a pending telecommunications merger is stirring up debate

There are few things more irritating than watching that little flag emblem wave in the corner of your monitor as the computer labors to connect to the Internet. Technological advances have made us greedy for high-speed, up-to-the-minute information at all times. But a number of businesses and residents in Northern New England lack high-speed Internet access, especially those in rural, out-of-the-way areas.

FairPoint Communications hopes to change all that. A pending merger between FairPoint and Verizon Communications would bring all of Verizon’s wireline (not wireless) operations in New Hampshire, Vermont and Maine under FairPoint’s control. The two companies have agreed to a $2.72 billion dollar sale, but they cannot close the deal until it is approved by public utilities commissions in all three states.

FairPoint Communications currently has about 310,000 access lines in 18 states. Verizon, by comparison, has about 1.5 million access lines in the three merger states alone. The prospect of a relatively small company tackling such a massive expansion has made many Verizon customers and employees nervous.

FairPoint executives insist the merger will be beneficial for all three states.

“It will increase the availability of broadband significantly to the customer base much more quickly than if the merger did not occur,” said Walter Leach, FairPoint’s vice president of corporate development. Leach pointed out that 92 percent of current FairPoint customers in New Hampshire, Vermont and Maine have access to high-speed Internet products, while only 62 percent of Verizon customers enjoy the same advantage.

Of course, in the case of Verizon, that’s 62 percent of a much larger number.

State Rep. Naida Kaen (D + R, Lee), chair of the Science, Technology and Energy Committee, says that members of the public have been vocal about their apprehension over the deal. “People are concerned primarily that they get state-of-the-art service. The question that we have to ask ourselves is, ‘How is that going to be achieved?’” Kaen said. “We need to make sure that the surviving entity that provides the service is capable, financially and procedurally, to be able to provide that.”

Leach assures the public that FairPoint is more than capable of financing the sale and handling the added responsibility. If the deal goes through, the company plans to use a product called ADSL Plus to increase the speed and capacity of Internet access in all three states. “We will be using a more advanced DSL technology than does Verizon today,” Leach said. “It is a more advanced technology that allows for higher speeds and greater capacities and will enable us to actually provide a video product over that technology, which we are currently doing in two Western markets today.”

Installing the technology will entail adding fiber to the core network, which will have the added benefit of providing faster speeds to businesses in more heavily populated areas. The result will be increased access for customers in rural communities and faster Internet services for customers that already have high speed access, Leach said.

The Public Utilities Commission has held a number of public hearings throughout the state in recent months, with the final hearing held on Thursday, May 24 in Littleton. N.H. Consumer Advocate Meredith Hatfield said most of the hearings have been well attended, with many members of the public expressing concerns. “They’ve been mostly folks either coming out strongly against the proposal in its current form or asking the commission to pay attention to specific issues,” Hatfield said.

Hatfield’s office has not yet taken a position on the merger, but it will eventually make a recommendation to the PUC. Before then, Hatfield and others will be exploring a number of topic areas, including whether FairPoint has the necessary finances to close the deal and whether the company can provide quality services to customers. They also must look at state and federal regulatory issues and pole maintenance.

Another issue involves the 3,000 employees currently employed by Verizon. Their contracts run out in August 2008, by which time FairPoint likely will have acquired the operations. The International Brotherhood of Electrical Workers has come out strongly against the proposed merger, and union representatives have attended many of the public hearings, Hatfield said. “The workforce is absolutely critical to providing the services, so it’s something that we’re asking a lot of question about,” she said.

But Leach believes the union concerns are unfounded. “They have no reason to be concerned in our view,” he said. FairPoint has guaranteed the Verizon employees that there will be no headcount reductions and that all current benefits will remain in place. Additionally, Verizon will fully fund all pension accounts after the transfer. And since FairPoint will be using the same workers already employed for Verizon, there is no reason to expect any change in services, Leach added.

FiarPoint plans to build three new operation centers in the region, which will create about 600 new jobs across the three states. Leach expects locations for the new centers to be announced within the next month or so.

Leach does not foresee any negative changes for current Verizon customers. “A current high-speed customer will see no change in rates or services,” he said, noting that the only alteration will be the name of the company on the bills. “Beyond that, there will be no change in rates, terms or conditions for any of the customers, whether they’re business or residential.”

Pending the necessary approvals, FairPoint and Verizon expect to close the deal late in 2007 or early in 2008. But, Hatfield noted, the PUC could impose conditions that might not sit well with either company. “That’s where the rubber meets the road, so to speak,” she said. “It’s possible the company would say, ‘Those conditions aren’t acceptable and we can’t do the deal if those are the conditions.’”

Whatever the outcome, Kaen and others hope the region will wind up with the best possible Internet services. If the deal does not go through, Verizon is not required to make any changes that would increase Internet capacity, potentially leaving the region where it started. “Hopefully it results in us here in the Northeast being as connected as anywhere else in the country, because that’s a link to our economic viability as well,” Kaen said.