(Host) The state of Vermont has hired a bankruptcy expert to prepare for the possibility that the region's dominant land-line phone company will default on its debt.

Fairpoint Communications says it may be forced to file for bankruptcy if it can't reach a new agreement with creditors.

VPR's John Dillon reports:

(Dillon) FairPoint concedes it's had troubles since it took over Verizon's northern New England land line business in January.

Melissa Bailey knows the problems first hand.

She wanted to get FairPoint's D-S-L Internet service connected to her home in Duxbury. She asked for the service last December, and it took the company five months to deliver.

(Bailey) "One time I was on the phone for an hour, being put on hold at different times for them to track something down. If I added up the time I spent trying to get this resolved, it was probably at least 20 hours."

(Dillon) Bailey said a FairPoint technician finally diagnosed the problem and worked hard to resolve the issue. But that didn't end her calls to FairPoint's help line.

(Bailey) Twice they billed me for the modem during this time. And I had to call them and say, ‘I'm not paying for it because I have a modem that's not working right now.' So I wouldn't pay for the service until it was corrected. So it's been every month during this process there's also been a billing issue."

(Dillon) Problems like the ones Bailey experienced have hurt FairPoint's cash flow.

David O'Brien is commissioner of the Department of Public Service, which represents consumers in utility cases.

O'Brien says that when FairPoint won permission to take over Verizon's territory, it committed to expanding broadband Internet service in Vermont.

O'Brien says the company is on track with its broadband roll-out. But he says FairPoint's revenues are down in part because of continuing troubles with customer service.

(OBrien) "Going into the acquisition they expected to see something on the order like 6 percent of their lines to be lost to competition over time. And what they've seen in reality is something on the order of 12 percent."

(Dillon) The latest bad news about FairPoint came in a legal notice filed with the Securities and Exchange Commission.

The company said it's working with creditors to restructure $530 million in debt. But if it can't get more time to repay, the company said it may file for bankruptcy.

The Department of Public Service has hired a bankruptcy expert for advice.

(O'Brien) "Someone who has the skills to advise us on how the bankruptcy process works and to make sure that whatever commitments have been made to the state of Vermont that as much as possible those commitments are sustained through the bankruptcy process."

(Dillon) FairPoint spokeswoman Beth Fastiggi says service would not suffer if FairPoint has to file for bankruptcy.

(Fastiggi) "Our network in the state would continue to function, and we would be able to continue to serve customers. Our customer service reps would answer calls; customers would be able to place orders, our technicians would install services."

(Dillon) Fastiggi says customer service has improved in recent months.

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