In the beginning, we knew there were going to be some problems. I think it's very fair to say at this point there were more problems than we thought."

Duh. But they couldn't see fit to provide documentation on how they would meet the 1/2-billion dollar debt payment due in a couple of months.

So says Vermont utility regulators. They are mumbling something like maybe they're sick of FairPoint malarkey and want rid of them from Vermont, now issuing deadlines and ultimatums.

Recall back in March FairPoint's "pledge" to resume regular debt payments after things "stabilize" in the summer? The question--Will FairPoint be able to keep its promises?--seems pretty close to being answered.

Here's the rub, though. Who will be the phone company if FairPoint is gone? As this item at DSLreports.com so aptly observers,

This sudden tough regulatory demeanor might have proven more useful when regulators signed off on the deal in the first place -- amidst warnings by unions and consumer advocates that Fairpoint was in no financial position to take on such a huge influx of phone and DSL subscribers.

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

Food AND Medicine celebrates with WalMart action


Martin, Judd, and Will in song next to WalMart voting booth

How much workplace democracy is there for WalMart workers in Bangor? Some people from Wildcat SLAP and Food AND Medicine figured today was a great day to find out. They carried over the voting booth pictured above and tried to distribute some ballots for workers to use, right at at the store. Store management quickly displayed their actual interest in workplace democracy by ejecting the effort.

At the dinner event later at the Eastern Maine Labor Council in Brewer, Maine Commissioner of Labor Laura A. Fortman gave some remarks recognizing workers injured and killed on the job--21 died in 2008. May Day is workers Memorial Day too. Ms. Fortman also recognized the contributions of the first woman to be a member of the Cabinet, Roosevelt's Secretary of Labor Frances Perkins. Read about her Maine roots HERE.


Laura Fortman speaks next to the smiley face

Food AND Medicine held Symposium on the Employee Free Choice Act Monday April 6 at the University of Maine


Author Barbara Ehrenreich (answering audience questions fielded by Judd Esty-Kendall) is critical of how the Obama Administration is handling the economy and the bailouts: "The emergency they're looking at is not the emergency I'm looking at."

The Bangor Daily News carried a good interview with Barbara Ehrenreich in the paper today.

Journalist Ehrenreich speaks at UM ...
By Abigail Curtis | BDN Staff

ORONO, Maine — When journalist Barbara Ehrenreich did the research for "Nickel and Dimed," her scathing indictment of blue-collar work in America, she spent a month cleaning houses in southern Maine.

She thought that perhaps in one of America's whitest states, people would treat each other better than in places with high immigration rates and more racial diversity. But, she said, she was wrong.

"Maine was very heartbreaking," she said in a phone interview this weekend. "These were women who maybe in another generation would have worked for mills. And now they were in this disgusting, $6-an-hour cleaning job, being just ground down."

A radio program from the Orono event will broadcast locally at a future date.

One major note that emerged from the program is that it is time to clearly and in large numbers let Senators Olympia Snowe and Susan Collins know that the workers of Maine want the Employee Free Choice Act (EFCA) to pass in order to level the playing field for workers.

Keep checking here and at foodandmedicine.org for more information on the Ehernreich broadcast and many other upcoming events related to the campaign for the EFCA.

Food AND Medicine held media event in Brewer Saturday morning


U.S. Representative Mike Michaud holds his copy of "Where Are They Now?" Saturday in Brewer; please click above for an excellent teevee news story from Ch. 2 (Flash video)

Please click below to download the report: Where Are They Now?

PDF, about 1.5 MB

The report "tells the stories of 107 workers who lost jobs over this eight-year period, 96 of whom worked in the wood products industry. These workers have three major experiences in common: life working in a union in Maine, the devastation of a layoff, and the challenges of working non-union and not always receiving a fair wage. Together, their stories reveal much about jobs, about our government policies, and about who benefits and who is hurt by our economy at the personal, community, and macroeconomic levels." (from p. 7)

Mike Michaud also made a little news (not mentioned in the teevee story) when he said his opinion was that the Employee Free Choice Act (EFCA) could not pass in the U.S. Senate this year, as currently written. Also, and I'm paraphrasing, Mike does not feel like President Obama will spend any "political capital" to help EFCA pass. But Mike will be in a meeting with the President early next week. We urged him to press Obama on the issue.

