Hearing Examiner recommends that Maine Public Utilities Commission reject sale of Verizon to FairPoint

Cautions against “Anybody But Verizon” mentality

In a report written on behalf of the Public Utilities Commission’s advisory staff, the Hearing Examiner recommended that the Commission reject the joint Verizon and FairPoint petition for approval of the sale of Verizon’s assets to FairPoint. Hearing Examiner Trina Bragdon released the report on November 26.

Bragdon wrote in the report’s introduction that, “taken as a whole, the proposed Transaction subjects both ratepayers and shareholders to substantial risks and harms that are not outweighed by any of the potential benefits of the Transaction.”

“The Examiner’s report echoes what the Office of the Public Advocate and we have been saying all along,” said Pete McLaughlin, Business Manager of IBEW Local 2327. “With each passing day, support for this ill-conceived transaction is dwindling. This report is encouraging news for Maine and its future economic development.”

The Examiner’s report shares the view advocated by the Office of the Public Advocate and the two unions representing Verizon employees that conditions on the sale would be critical if the Commission approves the deal. “Indeed, without many of these conditions, the Examiners believe that ratepayers would be harmed by the Transaction,” Bragdon wrote.

Significantly, the report cautioned “the Commission that it should not let its displeasure with Verizon’s lack of cooperation and investment in Maine over the past five years influence the Commission’s decision. The Commission should not succumb to the “anybody but Verizon” mentality that even Verizon, itself, seems to be encouraging. The Commission must make its decision based upon the evidence, or lack thereof, in the record of this proceeding.”

In the event that the sale is approved the, the Hearing Examiner’s report recommends 49 potential conditions the Commission could impose on Verizon and FairPoint to ameliorate the risks and harms to ratepayers and shareholders. Highlights of those conditions include:
· Renegotiate the terms of the agreement so that FairPoint's debt is reduced by $600 million
· Reduce FairPoint's dividend by 30 percent annually
· Verizon to grant FairPoint permission to hire former Verizon workers without a waiting period
· Renegotiate the Transition Services Agreement for a $0 cost for six months and thereafter at a reduced cost until retired workers are replaced and giving the PUC the right to suspend the cutover
· Require FairPoint to develop a plan to address the potential loss of experienced workers
· Require FairPoint to meet stronger service quality standards with higher penalties
· Require FairPoint to increase broadband investment and for Verizon to pay $12 million
· Require FairPoint to establish a separate subsidiary for DSL related services for three years.