FairPoint seeks to lower fines for service issues

Posted Oct. 17, 2010, at 7 p.m.

AUGUSTA, Maine — FairPoint Communications wants the Public Utilities Commission to reduce the penalties it faces for the service quality problems it had after it bought the land line phone service of Verizon.

“We are not asking for them to waive the penalties,” said FairPoint spokesman Jeff Nevins. “But we are asking them to waive the multiplier effect that was put in effect before FairPoint was the owner of the land lines here in northern New England.”

Part of the agreement when FairPoint bought the Verizon land lines in the state was a continuation of the formula set for Verizon in determining the penalties that would be imposed by the PUC if service quality standards were not met.

Public Advocate Richard Davies said his office is reviewing the petition filed earlier this month that asks the PUC to change the formula for setting penalties when FairPoint fails to measure up to the Service Quality Indicators set by the commission.

“The reality of this is that it all goes back to the company that they hired as their contractor to replace the old Verizon system,” he said. “This mostly goes back to that cut-over when there were a lot of problems for a lot of people.”

Newspapers and broadcast news reports were full of stories in 2009 about Mainers who could not get phones repaired and businesses that could not add phone lines or get a DSL installed for Internet service by FairPoint. Both residential and business customers complained they could not reach customer service, and when they did, they could not set a firm time for repairs or installations.

The most serious of the service problems were in Cumberland and Penobscot counties, earning FairPoint a separate $25,000 fine from the PUC for problems consumers had reaching emergency 911 dispatch services.

“We recognize that our system’s transition did not go very well,” Nevins said. “We are showing now that we are making significant improvements in our service quality. In our filing, we show that we are doing considerably better than the standard they have set for answering the phones and responding to make repairs and the like.”

Nevins pointed out the company is in the process of paying a fine for the year 2008 quality-of-service problems with those reflected as lower rates for customers. He said the company expects they also will have to pay a fine for 2009, but they do not want the fine as large as it would be if the formula inherited from Verizon were used to determine the amount.

“We had some unusual circumstances in our systems transition,” he said, “but we have gone beyond that now, and we don’t think the multipliers [in the penalty formula] should apply.”

Nevins said the use of the multipliers would double the penalty the company would have to pay, and that level of penalty is not warranted given the progress the company has made this year in its service.

“I think the penalty is about $10 million,” Davies said. “I haven’t seen any figures on that. I can certainly understand why they are seeking to reduce the penalty. I would if I were in their management and trying to come out of bankruptcy.”

Davies said he has not decided what his position will be on the request and is continuing to review the documents filed in the case. He does have concerns about the financial condition of FairPoint as it seeks to take itself out of bankruptcy.

“We reviewed a lot of material in the bankruptcy case about the finances of FairPoint,” he said, “and I have to say we are concerned that even though they will be in better shape after they come out of bankruptcy, they will still face some significant challenges.”

Davies said the company is continuing to build out its Internet services provided through DSL lines, but is facing stiff competition in many of its service areas from other providers such as cable TV systems and wireless systems.

“And I think they misjudged how fast people would drop their land line phone and use just a cell phone,” he said.

The latest federal figures indicate there are just more than 600,000 land line phones in Maine, a number that continues to decrease. The number of cell phones in the state continues to grow — now topping 1 million.

SEE COMMENTS →

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business

Similar Articles

More in Politics