New legislation music to ears of Fairpoint executives

Posted June 13, 2011, at 10:32 p.m.
Last modified June 14, 2011, at 10:36 a.m.

BANGOR, Maine — While more and more customers have been hanging up on Fairpoint Communications Inc. and switching to wireless or cable companies for their phone and Internet needs, the news isn’t all bad for the New England telecommunications provider.

Recently passed legislation already signed by Gov. Paul LePage could be a boon for Fairpoint.

LD 1466 directs the Maine Public Utilities Commission to submit a plan to reform Maine’s telecommunications regulations to the Joint Standing Committee on Energy, Utilities and Technology by the end of this year.

“This all comes right after the governor’s call to reduce regulation and restrictions on business,” said Fairpoint Maine president Mike Reed.

That call is one Reed and Fairpoint officials are eager to accept.

“You didn’t hear me say I want to be deregulated,” said Reed. “We don’t want to be deregulated yet. We just have to get less regulated to match the increase in competition.”

The bill, sponsored by Rep. Stacey Fitts of Pittsfield, sets the goal of creating a regulatory framework that ensures a level playing field for all telecommunications providers, whether they are local exchange carriers, wireless companies or cable companies.

“Cable companies are clearly one of our biggest competitors [for both phone and Internet]. There’s no doubt about that,” Reed said. “Five years ago, I think they were still just serving [phone] customers in the Portland area and started out with a 1,000-customer trial early in the 2000s and didn’t really gain much traction, but all of a sudden, they are a very, very big competitor where they serve, and they serve where it’s profitable for them.” 

Fairpoint is an Incumbent Local Exchange Carrier, or carrier of last resort while cable, wireless and Internet service providers, such as Time Warner and Vonage are Competitive Local Exchange Carriers. The basic difference? In competitive terms, ILEC’s are required by law to make phone access available to everyone in their coverage areas, no matter how remote or expensive it is, while CLEC’s only have to make service available where it’s financially feasible or profitable.

“We are subject to a lot of conditions and restrictions as a last-resort carrier,” said Reed. “For example, we’ve been required to report major outages to the PUC within two hours or we’re subject to fines.”

When a CLEC experiences a service outage, the ILEC whose lines or network the CLEC uses is still responsible for fixing the problem, although the ILEC could bill the other carrier for the cost of repair.

“Everybody’s going to be migrating to voiceover IP,” said Reed, referring to Voice over Internet Protocol, or VoIP, technology, which uses a broadband Internet service provider to connect calls to the standard telephone system.

But, VoIP companies will give Fairpoint new corporate business, while also siphoning even more residential land line users away.

“From reports I’ve read and testimony I’ve heard, there are around 170,000 cable TV customers getting their telephone service through cable in this state. There are probably close to a million wireless devices in this state and about 20 percent of them are cord cutters,” Reed said. “But while we’re losing land line customers, we’re gaining broadband customers.”

CORRECTION:

An earlier version of this story referred to Fairpoint Maine president incorrectly throughout. His name is Mike Reed, not Mike Peters.

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