FairPoint answers to tri-state inquiry

Posted Sept. 09, 2009, at 10:04 p.m.

DERRY, N.H. — State regulators from Maine, New Hampshire and Vermont questioned FairPoint executives on Wednesday about the company’s plans to rebuild its reputation with customers and pressed for timelines to fix lingering service problems.

FairPoint officials offered few definitive timelines other than a mid-November target for receiving a consultant’s list of recommended changes. But FairPoint representatives sought to assure regulators that they are making significant progress addressing the issues that have plagued the company for months.

“I have a huge sense of urgency,” FairPoint CEO David Hauser told regulators. “Let’s face it, northern New England is what makes or breaks FairPoint.”

Throughout Wednesday’s unusual joint meeting, members of the Maine Public Utilities Commission, the Vermont Public Service Board and the New Hampshire Public Utilities Commission pressed Hauser and other FairPoint officials for details on the next steps in the company’s recovery.

The commissioners also expressed frustration that more than six months after FairPoint took over Verizon’s telecommunications and Internet businesses, consumers continue to contact their offices with complaints — albeit fewer of them.

“There may have been significant strides, but we are still well short of where we expected to be,” said Thomas Getz, chairman of the New Hampshire PUC.

Eighty-nine percent of calls into FairPoint’s customer service center are answered within 20 seconds, according to company statistics. That is down from waits so long several months ago that many customers simply hung up.

Customer service orders are also completed within the standard time window 78 percent of the time. But that is still below FairPoint’s goal of 90 percent on-time delivery, said Jeff Allen, executive vice president for the northern New England operations.

The number of unresolved issues that eventually reach the regulators has also declined sharply. But FairPoint officials acknowledged that those “escalation” figures are still about three times higher than before the switch-over from Verizon. And some customers continue to report billing problems.

“I don’t want to overstate the positives,” Hauser said. “We have plenty of room for improvement. We know we’re not reducing the number of customer complaints that escalate to you fast enough.”

However, such statistics are sometimes part of the problem, according to the regulators.

Consumer advocate groups, regulatory agencies and other telecommunications businesses affected by FairPoint’s struggles have complained about inconsistencies and inaccuracies in the figures supplied by the company and consultants.

Maine PUC member Vendean Vafiades suggested such inconsistencies undermined the company’s credibility. Allen and Hauser replied that those statistics are usually accurate but were simply crunched differently, depending on the end user.

FairPoint is working on a weekly report to the agencies that will include uniform statistics.

Regulators also pressed company officials on how recent organizational changes would improve operations and help executives fix long-standing problems. Hauser said the one major change has been a shift from focusing on short-term “Band-Aids” to specific customer complaints to identifying and addressing what is often a bigger underlying problem within the system.

“What we want to do now is go to the root cause,” he said.

On the financial side, the executives said they continue to attempt to restructure the company’s debt but acknowledged that Chapter 11 bankruptcy is a possibility if those negotiations with creditors fail. Responding to several questions, Hauser assured the regulators that a bankruptcy filing would not affect the services that customers receive.

Asked at one point how the executives hope to win back customers, Hauser replied:

“I think the product will speak for itself, once we get there.”

One bright spot noted Wednesday was in the area of high-speed Internet, which officials regard as key to the company’s long-term business plan. Orders with FairPoint for DSL and high-speed Internet rose 250 percent between July 2008 and July 2009, officials said.

While regulators asked numerous targeted questions, there were no fireworks during Wednesday’s hearing.

William Black, deputy public advocate with the Maine Public Advocate Office, said he was disappointed to hear FairPoint vice president Vicky Weatherwax tell the regulators that an outside consultant’s report on recommended changes won’t be complete until mid-November. That means the company won’t start im-plementing those changes until December, he said.

“We heard a lot of language suggesting that the problems are going to be fixed,” Black said after the meeting. More than six months after the true scope of the problems became clear, Black added, “It’s time for fixing.”

Black’s counterpart from New Hampshire also walked away from the meeting largely unimpressed.

Meredith Hatfield, the New Hampshire consumer advocate, said, “We didn’t really leave with anything more concrete than when we went in.”

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