Get your Solidarity News everywhere now


Published by Food AND Medicine: The current issue (Spring 2009) contains a large special section on the EMPLOYEE FREE CHOICE ACT (EFCA)

A pro-EFCA rally was held Wednesday at the Worker Center in Brewer. The Bangor Daily News ran a "balanced" story yesterday:

A group of about 20 held a rally Wednesday morning at Food AND Medicine in Brewer, an organization that formed in 2002 to assist laid-off workers with food, medicine and other necessities. Jack McKay, director of Food AND Medicine and the Eastern Maine Labor Council, called the event a success if for no other reason than it keeps the debate going.

"We're committed to workers' rights, and we think this idea has significant support in Washington," he said.

Supporters claim that the EFCA would, among other things, allow workers to choose a union without fear of employer coercion or intimidation. U.S. Rep. George Miller, D-Calif., and U.S. Sen. Tom Harkin, D-Iowa, introduced the bill this week as a means to make it easier for workers to bargain with their employers for better wages and health care. If passed, the law would make the most substantive changes to U.S. labor laws since 1935.

That last paragraph could have been written a lot better. Supporters don't just "claim" the Act would do things to help labor organizing, it would do such things, including force employers to bargain in good faith.

EFCA not just about "secret ballot"
A succinct explanation of how this revision of labor law would help the economy was offered by former Labor Secretary Robert Reich on the public radio Marketplace program this week:

Reich: ... employees who want to form unions are threatened by their employers. And if they don't heed the warnings, they're fired, even though that's illegal. I saw this behavior when I was secretary of Labor over a decade ago. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business. The most important feature of the Employee Free Choice Act toughens penalties against companies that violate their workers' rights.

Judging by comments under the BDN story above, I'm afraid to say that there are a lot of people running around out there with deep misconceptions about unions, no understanding of barriers to organizing in law that mercilessly are used by management against them, and the actual content of EFCA itself. There is a lot of work left to do by Labor if we want to generate enough pressure to get EFCA passed.

See also FMI: Turn Maine Blue has many excellent items on EFCA.

It was bound to happen


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

The clip above reminds us that strong warnings were issued by labor leaders prior to the tax-avoidance-inspired* sale to FairPoint by Verizon of northern New England's land-line telephone system. The issue was that FairPoint would struggle to accomplish system modernization and extension of broadband to electronic deserts in rural areas while trying to service an enormous $2 billion debt load.

A major crack has appeared in the apparent ability of FairPoint to live up to its obligations and promises. According to an Associated Press story in the Bangor Daily News today, FairPoint wants to "delay a scheduled $11.25 million debt payment" due this month until June.

My question is, is FairPoint's "pledge" to resume regular payments after things "stabilize" in the summer worth anything given that it wants to break its promise to make this payment? Obviously, there is trouble with the post-sale stability of the company. Will FairPoint be able to keep its promises? The alternative? Is another public bailout on the horizon? Only time will tell.

Update: Another AP story in the Friday BDN points out that FairPoint has been shedding customers like fur off a collie, and has what fairly recently was a stock price of $11 now is worth "between 38 and 42 cents a share," to an insider (according to an SEC filing). The switchover from Verizon turned into a boondoggle. This was a very stupid idea from the get-go.

Update 2: Jeff Inglis at The Phoenix has more in a piece this week:

The company has asked regulators in Maine, New Hampshire, and Vermont for permission to miss a March 31 $11.25 million quarterly payment to creditors, saying that while the states' public-utilities commissions had required the payment as a condition of the Verizon purchase, FairPoint's actual lenders don't require any money until the end of June.

"FairPoint is essentially reneging on the agreement," says Wayne Jortner, senior counsel in Maine's Office of the Maine Public Advocate, a state agency charged with defending customers' interests in utilities regulation.

The company is promising to make up the payment by the end of the year, to meet its state-mandated obligation of paying $45 million annually to reduce the heavily leveraged company's debt load. And Jeff Nevins, FairPoint's Maine spokesman, says the request will allow "more financial flexibility." But that flexibility may not help it keep that promise, based on the company's March 4 filing with federal securities regulators.

Thanks, Jeff. Please stay on this.

*For some explanation of the "Reverse Morris Trust," see the Maine Owl post HERE. (Vermont relented and allowed the sale to proceed in early 2008.)

The labor union complaint about FairPoint was always that the company is "rinky-dink." They are proving that now with a series of 911 system failures, including right here in Penobscot County over this past weekend.