Vt. board questions FairPoint’s viability

MONTPELIER, Vt. – A month after rejecting the proposed sale of Verizon Communication’s land telephone lines in northern New England to FairPoint Communications Inc., the Vermont Public Service Board is considering a revised deal.

On Tuesday, the board and a lawyer representing Verizon’s unionized workers questioned FairPoint Vice President Walter Leach about the company’s financial soundness.

“We’re hopeful we persuaded them,” Leach said after the hearing.

On Dec. 21, the board rejected the original deal, saying the Charlotte, N.C.,-based FairPoint hadn’t demonstrated its financial viability to operate in a service territory with five times the number of access lines it currently has.

Since then, the Vermont Public Service Department has approved a tentative settlement that essentially mirrors a stipulation already reached by Maine regulators. It calls for a $235 million payment by Verizon to FairPoint for debt reduction, reduced dividend payouts that would free more money for debt service and some special accommodations for Vermont.

But an attorney representing the Communications Workers of America and the International Brotherhood of Electrical Workers wasn’t satisfied.

“It’s still not sufficient to ensure FairPoint will be financially able to live up to all the promises it has made across the three states,” Scott Rubin said Tuesday.

The proposed deal includes a minimum annual capital investment of about $40 million in each of the first three years; up to $12.5 million a year set aside to address service quality issues that come up; and a requirement that FairPoint extend broadband service to all customers in 50 percent of its Vermont markets by 2010.

Since the sale must be approved by regulators in Vermont, Maine and New Hampshire, FairPoint has negotiated different settlements in each state.

FairPoint expects Vermont’s board to have a decision by Feb. 11.