Anger in New England Against Verizon and Fairpoint
June 28th, 2007 by Gordon Cook
Have more than 170 smart people on a private list and feedback comes quickly.
This from Mike Spector:Verizon’s attempt to dump its copper in Maine, New Hampshire, and Vermont by a sale to Fairpoint has caused a storm of protest in New England. Understandably the trade unions, IBEW and CWA have been in the forefront of organizing the protests, putting aside their sometime very bitter internecine warfare occasionally leading to lawsuits and even violence. But other concerned individuals and organizations in New England have joined the fray. Two Websites espousing the cause are at: Stop the sale of Verizon and No Deal.org
But the traditional print media in the area has also taken up the cudgel and questioned the economic viability of the situation as in the below from the Burlington Free Press
Burlington Free Press Editorial:
Vt. interests at stake in FairPoint deal
June 21, 2007
The response to an investment bank’s analysis of FairPoint Communications’ finances serves to underscore the stakes involved in the North Carolina company’s bid to buy Verizon’s land-based network that make up almost 90 percent of Vermont phone lines.
In January, FairPoint agreed to buy Verizon’s land lines in Vermont, New Hampshire and Maine, a deal valued at about $2.7 billion. The 1.48 million access lines involved in the Verizon acquisition are nearly six times the 248,000 lines FairPoint currently operates.
The deal matters because it is a clear signal that Verizon is no longer invested in providing regular phone service in Vermont, and it is in the state’s interest that land lines — still a critical part of the communications infrastructure — must be maintained and kept up to date.
The report released by Morgan Stanley this month says FairPoint is in a financially “vulnerable position” without the merger. “We are concerned that FairPoint may be in a position where the Verizon NE lines transaction has become a necessity for the stock rather than an option,” the report says. Morgan Stanley is one of FairPoint’s largest shareholders, with 5.44 percent of the company’s outstanding stock valued at almost $38 million on March 31.
Cook’s Edge: Another member responded - This kind of thing goes on with most all rural telcos, only the “6 or 7%” is really 60 to 70% of revenues for many of the smaller carriers if you include the access charges (per min of LD). This is nothing new, and no surprise to anyone who has really looked at the numbers or been in the business. In truth there is no viable business model for most of them without the subsidy stream.