Regulators to review agreement FairPoint deal needs N.H., Vt. approval

AUGUSTA – New Hampshire and Vermont utility regulators said Friday they’ll closely examine the agreement in Maine approving FairPoint Communications’ $2.7 billion buyout of Verizon’s land lines in northern New England.

Maine’s Public Utilities Commission approved an amended agreement Thursday night, setting the stage for similar reviews in New Hampshire and Vermont.

FairPoint on Friday called Maine’s approval “a major hurdle” and expressed confidence in winning approval in the other two states.

The agreement, or stipulation, will be taken into account as regulators in New Hampshire and Vermont take up the case.

Gene Johnson, FairPoint’s chairman and chief executive officer, expressed hope that the Maine agreement can serve as a “blueprint” or “roadmap” for the other two states’ regulatory agencies.

New Hampshire’s Public Utilities Commission, whose staff recommended against the deal, is aware of substantial changes that were made to the original agreement to win approval in Maine, said commission General Counsel Donald Kreis.

After deliberating the case Dec. 17, the commission said it will not take action until the parties clarify their proposal in light of the agreement in Maine, he said.

Maine’s action could also have an impact in Vermont.

“What happened in Maine changed the deal in its entirety,” said David O’Brien, commissioner of the state’s Department of Public Service. “How the deal has now changed must be brought into the process in Vermont.”

O’Brien said his department, which represents consumers’ interests, hopes to see an expression of willingness to improve service quality in FairPoint’s new filing in that state. He was pleased to see “significant concessions” on the purchase price and dividend payments in the new Maine stipulation.

One of the conditions set forth by the Maine PUC makes reference to the other two states, saying FairPoint cannot negotiate an agreement in New Hampshire or Vermont that dilutes provisions in Maine that are aimed at strengthening FairPoint’s financial condition.

While he opposes the transaction, Vermont state Sen. Vincent Illuzzi agrees that any sales deal must be essentially uniform in all three states.

“In order for the thing to work, you can’t have conflicting provisions,” said Illuzzi, the Senate Commerce Committee chairman who has been deeply involved in the telecommunications case.

Like opponents who intervened in the Maine case, Illuzzi, R-Essex-Orleans, believes FairPoint is so leveraged that it would not be able to live up to its promises.

The union representing Verizon workers said Friday it hopes regulators in New Hampshire and Vermont will reject the Maine settlement as insufficient to protect the public and the workers.

The Maine PUC, acknowledging its own concerns about FairPoint’s financial strength, imposed a condition aimed at getting the North Carolina-based company closer to investment grade by 2014. Johnson promised to take steps, such as selling noncore assets and selling more stock, to reduce its debt by $150 million by 2012.

FairPoint also has trumpeted the transaction’s benefits to consumers, saying it commits the company to expanding its broadband initiative in Maine. Overall, it will enable FairPoint to provide broadband to 90 percent of Mainers within a five-year period, the company said.

Landline customers with standard local service, who pay $19.29 per month, would see their monthly bill reduced by about $4. The reduced rate would last at least five years.

Customers paying the economy rate, $17.79, which includes a smaller calling area, would pay $3 less for at least two years.

For high-speed DSL service customers, rates would be frozen at $15 with a two-year contract and $18 with a one-year contract for at least two years.

A national coalition, Consumers for Competitive Choice, said Maine telephone consumers will benefit from the agreement. The group said the planned broadband expansion “will propel Maine into the Internet economy” as more people get access to a high-speed connection.

While the Maine PUC has dealt with major issues in the sale, it plans a session next week to consider less controversial technical issues involving rental of equipment to local exchange carriers. The package also needs approval of the federal government.