FairPoint defends record at PSB hearing
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By DANIEL BARLOW VERMONT PRESS BUREAU - Published: October 1, 2009
MONTPELIER – FairPoint Communications fought back against its critics Wednesday, telling state officials that the company has not done anything improper that would result in its license to operate being taken away.
FairPoint's attorney told the Vermont Public Service Board that the North Carolina company, which is experiencing severe financial problems and may soon file for bankruptcy, has done anything to violate its agreement with the state.
"We don't believe that there is any evidence that requires an issuance of a show of cause order," said Nancy Malmquist, an attorney with Montpelier law firm Downs Rachlin Martin, who represents FairPoint before the Public Service Board. "There has to be clear and undisputed violations of the law and there is no evidence to suggest that happened."
FairPoint, which purchased Verizon's landline telephone and Internet services in Vermont, New Hampshire and Maine for $2.4 billion last year, has been plagued with service problems since switching over to its new computer network in late January.
The Vermont Public Service Department this summer asked the Public Service Board, which regulates telecommunication companies, to open an investigation to determine why the company's authority to operate should not be revoked.
Board members have yet to rule on that petition, but the suggestion Wednesday that FairPoint officials do not believe there is evidence to support that move surprised many in the room. The 60-minute hearing was one of the most contentious so far between state officials and representatives of the company.
James Porter, a lawyer for the Public Service Department, said they filed the "show cause" petition in July in the "vain hope that FairPoint would do something in the interim" to correct its problems.
Porter said the concerns of the Department have been clearly explained to FairPoint officials during informal monthly workshops and in filings before the Public Service Board. He called for the end of those workshops during the meeting Wednesday, saying future conversations with the company need to be formal and on-the-record.
"This is not a road we went down lightly," he said. "But we have reached the point where the workshops have failed."
Even members of the Public Service Board seemed surprised that FairPoint did not believe there was strong evidence to open an investigation into why they should retain their certificate of public good to operate here.
"I think everyone is aware, and the public is painfully aware, of the shortcomings of the company," said James Volz, the chairman of the Public Service Board, who earlier in the meeting said that FairPoint "has had plenty of notices as to what the concerns are."
Much of Wednesday's hearing was to determine a schedule for the next several months as the Board continues to monitor FairPoint, including setting the dates of future hearings and the scheduling of written testimony.
But the chance that the company could file for bankruptcy soon, could throw a wrench in those plans as the case transitions from a regulatory hearing to a court bankruptcy hearing. If that occurs, Vermont could file a petition to participate in the company's restructuring, as could the two other states in the deal.
Beth Fastiggi, a spokesperson for FairPoint in Vermont, said Wednesday that the company had reached agreements with some of its creditors to delay interest payments on money that it owes. She said it was essential for the company to restructure its debt.
"We have too much debt," she told reporters after the meeting. "We need to restructure our debt and that will either occur within the court system or outside of the court system."
daniel.barlow@rutland herald.com
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