Sunday, March 30, 2008

Verizon/FairPoint Deal Hits A Snag

It appears the Verizon/FairPoint deal hit a snag.

The meltdown in the financial market has hit close to home, causing an unexpected rise in the cost of financing for the Verizon/FairPoint sale. The interest at the time the deal was struck was expected to be 8%, but rose to 13.125%, which would add about $27 million in interest payments every year. This increase puts the financials into question, which triggered meetings of the Maine, New Hampshire, and Vermont Public Utilities Commissions to discuss the issue.

Neither state PUC has made any decisions about any additional actions to be taken in light of the changes. However, the New Hampshire PUC has given its approval of the deal even with the increased costs of the sale.

Frankly, I am dismayed the NHPUC didn't take this opportunity to delay the deal. There are still too many unanswered questions, and I believe the consumers in all three states will end up with a substandard and soon to be obsolescent telecommunications infrastructure using older, non-upgradeable technology. Northern New England may end up a broadband hinterland, something that will have a negative effect on our respective state economies.

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