The CWA and IBEW filed testimony with the Vt. Public Service Boar...
The CWA and IBEW filed testimony with the Vt. Public Service Board (PSB) detailing their opposition to Verizon’s $2.7 billion spinoff of its landline assets to FairPoint Communications. They presented testimony by consultants that calls into question FairPoint’s ability…
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to maintain service quality. The testimony cited Vt. Dept. of Public Service data showing FairPoint’s existing Vt. local exchange operation had a complaint rate roughly 5 times higher than Verizon’s and a disconnect rate about 25% higher than Verizon’s. The CWA urged the PSB either deny the deal or set strict quality conditions. But the IBEW said merger conditions won’t work, because FairPoint lacks the resources to meet meaningful conditions. IBEW economic consultant Randy Barber said FairPoint relies heavily on depreciation to ensure enough cash flow to support its next acquisition while maintaining high dividend levels. He said FairPoint “came perilously close to bankruptcy” in 1998, when it took over a fairly large CLEC and had to end operations in 2001 after 3 years of operating losses. Meanwhile, Rep. Kucinich (D-O.) followed through on a promise he made at an anti-FairPoint rally in N.H., sending a letter to FCC Chmn. Martin asking the FCC to scrutinize the Verizon-FairPoint deal. Kucinich, a presidential candidate and House Domestic Policy Subcommittee chmn., told Martin that FairPoint’s debt burden from this deal would prevent it from fulfilling its promises to improve the Verizon network and expand broadband availability in rural areas. He suggested Verizon picked FairPoint for the spinoff because FairPoint qualified under IRS rules for a reverse Morris Trust, making the deal tax exempt.