As the Maine Public Utilities Commission travels the state this week to hold public hearings on the proposed sale of Verizon’s northern New England Internet and telephone lines to FairPoint Communications Inc., unions and business representatives remain divided on the deal.

Despite promises from FairPoint to honor existing union contracts, add jobs, improve Internet and phone service and maintain current Verizon rates, the International Brotherhood of Electrical Workers and the Communications Workers of America unions have banded together to dispute FairPoint’s ability to pay for the takeover and the $16.1 million in Internet service upgrades it has promised.

On the other hand, Maine State Chamber of Commerce President Dana Connors said Monday that his members have responded to the sale favorably. Connors has urged Maine State Chamber members, who include FairPoint and Verizon, to testify about the benefits of the acquisition.

“Their [FairPoint’s] commitment to employees, whether it’s new jobs or retaining jobs, is very clear,” Connors said Monday. “What we know is what we hear the company say. … And they will be held accountable to that.”

Verizon announced in January that it would keep its wireless operations but sell its land-based Internet and phone service lines in Maine, New Hampshire and Vermont to FairPoint, based in Charlotte, N.C. One of the largest rural telephone providers in the U.S., FairPoint operates 33 telephone companies in 18 states.

The proposed sale is worth $2.72 billion in cash and stocks. FairPoint promises to create 600 new jobs in New England, including 280 in Maine.

Last Monday and Tuesday, the interested parties in the case, which include FairPoint, Verizon and local phone companies that use Verizon-owned service lines, gathered in Augusta for settlement conferences.

No union representatives attended the conferences because they attended similar meetings in Vermont and New Hampshire, according to union spokesman Peter McLaughlin.

“No parties have reported back to us with a settlement,” PUC spokesman Fred Bever said Monday.

The acquisition awaits approval from the PUC and its state government equivalents in New Hampshire and Vermont. The takeover requires approval from all three states.

Walter Leach, executive vice president of corporate development for FairPoint, said in an interview last Wednesday that the unions want to stop the sale of Verizon’s lines regardless of who the buyer is.

“This really isn’t that much about FairPoint. The unions have always been opposed to Verizon selling these assets. We just happen to be the buyer that stepped in,” Leach said.

The unions have prepared and filed with the PUC hundreds of pages of testimony, which include the following points:

. FairPoint would add $1.7 billion in new debt after the $2.7 billion purchase.

. The dividends FairPoint pays out to shareholders are higher than its capital expenditures – 126 percent greater in 2005 and 171 percent greater in 2006 – and higher than its net income – 122 percent greater in 2005 and 178 percent greater in 2006.

. FairPoint management would have to oversee a 614 percent increase in access lines and a 333 percent increase in employees. Verizon’s northern New England operations are 26 times larger than the largest local exchange company FairPoint owns.

. In 1998, FairPoint failed in its attempt to launch a competitive local exchange carrier business called FairPoint Solutions in eight to 10 states, including Maine. FairPoint Solutions was larger than any of FairPoint’s telephone companies but smaller than the Verizon properties it plans to acquire.

. FairPoint’s DSL Internet service is insufficient compared to the fiber-optic networks many businesses now require to transmit large files quickly.

“DSL is quickly becoming the horse and buggy of the information age, and yet FairPoint wants New England small businesses, hospitals and educators to believe that it can give them access to the world,” said Peter McLaughlin, union spokesman and business manager of IBEW Local 2327 in Maine. “If this FairPoint-Verizon deal is approved, it could set the area back decades while the rest of the country moves forward.”

At least one Maine company, Oxford Networks of Lewiston, has begun to offer fiber-optic cable directly to businesses. Verizon’s fiber-optic cable runs only along its “backbone,” or main service line, which mostly follows Interstate 95 through the state.

FairPoint has responded to the union allegations in its own filings with the PUC. With regard to Internet service offerings, Leach said FairPoint plans to add fiber to its backbone and is now “using the latest state-of-the-art technology for DSL.”

