PUC alters how FairPoint can meet broadband service expansion requirements

Posted Aug. 13, 2013, at 12:26 p.m.
Last modified Aug. 13, 2013, at 7:49 p.m.

HALLOWELL, Maine — The Maine Public Utilities Commission voted Tuesday morning to change the obligations FairPoint Communications must meet with respect to investing in the expansion of broadband in Maine.

Tom Welch, the commission’s chairman, acknowledged the vote likely will mean some customers in rural Maine will not see their Internet speed improved, but said the change represents a reasonable trade-off that will allow FairPoint to take other actions to improve the overall quality of its broadband service. Commissioner David Littell, however, disagreed.

The PUC’s three commissioners voted 2-1 to accept a stipulation agreement submitted last week by FairPoint, and supported by Maine’s Office of the Public Advocate, which changes the way in which telecommunication lines are counted toward the expansion goals FairPoint must meet. The stipulation agreement also commits FairPoint to invest an undisclosed amount in improving “broadband facilities and services in Maine that will benefit small businesses and residential customers.”

Commissioner Mark Vannoy joined Welch in voting to accept the stipulation agreement.

The implication of what this vote means is in dispute.

Littell said during deliberations that the stipulation agreement “substantially” reduces the broadband speed that some Maine customers will have access to, and that approving the settlement “is not in the public interest.”

“The stipulation before us today substantially reduces the speed and the number of Maine residents and small businesses that would receive either faster or any broadband service at all,” Littell said during deliberations. “In exchange for relaxing the speed and number of lines covered, the public advocate has given up much and received very little in return, nothing in fact that is not already required of FairPoint.”

Welch said that Littell is likely correct in his assumption that some Maine residents no longer will receive upgrades to faster speeds but that the trade-off in the long run is a better deal for Mainers.

“The implication probably is — I think this is fair to say — there will be some customers in some of the more rural areas who will not have their speed improved,” Welch told the Bangor Daily News after the PUC vote. “The trade-off is FairPoint will commit to invest a certain amount of money improving broadband in other ways throughout the state for commercial and residential customers. One of things it committed to do is upgrade the number of central offices to provide significant increases in speed for customers served out of those offices, something they were not required to do under the prior order.”

Welch said the regulatory obligations related to broadband speed that were included in the original deal are out of date, and that forcing FairPoint to invest capital to meet those now outdated thresholds — basically to improve the speed in some areas from inadequate to slightly less inadequate — doesn’t make financial sense.

The amount FairPoint is now committed to invest is not being disclosed for competitive reasons. Tim Schneider, Maine’s public advocate, said the number is “substantial.”

FairPoint Communications acquired Verizon’s land-line and broadband business in Maine in March 2008. As part of the acquisition, FairPoint at the time agreed to expand broadband access to 90 percent of its existing customers in Maine and to invest $57 million in its Maine network. After FairPoint filed for bankruptcy in 2009, the percentage goal was dropped to 87 percent, and the investment requirement was dropped altogether.

“Our calculations are that this stipulation, taken as a whole and taken with FairPoint’s expenditures to date, is that Mainers are getting more broadband investment than was bargained for in the 2008 agreement,” Schneider said Tuesday.

The stipulation agreement approved on Tuesday morning does not alter FairPoint’s obligation to meet goals for the percentage of its customers with access to broadband. The agreement requires FairPoint to make broadband available to 85 percent of its existing customers by Aug. 14, 2013, and 87 percent by April 14, 2014. If those goals aren’t met, the company will be required to make it available to 90 percent of customers by May 1, 2015.

Those goals will be easier to meet now that the stipulation agreement has been approved.

In a statement sent to the BDN, FairPoint’s Jeffrey Nevins said, “We are pleased that the commission approved the agreement that was developed in cooperation with the Office of the Public Advocate. The agreement is in the best interest of all the parties and most importantly, the users and consumers of broadband services in Maine.”

Littell also took the opportunity during the Tuesday morning deliberations to voice his concern about the secretive nature in which some of these dealings were completed, noting that the redacted version of the stipulation agreement the commission was voting on had been made available to the public only Monday, the day before the vote. He also noted that last week’s hearing had not been open to the public, and a redacted version of that transcript was not yet available to the public.

“The public and the media have had no idea FairPoint is again seeking to reduce its broadband commitment in Maine after losing its arguments at the law court,” he said during deliberations, referring to a previous law court decision that did not favor FairPoint’s efforts to reduce its regulatory obligations.

Schneider, the public advocate, doesn’t agree with Littell.

“There are many proceedings at the PUC where individual members of the public are not participants,” he said. “We certainly want things to be open as possible.”

The “tight timeline” was driven by a deadline for federal funding that FairPoint hoped to meet, Schneider said. The outcome of the PUC proceedings would have impaired FairPoint’s ability to receive those federal funds, he said.

“It’s no secret we would have preferred more time to negotiate this but the deadlines were what they were,” he said, then added: “I would say though, there has been no greater critic of broadband obligations than my staff and my office. They have both the expertise and the history of aggressively scrutinizing the company’s broadband expenditures.”

Littell said the talk of timelines provided “a false sense of urgency,” and that the company’s desire to link its willingness to consider applying for those funds to the approval of the stipulation agreement “is inappropriate.”

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