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Friday, November 13, 2009

FairPoint stresses its relevance

CONCORD – FairPoint’s progress in solving service issues for business customers has been “minor and not uniform” in recent months, although the company’s once-maligned call center has greatly improved, according to a report by an independent consultant.

That information from Liberty Consulting Group, which has been hired by New Hampshire, Vermont and Maine to watch over the region’s telephone company, was part of a slew of data presented to a panel of state legislators Thursday during an information session.

The 31⁄3-hour meeting was designed to update elected officials about the status of FairPoint now that it is in Chapter 11 bankruptcy proceedings.

Officials from Vermont and Maine were originally scheduled to join but backed out because so many questions exist due to the bankruptcy, under which FairPoint reorganizes its debts in an attempt to keep operating.

FairPoint is scheduled to present its debt reorganization plan to a U.S.

Bankruptcy Court in New York on Dec. 10 , although that date could be pushed back.

The company owes $2.2 billion to banks and more than $500 million to bondholders; its proposed pan reduces that total debt to $1 billion, which probably means many creditors will not get paid.

During Thursday’s session, which covered a wide range of issues, a question bigger even than FairPoint’s bankruptcy came up: What is the future of a telephone company that depends on wired, rather than wireless, service in an era when customers are abandoning landline phones en masse?

“At the rate the number of lines is dropping . they’ll be down to zero in 2013,” said Rep. James Garrity, R-Atkinson, after looking at a chart of the number of telephone lines in New Hampshire. “How can they survive?” The figure of telephone lines has been falling by almost 100,000 a year since at least early 2007, when Verizon was still the state’s main provider.

The decline has continued at roughly the same rate since FairPoint bought the system.

Figures for land-lines are declining all around the country at rates of around 10 percent a year; FairPoint’s decline has approached 20 percent annually.

The figure released by the New Hampshire Public Utilities Commission says roughly 350,000 lines exist in the company’s coverage area. That number apparently does not include people who get only Internet service from FairPoint, using cell phones for their voice service, but that wasn’t entirely clear at the meeting.

FairPoint CEO Peter Nixon, reiterating a point that FairPoint has made since it first proposed the $2.35 billion sale two years ago, told the legislators the company’s business future is “broadband, broadband, broadband.” He touted the recently completed fiber-optic backbone through the state which he said will allow fast versions of DSL broadband to be deployed, and noted that the company has applied by federal stimulus funding to extend broadband in the North Country.

He also said that FairPoint has a large amount of business that is often overlooked - including, ironically enough, connecting cell-phone towers to the national phone network. Cell phones may be undermining FairPoint’s core retail business, but hooking their towers to the main network provides up to 30 percent of the FairPoint’s business.

Nixon also said FairPoint would counter the decline in landlines by concentrating on small- and medium-sized business customers, whom he said had been overlooked by Verizon.

However, FairPoint seems to be having the biggest problem with these so-called wholesale customers, whose needs are usually more complicated than those of home customers.

The Liberty Consulting Group report said a quarter of all wholesale orders, such as changes in phone numbers or disconnections, were late as of Oct. 28, and that two thirds of those were more than 20 days late. It highlighted this as one of the biggest problems that FairPoint has been unable to solve.

The report said “one bright spot” is the retail call center performance, which is answering calls quickly – unlike last spring, when a deluge of problems caused after FairPoint switched Verizon’s computer systems to its own forced people to sit on the phone for hours at a time to get questions answered.

The Liberty report and discussion by legislators indicated that a core problem for FairPoint remains databases – the enormous lists of information about customers, such as name, address, types of services ordered, that are used to keep track of billing, orders, repairs and the like.

Moving these lists from Verizon’s roughly 600 different computer systems to the 60 systems used by FairPoint showed many problems – for example, a customer address listed as “10 Main Street” in one place and “10 Main Street, Apt. 1” elsewhere. Such problems snarl automatic processing of orders and must be fixed individually by hand, a slow process.

Other points touched on at the hearing included:

• Nixon said the company is still evaluating a Portsmouth-area test of television sent over its fiber-optic channels, performed this summer. The biggest question, he said, is a business one: Does it make sense to duplicate existing cable-television models or try to provide “a la carte” programming through Internet-like processes?

International Brotherhood of Electrical Workers representative Glenn Brackett said he thought FairPoint needs to sell a “triple play” – voice, Internet and television – in competition with Comcast and other cable-TV companies, in order to make enough money to expand service in the state.•

• In response to a question from Sen. Jacalyn Cilly, D-Barrington, Nixon said he did not expect FairPoint to pay any executive bonuses this year because “We did not meet our 2009 goals.”

• Cilly also touched on an question that may come up in later months: Was the Public Utilities Commission to blame for approving the FairPoint sale without more safeguards?

“There were reports that Verizon’s assets had deteriorated well beyond what was (accepted), and that didn’t seem to be pursued . as aggressively as it might have been,” she said.

PUC Chairman Tom Getz defended his agency’s work, saying they had been “thorough” and “were keeping the pressure on FairPoint” to improve.

David Brooks can be reached at 594-5831 or