“We’ll offer some different levels of service to different customers based upon their needs,” Leach said. “Basic customers who need the Internet to send e-mail will be served and that’s the base of our customers.”

Leach confirmed the amount of debt FairPoint would take on and said the company would be adding revenues of $1.5 billion “and significant cash flow that comes from that revenue stream.”

“FairPoint will actually be improving its leverage position and capital structure,” Leach said.

Leach said it makes sense that its dividends would be higher than its capital expenditures. As equipment becomes more efficient and customers remain steady, company expenses go down, he said.

The unions made a valid point regarding FairPoint’s increased responsibilities should the takeover be approved, Leach said. But Leach said he is not worried about the current Verizon workers taking direction from a new company.

“Those same employees that are providing service today will still be there tomorrow,” Leach said. “These three states will be the most important markets to FairPoint. They will be getting all of our attention.”

After the acquisition, New England would provide 80 percent of FairPoint’s revenues and just over 80 percent of its customer base, Leach said.

“We believe these states will be getting better served than they would if we did not take over,” Leach said.

Leach confirmed that FairPoint failed in its effort to form a telephone company in the late 1990s.

“We saw that as an opportunity to expand and grow by competing with the incumbent company, Verizon or Nynex at the time. It was not just FairPoint, but most of the CLECs [competitive local exchange carriers] that were created at the time were not viable,” Leach said.

FairPoint eventually sold FairPoint Solutions at a loss.

Leach said FairPoint has agreed to honor the existing Verizon-union contract, which expires in August 2008. He said his company would be willing to discuss an extension of the contract at any time.

“We have union members in other states. Basically, when we acquire a company, whatever was there stays there. What we inherit is what we continue to operate. In northern New England we’ll inherit a very experienced labor force and we’ll keep them going forward,” Leach said.

The unions also have attacked FairPoint and Verizon’s histories of service in Maine, questioning whether FairPoint can improve upon Verizon’s history. The PUC said their allegations are accurate but some require added context.

“FairPoint has a history of poor service quality in Maine. According to PUC documents, its six subsidiaries had among the highest rates of complaint for service, disconnection and billing in 2005 and 2006 in Maine,” the unions asserted.

The PUC tracks the number of complaints for every 1,000 customers. In 2006, China Telephone Co., a FairPoint unit, had the highest complaint rate. Its 3,405 customers filed a total of 10 complaints that year, according to the PUC.

At the same time, Verizon has been forced to pay a total of $3.3 million in service quality penalties since 2001. Those penalties are for violations such as repair appointments not met and residential troubles not cleared within 24 hours. That money goes back to customers as a line-item credit on their bill, according to the PUC.

Verizon is the only telecommunications company that operates under strict guidelines for service under an alternative rate plan issued by the PUC. Independent telephone companies operate under rate of return regulation. Their services are not subject to automatic penalty by the state.

In an interview Monday, Maine Public Advocate Richard Davies called this the most important telecommunications case ever to come before the PUC.

“What is now the Verizon network really provides support to the [state’s] entire telecommunications industry,” Davies said. “This is also the biggest case probably in terms of the buying of a major utility.”

Davies said his office would not take a side until it has all the information available from all interested parties.

“We’ve got some concerns. We’ve raised them with the companies,” Davies said. “We want to keep our minds open.”

If the acquisition is rejected by any of the New England states, then state law requires Verizon to continue to be the service provider, Davies said. On Monday, Verizon declined to comment on what it would do if the sale were not approved.

Public hearings on the Verizon-FairPoint acquisition are scheduled for 6-9 p.m. Tuesday at 23 University Drive in Fort Kent, 6-9 p.m. Thursday at the Bangor High School auditorium, and 6-9 p.m. Sept. 25 at Portland High School. The PUC requests that comments be limited to those who have not filed for intervenor status or do not have legal representation in the proceeding.

Hearings for FairPoint, Verizon and other legal parties in the case will take place in Augusta and are scheduled for the entire week of Oct. 2 and the next week if needed.