Tuesday, March 31, 2009

FairPoint Feeling The Heat

And the hits keep on coming!

FairPoint Communications is in the crosshairs again, with rising customer complaints, poor customer service, billing problems, and a host of other issues that have driven over 80,000 customers away from the company. As an editorial in the Laconia Citizen asks, can FairPoint survive its mis-steps?

Concerns over customer service woes at FairPoint have been in the public’s sights for two months, and pressure has increased for the communications provider to address them. Particularly nettlesome to the company and its customers have been the operation of the company’s call centers, the billing process and how it handles orders.

Earlier this year, an international credit rating agency lowered its outlook for FairPoint from stable to negative because it lost an unexpected number of access lines and customers. Reports in January had the company shedding 80,000 customers since buying Verizon’s assets in Maine, New Hampshire and Vermont.

Today, it seems fleeing customers remain the rule and not the exception.

The Associated Press reported earlier this month that subscribers still are heading for the door to escape the tie of landlines. Subscribers became itchy last year when Verizon sold out. It was a 12 percent loss of subscribers compared to a nationwide average of 7 percent.

Now, reported the AP, more customers are fleeing after experiencing e-mail, Internet and customer service problems in recent weeks.

When FairPoint purchased Verizon’s landline telephone and broadband Internet network last year there were widespread concerns. Approval of regulators in New England’s three northern states came only after months of hearings. Consumer advocates and regulators expressed deep worries about FairPoint’s ability to finance the $2.3 billion undertaking as well as operate and manage an area as large as it was seeking to take over in this corner of the Northeast.

The transfer took place despite the lingering doubts of many observers and some regulators.

I was one of them, as you've seen from earlier posts I made on the subject.

FairPoint bit off more than it could chew, taking on a debt load many times its net worth.

They have plans to deploy a broadband technology that is considered “so yesterday” it's a wonder why they would bother at all. With better technology out there – fiber optics or some of the newer wireless broadband technologies – why deploy DSL (Digital Subscriber Line) when it can't match the speeds of even some of the slower cable Internet providers? While the argument could be made that DSL is cheaper, that is no longer the case. DSL has its limitations, something FairPoint knows quite well. Yet it decided to gamble on this increasingly less effective technology. Is it any wonder they're losing customers?

The consumers in northern New England were sold a bill of goods. FairPoint hasn't delivered as promised, is suffering from falling revenue, has a bad PR problem, and a debt load that would make some Third World nations take a pass.

This isn't going to end well.

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