[T]he company that is buying FairPoint Communications has agreed to reinvest tens of millions of dollars into its telephone network for the next three years.
Consolidated Communications, Inc., signed a settlement with ratepayer advocates at the Public Service Department on Thursday that requires the company to both reinvest in the network and improve service quality.
Consolidated is a company based in Illinois that owns telecommunications companies across the country. The company announced in December it would buy FairPoint and wanted to complete the regulatory process within six months.
FairPoint, based in North Carolina, provides landline telephone and Internet services in more than a dozen states. Most of the company’s workforce and customers are in Vermont, New Hampshire, and Maine.
The settlement signed Thursday requires Consolidated to reinvest 14 percent of revenue from Vermont customers—for services that are both unregulated and regulated—back into the Vermont phone network for three years following the sale.
The settlement also requires the company to invest an additional $1 million each year for three years to improve service quality for Vermont phone customers who currently have no other option but FairPoint.
“Our hope is that customers will see modest improvements to the network over time, that the company will be maintained as they should,” said Clay Purvis, the director of telecommunications and connectivity for the Public Service Department.
“It’s not an investment requirement that will revamp the entire network,” Purvis said. “What it will do is it will maintain the entire network and make slight, incremental improvements to the entire network.”
FairPoint has had a history of service quality problems including long outages.
The Public Service Department advocates for the public interest in utility cases in front of the Public Service Board, which acts like a court. For the past several months, the board has had a case open regarding the FairPoint sale.
The department has advocated that the board approve the sale but place conditions on the transaction. The settlement means that Consolidated has agreed to a majority of those conditions. The board now has to approve the settlement for the sale to go through.
“The board still has to approve the settlement,” Purvis said. “From our perspective, we put forward a strong case, and we went to hearing, and after the hearing we negotiated a settlement that we believe is right for Vermont.”
FairPoint’s regulated revenues in Vermont were $128 million in 2016, according to the company’s annual report, but data on the company’s unregulated revenue is unavailable. The limited data suggests that the required investments in the Vermont network could be a minimum of $54 million over the next three years.
In New Hampshire, regulators required Consolidated to reinvest 13 percent of its regulated revenue back into the network. In Maine, regulators are requiring a $52.2 million investment over the next three years.
“I think in some ways it’s the strongest settlement,” Purvis said of the Vermont settlement.
Other parts of the settlement allow Consolidated to find “synergies”—which means they may lay off workers in order to avoid duplication between existing Consolidated staff and existing FairPoint staff.
Consolidated will have senior management in New Hampshire and Maine, but not Vermont. The company will have a middle manager in Vermont who will work on regulatory affairs and have decision-making power.
Under FairPoint, the company had a president for the state of Vermont. Beth Fastiggi, who was the Vermont president when the sale was announced, is now the commissioner of the Vermont Department of Human Resources.
Purvis said the Public Service Department is concerned about layoffs and how they might affect service quality, but that there are some protections against layoffs in the settlement.
For example, the settlement requires Consolidated to identify any synergies they will make in Vermont within six months of closing the sale and hold a meeting with the Department to discuss them. Going forward, the company must verbally notify Purvis any time they plan layoffs.
Overall, Purvis was optimistic about Consolidated. He said the Department contacted regulators in the states where Consolidated already operates to look at how the company deals with consumers and regulatory issues.
“I think they gave good marks in those states,” Purvis said. “I’m confident that they’re going to do a better job than FairPoint.”
The board still has an open investigation into FairPoint’s phone system. The department is awaiting a decision in that matter. If the sale goes through before that decision, the decision would then apply to Consolidated.
