[T]he local president of FairPoint Communications says the new settlement with Vermont’s ratepayer advocates will be a win for customers and help the company “reboot.”
Beth Fastiggi, the Vermont president for FairPoint, said the company’s agreement to pour money into bringing broadband to 28,399 homes, issue retroactive credits to thousands of customers’ bills, and evaluate regulatory standards will be good for Vermonters.
The terms are part of the multifaceted settlement announced Tuesday that resolves the ongoing service quality investigation in front of the utility-regulating Public Service Board. The investigation started in December, months after ratepayer advocates from the Public Service Department started warning FairPoint that its service in the state was sub-par.
FairPoint will issue 22,700 bill credits for customers who lost service between April 1, 2013 and Feb. 28, 2015. FairPoint must notify customers who are eligible for the credit and, within three months of the Public Service Board approving the settlement, clearly disclose on customers’ bills their policy – which is that they can receive bill credits for outages lasting more than 24 hours.
The company and the Public Service Department will ask the Public Service Board to open a new case. The case would evaluate whether FairPoint should have looser regulatory standards in areas where the company has phone competition, evaluate the current standard that pushes the company to make phone repairs within 24 hours, and use the board’s decision in the separate case to amend its regulation guidelines.
Ratepayer advocates investigating FairPoint found that the company responded more quickly to business customers over households for repair requests, disconnected customers without their consent and failed to maintain infrastructure. In addition, they did not pay bill credits to 10,611 customers.
FairPoint contested the allegations. The company said it has been held to a higher standard than other broadband companies because of its traditional phone line business. FairPoint argues that it is subject to outdated landline regulations that make it difficult to compete with other telecom companies that do not come under the same state scrutiny.
The company wants the state to loosen service quality standards.
The two parties also had an ongoing dispute over several of the Public Service Department’s requests for information; the company said much of the information was too burdensome to provide.
“We had quite an argument with FairPoint over what should be public and what should not,” said Jim Porter, the director of telecommunications and connectivity at the Public Service Department.
“We decided to settle, and then there were some issues involving service quality metrics that we were not able to agree to,” Porter said. “We really did not want to jeopardize the (federal broadband money).”
The FCC’s Connect America Fund
FairPoint will accept $8.8 million per year for six years from the Federal Communications Commission’s Connect America Fund II program for rural broadband buildout for 28,399 Vermont customers.
Across the 14 states it covers, FairPoint accepted a $37.4 million annual grant package for 105,220 customers. The majority of FairPoint customers to be served under the program— more than 77,000 — are in Vermont, New Hampshire and Maine.
The specific program in question is only open to the largest Internet service providers, according to Clay Purvis, a telecommunications specialist at the Public Service Department. Smaller Internet service providers will be eligible for broadband buildout money through a different section of the program.
The speed is required to be 10 Mbps downloading and 1 Mbps uploading, written as 10/1. The official FCC definition for broadband is now 25/3, but the FCC has not funded projects at those speeds. The state wants to have 100/100 to every home by 2023. (A previous Connect America Fund project paid for 4/1 speeds.)
Fastiggi said FairPoint would drive fiber-optic cable to the middle-mile of communities, and then run copper digital subscriber lines to individual homes. The grant money will cover less than half the cost, she said.
“This program is designed to get broadband to the most difficult-to-reach customers,” Fastiggi said Wednesday. “We know that it’s going to cost us significantly more than what we’re going to be receiving from the federal government.”
“We’ve met every broadband commitment we’ve made, most or all of that using our own funds,” she said. “This really makes a big commitment to rural areas and areas that are really hard to serve so that people in even the farthest areas of the state have access to the modern economy.”
In the company’s second-quarter conference call, chief executive officer Paul Sunu said the company “supports the intent” of the federal grant program, but warned it may not be profitable to accept the money. The company had until Aug. 27 to agree to the conditions, and accepted all of the funds.
The November phone system outage
The final major piece in the settlement was FairPoint’s agreement to upgrade its SS7 technology, a piece of the system that allows phone calls to go through. The company’s SS7 technology went down in November, consequently knocking down the state’s Enhanced 911 system.
The Public Service Department made 911 a priority and said a lapse in service presented a danger to public safety and public health. The Colorado company Intrado was running the 911 system at the time. The state subsequently awarded an $11.2 million contract to FairPoint for 911 service.
The Public Service Department presented expert testimony from Fred Goldstein saying the company was operating its phone technology “in break/fix mode” and recommended operational changes. FairPoint says it has met and exceeded those recommended steps for its infrastructure, to the benefit of customers.
“I think that the settlement is good for the state, and it’s good for our customers,” Fastiggi said. “It provides a path for customer bill credits, a resolution of that. It satisfies the department, the operations improvements as well as the enhancements we’ve done with our SS7 network.”
Porter said he’s “happy the way things turned out” because customers will get refunds, and the state will get broadband buildout. But he said the two parties still don’t agree on the company’s proposal to be deregulated in areas with competition.
“That’s something that the Public Service Board will have to determine, and at the same time, we will have to look at the service quality metrics that would be applicable to areas with less competition,” Porter said.
The Public Service Board will hold hearings in September to determine whether to approve the settlement.
