FAIRPOINT QUESTIONS

The Maine Public Utilities Commission is required to ensure that transactions it approves do not adversely affect ratepayers and the companies’ shareholders. Assuming that FairPoint Communications and Verizon, which propose to merge their landline operations here, have taken care of shareholder concerns, the PUC has rightly focused on ensuring that consumer issues are addressed. Recent recommendations from the state’s public advocate for conditions that should be met for the merger’s approval further narrow this focus. This ensures that the debate remains centered on the new company’s expected quality of service, rates and the capacity for investment.

The legal and financial questions in this reorganization are complex, so regulators, advocates and the public are wise to focus on the bottom line of how Maine citizens will be affected by service, rates and company investment.

The Office of the Public Advocate furthers this by outlining nearly two dozen conditions the company should meet. These include ensuring that rates for telephone and DSL service do not increase and that FairPoint’s back office operations are fully functional before Verizon leaves.

The PUC, which is in the midst of a thorough review with a focus on customer service, must determine if such conditions would improve the merger. The commission often places conditions on utility mergers to ensure its standard of “no harm” to ratepayers is met.

FairPoint says it welcomes the scrutiny. “We want to ensure every issue is addressed,” said spokeswoman Rose Cummings.

The public interest in this merger – a deal in which Verizon shareholders will initially end up owning about 60 percent of the new company’s stock and Verizon itself will enjoy favorable tax treatment – is how often phone outages will occur and how fast will they be repaired. A key question is whether the supersized FairPoint would have the financial capacity to make the investments it is promising and maintain service throughout the region. And is FairPoint in a position to adjust its telecommunications strategy as new technologies become available?

FairPoint says it will invest heavily in its new firm, a substantial leap in size for the North Carolina company, which has a small presence in Maine now. It plans to spend about $200 million for new back office operations, according to its filings, and another $44 million ($16 million in Maine) to upgrade broadband access. It further says it will honor union contracts and negotiate new ones, though its union history is very different from Verizon’s.

The PUC has appointed two of its lawyers to serve as consumer advocates. As PUC insiders they will be able to build on the public advocate’s concerns and help steer any negotiations that may emerge.

Making sure all the questions are on the table helps ensure they will be answered.