Lawmakers Scrutinize Planned Fairpoint Sale

Published in VT Digger, Jan. 25, 2017 by Erin Mansfield

The new House Energy and Technology Committee held a joint hearing Wednesday with the House Committee on Commerce and Economic Development to review the $1.5 billion sale that was announced in December.

Jim Porter, the director of telecommunications at the Public Service Department, said Consolidated Communications wants the sale to be approved within six months, “which in the regulatory world is like being on a rocket ship.”

The Federal Trade Commission expedited the sale Jan. 11 in a decision that terminated a waiting period designed to enforce antitrust laws. The Vermont Public Service Board still needs to approve the sale.

Porter, whose department represents the public interest in front of the Public Service Board, said the department will be primarily examining the financial aspects of the transaction and what the buyer is willing to do to improve service quality.

“(Consolidated Communications) is actually planning to pledge the assets of (FairPoint) against their loan, and that’s a little bit different than what has been in the past,” Porter said.

He said most companies pledge their own stock as collateral when they take out a loan, not the assets of the company they’re buying. He said the department would have financial experts look into the implications of that decision.
Additionally, the department and FairPoint have wrangled for years over whether the company provides adequate customer service to phone subscribers, particularly if the customer can’t choose another carrier. Their latest entanglement over service quality is still in front of the Public Service Board.In the case of a customer who has no other option but FairPoint, Porter asked, “Are you going to prioritize that customer or are you going to prioritize the customer who can go to Comcast?”

Beth Fastiggi, the state president for FairPoint, said that these days “there’s not any controversy about poor service” and that she is confident the Public Service Board would approve the merger.

“I don’t really want to think about what would happen if it’s not approved,” Fastiggi said. “I think this is a really good thing for FairPoint because we’ve had some difficulties over the past few years.”

She added: “I’m pretty proud of it to be at the point where a company is wanting to acquire the assets of FairPoint. They’re very attracted to the fiber that we’ve built.”

FairPoint has 3,700 miles of fiber-optic cable in Vermont that largely serves wholesale customers. FairPoint has 21,000 miles of fiber-optic cable across the country.

Rep. Bill Botzow, D-Pownal, asked Fastiggi whether Consolidated Communications has a good relationship with its employees. FairPoint has been criticized over the years for its relationship with unions.

A federal appeals court ruled in September that Consolidated Communications illegally suspended two union employees after they exercised their right to strike.

Fastiggi said: “From what I understand they have good relationships with their union.”

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