FairPoint takes battle over landline service to lawmakers

Posted April 30, 2015, at 8:12 p.m.

PORTLAND, Maine — FairPoint Communications has about 29,000 landline customers it’s required to serve, regardless of profitability, and the company wants out of that arrangement.

Maine’s largest telecommunications provider has helped draft a bill, LD 1302, that seeks to create a way for FairPoint or other obligated phone service providers to opt out of covering certain areas under state law.

The bill, which is the only one to deal with those service requirements this session, tees up a major policy issue that lingers from Maine’s deregulation of the telecommunications industry in 2012.

“We have a regulated service that we’re trying to find out how to provide funding for in a fully competitive environment,” Mike Reed, FairPoint’s president in Maine, said in a phone interview Wednesday.

Reed said that the bill would put FairPoint on level playing ground with competitors, but groups representing seniors, smaller phone companies, the workers union of FairPoint technicians and the Office of the Public Advocate came out strongly against the proposal during a hearing before the Legislature’s Energy Committee Thursday.

The bill is the company’s latest effort to tap state subsidies or remove the requirement it provide the universal landline access called provider of last resort, or POLR, service across its entire coverage area.

The advocate for utility ratepayers appointed by the governor took issue with FairPoint’s proposal because it seeks to do both.

“This is a win-win for the existing POLR provider: either it has no state regulatory obligations, or it receives funding from the commission to provide the service it is currently obligated to provide,” said Tim Schneider, Maine’s public advocate.

RoJean Tulk, government relations director at FairPoint, said during testimony Thursday that the bill aims to start a conversation about POLR landline service. Schneider said the bill goes further than that.

“This bill is no way to start the conversation on basic telephone service. I would urge the committee to treat this for what it is: a provocation, not a credible policy proposal to move this state forward,” Schneider said.

Tulk said Thursday the company was seeking either a positive recommendation for the bill or for the committee to carry it over into the next session, saying many of the issues are “too important to rush through.”

Opponents of the bill said there are other reasons to wait. FairPoint could decide to accept $38.1 million in federal funds to provide broadband and phone service to certain census blocks in its coverage areas, a possible grant amount announced Thursday.

Schneider and others said the Legislature should consider waiting to see how that affects phone service in the state before making changes to the POLR requirements.

Angelynne Beaudry, spokeswoman for FairPoint, said the company is still considering whether it will accept those federal funds, done on a state-by-state basis. It has 120 days to make a decision.

The bill calls for state utilities regulators to prune the list of areas eligible for POLR service by the end of 2015 if there are multiple phone options available and then set up a scheme for designating mandatory service providers in other areas of the state.

Reed said the bill first would free the company from mandatory service in urban areas, such as Portland, Lewiston and Bangor, based on the presence of other telecommunications providers, and still provide for required coverage in rural areas.

With that, the bill also would eliminate a requirement that POLR service include backup power systems that could continue to operate during an electricity outage.

Reed said that part of the bill was intended to reduce the costs for a company coming in to provide POLR service in rural areas.

Concerns about that provision and the impact on rural areas of the state raised most concern Thursday afternoon with testimony from groups representing the legal, medical and general interests of seniors in the state. They argued that many vulnerable Mainers depend on landlines to allow doctors to monitor pacemakers remotely, and to call 911.

“We’re very concerned that elderly rural patents have this universal service available until such time that we have the technology available [to replace it],” said Gordon Smith, executive vice president at the Maine Medical Association.

Peter McLaughlin, business manager for the International Brotherhood of Electrical Workers chapter representing FairPoint workers in Maine, also testified against the bill, but suggested the state should provide the company funding to subsidize that service.

The company in 2013 asked state utilities regulators for about $67 million from the state’s universal service fund for that purpose. The Legislature passed a bill claiming temporary authority through this summer to approve any such allocation, which the Maine Public Utilities Commission turned down, ruling FairPoint did not adequately prove it needed the money.

Reed said Wednesday he could not say just how much the company stands to save it if were relieved of its obligations to provide POLR service.

The bill, presented by committee member and Senate Majority Leader Garrett Mason, R-Lisbon, also drew opposition from smaller telecommunications providers, some of whom get state funds for serving POLR customers. The bill called for the eventual phase-out of that fund, called the Maine Universal Service Fund, by 2021.

Mason said introducing the bill that he “did not necessarily support” elimination of the state’s universal service fund but felt the issues around POLR needed to be discussed by the Legislature this session.

While the specifics of the bill drew harsh criticism Thursday, speakers testifying neither for nor against the bill gave committee members direction on related issues that could find their way to the Legislature.

Patrick Woodcock, director of the Governor’s Energy Office, testified that the state needs to revise its definition of “universal service” so that it is not specific to copper telephone lines.

“There are technologies that could provide a reliable service that were not available when we constructed this statute specifically,” Woodcock said. “I do think there’s an opportunity to define the service as a service and not as a technology.”

Andy Hagler, director of the PUC’s telephone and water divisions, encouraged the committee to think about that definition, too, making clear what the state should require for availability and accessibility of phone service throughout Maine.

“The central thing is that you want everyone to be able to have a service that calls 911 and copper is a very nice thing,” Hagler said. “I can’t predict it, but I wonder how long a copper telephone systems will exist in the future, as a practical matter.”

 

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