FairPoint executive hopes bill will modernize state’s telecommunication regulations

Posted May 11, 2011, at 11:09 a.m.
Last modified May 11, 2011, at 1:56 p.m.
Michael C. Reed
Warren Roos
Michael C. Reed

PORTLAND, Maine — The head of FairPoint’s Maine operations is hopeful that a bill making its way through the Legislature will modernize the regulation of telecommunications in the state, equalizing oversight and requirements for the variety of businesses that play in that sector now.

LD 1466 received a unanimous vote out of the Utilities and Energy Committee on Tuesday, said Michael Reed, Maine state president for FairPoint.

“The bill recognizes we have a diversity of regulation in the state and that technology has gone beyond the usual processes,” said Reed, speaking at the Portland Regional Chamber’s Eggs & Issues breakfast Wednesday.

Wireless companies, cable companies, local phone companies, large telecoms and other businesses all provide different levels of phone and Internet services in the state, Reed noted, and regulations need to be updated to reflect that.

The bill seeks to create “a nondiscriminatory regulatory structure for all telecommunications providers, for the purpose of fostering continued competition and ensuring a free market for telecommunications services,” according to a description on the state’s website. Reed said the bill would have regulators study ways to move toward that parity.

About 150 people turned out Tuesday to hear Reed speak. He acknowledged that FairPoint had a “rocky” start in its entrance to Northern New England. The company bought Verizon’s land line business in Maine, New Hampshire and Vermont in 2008. In the transition, it moved data from more than 600 older Verizon systems into 60 new FairPoint systems – a move that was fraught with glitches that inconvenienced customers.

“It didn’t go the way FairPoint hoped it would go,” said Reed.

Reed acknowledged that the glitches hurt the company.

“In the highly competitive environment we’re in, if we provide bad service to our customers, they go to our competitors,” said Reed.

In 2009, the company filed for Chapter 11 bankruptcy. It emerged from bankruptcy in January with a 64 percent reduction in debt. It still has a total debt of $1 billion. According to a recent story in The Telegraph of Nashua, N.H., citing Securities and Exchange filings, FairPoint lost $282 million in 2010, a larger loss than the $241 million in 2009. Industry analysts told the paper that the loss wasn’t horrible news as long as it was a sign of continued investment in modern fiber technology.

Reed said that since buying the operations in 2008, FairPoint has invested $152 million in communications infrastructure in the three states and has built out more than 1,500 miles of fiber. Overall, it has increased the availability of broadband in its territory from 68 percent to 83 percent in Maine, said Reed.

Reed also noted that the company last year completed work on a network that supports 1,600 wireless towers in Maine. This is important to the exploding handheld market, he noted. The cell phone in a user’s hand communicates wirelessly with cell towers, but the towers rely on fiber optic networks to secure the data and send it back out to the phones. The investment will allow carriers in Maine to transition from a 3G network to a 4G network, Reed said.

While FairPoint may lose wireline customers to cell phones, the company benefits from the increased use of those networks servicing wireless towers, he said.

“That network is the future of our company,” said Reed.

Reed said the Maine operations include 1,500 employees with annual wages of $118 million a year and health care costs of $18.5 million. The company spent $129 million on local products and services in 2010, he said.

“We have a very significant footprint as an employer in Maine,” said Reed.

 

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