Pennsylvania Clears Consolidated/FairPoint; New England Resistance Continues

Pennsylvania commissioners greenlit the deal, unanimously adopting a staff recommendation to approve with no conditions. FairPoint has fewer customers in Pennsylvania than in Maine, Vermont and New Hampshire, and the commission received no protests or comments. “The current customers of the FairPoint PA Utilities will remain customers of those entities following the transaction, and there will not be any change to services, rates and terms of conditions pursuant to their existing authorizations,” said Thursday’s order. “The general rule transaction is expected to be virtually seamless to end user customers.”

Consumer and labor advocates sought commitments in Tuesday testimony at the Maine Public Utilities Commission (docket 2016-00307). The Office of Public Advocate sought a commitment that Consolidated enhance broadband speeds. "To meet its revenue forecasts and achieve the benefits of the merger, Consolidated should commit to a plan that immediately enhances the unsupported portion of the FairPoint network,” said OPA consultant Robert Loube. Consolidated should increase availability of 25 Mbps broadband to 45 percent of Maine consumers by 2018 and 60 percent by 2020, up from 39 percent today. And it should reduce the percentage of Maine consumers that can’t get at least 4 Mbps speeds to 10 percent by 2018 and 5 percent by 2020, from 15 percent today, he said.

The International Brotherhood of Electrical Workers asked for a condition requiring the company to justify any job cuts. “If Consolidated plans to generate synergies by further cuts in its operations and workforce in Maine, then Consolidated should be required to submit plans to the Commission showing that its reductions in workforce and operations will not have an adverse effect on the reliability and safety of its telephone service,” said Peter McLaughlin, business manager of IBEW Local 2327 in Augusta. “It will be difficult for Consolidated to achieve synergies in operating expenses in the amounts it is projecting without reducing the quality of telephone service to Maine telephone customers,” he said, because FairPoint already has made significant cuts to jobs and operations and is "now running a 'bare-bones' operation."

“It is highly likely that Consolidated will have to make investment commitments, such as broadband speed enhancements," to get the OK, TBR's Antlitz emailed us Thursday. It’s common for advocacy groups to push for broadband speed commitments in deals like this one, and they may have an especially strong case on this deal, the analyst said. “There will be significant pressure on Consolidated to agree to investment targets as it pertains to broadband enhancement to address years of underinvestment in these areas within the FairPoint footprint.”

The Maine PUC could decide on the deal in June, because statute gives only 180 days to review the Dec. 29 application, a spokesman told us. Technical and settlement conferences are scheduled April 3-4 and hearings are May 4-5, with briefs due May 12 and replies May 17. The deal also needs approval in big FairPoint markets Vermont and New Hampshire, plus other states like Pennsylvania that have a smaller FairPoint presence.

The New Hampshire PUC has April 27-28 hearings (docket 16-872). “While the schedule envisions an order being issued by May 30, 2017, that is not a firm date,” the Consumer Services Director Amanda Noonan emailed Thursday. “There have also been some issues related to discovery which have the potential to delay the schedule if the parties are unable to resolve those issues amicably.” The Vermont Public Service Board has technical hearings May 9-10, with briefs due May 26, replies June 2 (docket 8881).

The Maine consumer and labor advocates said there's insufficient information about how the deal will benefit consumers and employees. Consolidated hasn't shared plans for improvements or what best practices it will apply from its existing business to the FairPoint market, said OPA consultant David Brevitz. “Lack of information regarding benefits from implementation of best practices impairs the ability to concretely round out what benefits are likely to be gained from the proposed transaction.”

This deal isn’t the same as Verizon/FairPoint, but it’s hard to discern if the deal will be as “seamless” as the companies claim, Brevitz said. Testifying on behalf of IBEW and Communications Workers of America, Center for Economic Organizing President Randy Barber agreed: "Since the 2008 acquisition by FairPoint of the Verizon NNE [Northern New England] properties, they have witnessed a tumultuous FairPoint regime, including a bankruptcy, a 134-day strike and significant layoffs, all while the company’s customer service has deteriorated.” Unions hope the takeover by Consolidated “will usher in a more stable, professional era for the FairPoint customers, communities and employees” but “have deep concerns about [Consolidated’s] plans, knowledge, and intentions with respect to NNE.”

FairPoint looks forward to disputing the OPA and IBEW comments in rebuttal testimony, a spokeswoman said Thursday. They don't "acknowledge the realities of the technological, regulatory and competitive changes in our industry. Our operations are running more efficiently than ever," she said. "We continue to implement changes to enhance our customer service.” Consolidated didn’t comment.