[F]airPoint Communications has agreed to a settlement with the state after a nine month service quality investigation.
Under the agreement, the company will credit bills for 22,700 customers and invest in broadband service for 28,400 underserved Vermont customers. FairPoint will also accept $8.8 million in Connect America Funding to expand broadband service in Vermont. Under the federal program, FairPoint will be required, over a six year period, to make significant capital investments to construct network infrastructure and offer broadband speeds of at least 10 Mbps download and 1 Mbps uploads.
FairPoint has also agreed to make upgrades to its existing network to improve reliability and reduce the risk of having its SS7 system go down, which consequently took down Intrado’s 911 system in November.
As part of the compromise, the state is proposing a change to regulatory oversight of FairPoint. A new proceeding before the Public Service Board will review the scope of the state’s authority over the company’s operations “in light of significant changes in the competitive telecommunications landscape in the past several years,” according to a press release from FairPoint.
Information about the regulatory changes was not available at press time.
The Department of Public Service began an investigation of FairPoint’s “deteriorating residential repair response time” and an outage to part of its phone system technology in November of 2014 that affected more than 10,000 customers. More than 12,000 customers lost service for 24 hours or more between July and December 2014.
In March, the department said FairPoint was well aware of the outages and should have credited customers automatically. The incidents occurred during a months-long labor dispute and strike that ended in February. Hundreds of FairPoint workers were replaced by temporary workers during a seven month period.
Chris Recchia, the commissioner of the Department of Public Service, called for the investigation after receiving “an unacceptably high number of FairPoint customer complaints through much of 2014.”
“After a thorough investigation, it is apparent to me that FairPoint has clearly taken significant steps to improve its operations and network, to the benefit of its customers,” Recchia said in a statement. “As ratepayer advocates, the Department insisted as part of the settlement that FairPoint give credits to customers who experienced unacceptable delays in repairs of telephone service.”
Beth Fastiggi, Vermont state president for FairPoint, said in a statement that the company has worked hard to improve customer service since the end of the labor strike in February. “We hope this settlement and our renewed commitment to increase our broadband network investment through the acceptance of CAF Phase II [Connect America Funds] will help us demonstrate our continued commitment to provide Vermont with a high-quality communications network,” Fastiggi said.
FairPoint is the largest local telephone carrier in Vermont and maintains poles and wires in remote areas of the state where “market forces are not favorable.” The company, Fastiggi said, must adapt to the “tremendous technological change” so that it can compete with other telecommunications companies.
“In order to compete effectively in what has now become a highly competitive industry, FairPoint must continue to evolve and so too must the way we are regulated,” Fastiggi said. “The settlement we have reached with the Department will allow us to continue to work with the state and move forward on these issues.”
In March Fastiggi told the Public Service Board that state regulatory oversight has become cumbersome as FairPoint competes with AT&T, Verizon and Comcast, which are not subject to the same state regulations.
Jim Porter, the state’s telecommunications director and the chief investigator of the service outage and repair issues, said telephone technology has rapidly evolved and the number of traditional telephone service customers has declined in Vermont.
“Our responsibility is to ensure that FairPoint continues to provide acceptable service to its telephone customers while allowing it to compete in this increasingly competitive telecommunications environment,” Porter said.
The matter now goes before the Public Service Board. If the board approves the settlement, FairPoint will issue customer credits within three months of a board order.
FairPoint says it has invested nearly $100 million in its Vermont broadband network in since 2008, and has added 1,100 miles of new fiber. The network is used by wireless and other carriers.
