Senate approves bill aimed at ensuring Maine benefits from sale or reorganization of FairPoint

The Bangor office entrance of FairPoint Communications in this October 2009 file photo.
Bridget Brown | BDN
The Bangor office entrance of FairPoint Communications in this October 2009 file photo.
Posted April 03, 2014, at 3:48 p.m.

AUGUSTA, Maine — A bill to make sure Mainers benefit from any merger, reorganization or sale of the state’s largest telecom utility, FairPoint, won approval in the Senate Thursday morning.

FairPoint, which owns and operates the backbone of Maine’s telephone infrastructure and provides DSL broadband services, was involved in a contentious reorganization of the utility in 2008, when it acquired the network from Verizon.

Workforce shrinkage and customer-service system failures, compounded with the rapidly changing communications market, sent the company into bankruptcy in 2009. FairPoint emerged in 2011, with new ownership, including a handful of hedge funds.

Since then, things have improved for both FairPoint, which saw revenue stabilize in the last two quarters of 2013, and for customers. But industry observers and unions representing FairPoint workers say the company is positioning itself to be sold.

Wary of another fiasco, Rep. Barry Hobbins, D-Saco, sponsored LD 1761, which would increase the standard the Public Utilities Commission will use in deciding whether to approve any reorganization of FairPoint’s assets in Maine. The bill passed the Senate Thursday on a 21-14 vote.

Rather than the usual standard — that a deal must “do no harm” to Maine’s ratepayers — the bill would instruct the PUC to only approve any deal that stood to create a “net benefit” for Mainers. The new standard would only apply to deals involving telecom utilities with net Maine revenue more than $50 million. That means it applies only to FairPoint.

Sen. Ed Youngblood, R-Brewer, was one of 14 senators to oppose the bill, saying it was unfair to target FairPoint for increased regulation.

“There are states that have changed from a ‘do no harm’ philosophy to one of ‘net affirmative benefit,’ but [they changed the standard] for everyone,” he said. “Why are we saying it’s only good for one, but not the other?”

Sen. John Cleveland, D-Auburn, chairs the Legislature’s Energy Committee. He said deals involving FairPoint deserved the higher standard because it is so large and because rapid, disruptive changes to the telecom industry — from the expansion of cellphone service and the introduction of cable-based alternatives — create an imperative to protect ratepayers.

“Because it’s so different, because it’s changing so rapidly, because there are entirely new paradigms on how businesses have to be operated to be successful, it’s appropriate, wise and cautious to ask the PUC to use this different lens,” he said.

FairPoint has said the bill is unfair and will send a negative message to other businesses seeking to invest in Maine. It also says it’s unnecessary because the PUC already has the authority to impose conditions on any utility reorganization.

The bill, already approved in the House, faces final procedural votes in both chambers. Barring any sudden changes of heart, it is likely to be enacted and sent to Gov. Paul LePage for his approval or veto.

Follow Mario Moretto on Twitter at @riocarmine.

 

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