Douglas: Regulators should not approve Fairpoint deal unless strict conditions met

10/17/07 6:16PM By John Dillon
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(Host) The Douglas Administration says regulators should reject FairPoint Communications' bid to buy Verizon's phone business unless strict conditions are met.

The Department of Public Service says Fairpoint has to agree to improve service quality and expand its broadband network.

VPR's John Dillon reports:

(Dillon) FairPoint wants to acquire Verizon's land line business in a $2.7 billion deal. But first it needs approval from utility regulators in Maine, New Hampshire in Vermont.

On Wednesday, the state Department of Public Service told regulators the sale as proposed should be turned down.

(O'Brien) No, the public good has not been met.

(Dillon) David O'Brien heads the public service department, which represents consumers. He says the state will back the sale, if Fairpoint agrees to strict standards that measure improvements to service quality.

(O'Brien) We, the public service department, have laid out some very thorough, and I would argue very well-thought out and responsible safeguards and conditions that would address a lot of these issues.

(Dillon) O'Brien says Fairpoint has to do a better job than Verizon in providing basic phone service. So the state has proposed conditions that link improvements to service quality to the stock dividends the company pays to investors.

(O'Brien) Our basic principle is this: that we want the boardroom of Fairpoint to be dominated by two measurements, their profit and loss statement and the things that they look at to satisfy shareholders and investors, and the service quality metrics in Vermont that show that they are in fact meeting the demands of customers in Vermont.

(Dillon) The public advocate representing consumers in Maine has taken a different tack in dealing with the Verizon sale. The advocate says the sale price should be lowered by $600 million.

O'Brien says that approach amounts to a flat-out rejection of the deal. He says he wants to find a way for the sale to happen - but with provisions that protect consumers.

(O'Brien) I would call this an accountability measure that says we want you to be as vested in our service quality as we are.

(Dillon) Walter Leach is Fairpoint's executive vice president for corporate development.

He hadn't seen the details of the state's proposal to link service quality to stock dividends. But he said Fairpoint will try to work with the state to gain its support.

(Leach) We're open to all ideas and willing to discuss anything that would be in the best interests of the state and ratepayers.

(Dillon) The state also wants Fairpoint to provide consistent broadband service in the communities it serves.

For VPR News, I'm John Dillon in Montpelier.

 

AP Photo/Toby Talbot

 

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