Verizon's Transfer Of New England Lines Gets A Busy Signal

Dec 26, 2007 (07:12 AM EST)

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Verizon Communications' effort to spin off landline operations in Maine, New Hampshire, and Vermont has run into a roadblock as Vermont regulators turned down Verizon's plan to transfer the operations to FairPoint Communications.

The decision, by the Vermont Public Service Board, was immediately followed up by a move by Maine's Public Utilities Commission to postpone its Wednesday meeting to Jan. 3 to take up the issue. The Maine agency had reached an agreement with Verizon last week and that pact could now be reviewed.

In a statement, the Vermont board said: "The board found that FairPoint had not demonstrated that it would be financially sound as it seeks to operate the newly acquired territories in Vermont, Maine, and New Hampshire -- a service territory that has five times the number of access lines as FairPoint presently has."

In recent months, Verizon has moved to shed landlines and older operations in mostly rural areas as its moves aggressively to deploy advanced wireless and fiber optic services in mostly urban regions.

The Vermont board noted that FairPoint, a North Carolina-based firm with about 310,000 phone lines, would be financially pressed to support the 1.6 million lines that Verizon seeks to shed. The Vermont board noted that FairPoint would have to borrow $2.5 billion to support the transaction.

The Vermont board's decision was hailed by the Communications Workers of America, which has been urging lawmakers to help establish an independent phone company that would be operated by management in the region. The CWA stated that the proposed Verizon-FairPoint deal for Vermont "has the potential to lead to a reduction in service quality, in less investment in the Vermont infrastructure, and to slower deployment of broadband services than is acceptable."

The Vermont board's decision doesn't kill the Verizon-FairPoint deal and New Hampshire and Maine regulators have indicated they are expecting to review revised proposals from the two companies.

FairPoint spokeswoman Rose Cummings told the Associated Press that "this is a procedural move that we consider an invitation to discuss the conditions, to introduce more information into the record... We are looking at it as an invitation to continue discussions around conditions, just a procedural bump."

In its decision, the Vermont board indicated it could approve the transfer of Verizon assets to FairPoint if the financial provisions and some other details can be ironed out.