Sounds Heavy

Verizon Communications’ planned spin-off of landline operations in Maine, New Hampshire, and Vermont to FairPoint Communications has run into a roadblock as Vermont regulators have rejected Verizon’s plan.The Vermont Public Service Board’s rejection, was then followed up by a move by Maine’s Public Utilities Commission to postpone its Wednesday meeting to Jan. 3 to take up the issue. The Maine agency had previously reached an agreement with Verizon and that could now be reviewed.

The Vermont board issued a statement: “The board found that FairPoint had not demonstrated that it would be financially sound as it seeks to operate the newly acquired territories in Vermont, Maine, and New Hampshire — a service territory that has five times the number of access lines as FairPoint presently has.”

Verizon has been moving to divest older operations in mostly rural areas as its moves aggressively to deploy advanced wireless and fiber optic services in primarily urban areas.

The Vermont board was concerned that North Carolina based FairPoint, would be financially pressed to support the 1.6 million lines that Verizon seeks to shed. Fairpoint currently supports approximately 310,000 lines. The board noted that FairPoint would have to borrow $2.5 billion to support the transaction.

The Communications Workers of America, together with the AFL-CIO and the International Brotherhood of Electrical Workers are urging governors and lawmakers to consider an alternative to create a stronger communications network for northern New England residents. They have proposed establishing an independent telephone company that would create a stronger, more viable network, one that would:

– Be operated by local management dedicated to the region.

– Not be burdened with $2.3 billion in debt like FairPoint.

– Improve on Verizon’s record of investment in our communities versus FairPoint’s plan to cut that investment.

– Continue dividends at current (or lower levels) unlike FairPoint, which plans to pay twice as much in dividends as it earns in income.

The Vermont board’s decision doesn’t kill the Verizon-FairPoint deal and New Hampshire and Maine regulators have indicated they are expecting to review revised proposals from the two companies.

FairPoint spokeswoman Rose Cummings told the Associated Press that “this is a procedural move that we consider an invitation to discuss the conditions, to introduce more information into the record… We are looking at it as an invitation to continue discussions around conditions, just a procedural bump.”

In its decision, the Vermont board indicated it could approve the transfer of Verizon assets to FairPoint if the financial provisions and some other details can be ironed out.