Monday, August 24, 2009

FairPoint's Troubles Just Beginning

FairPoint Communications is in the news again, and not in a good way.

Local news outlets report an anonymous e-mail from a FairPoint “insider” alleges FairPoint “misrepresented test data” showing they were ready to take over operations from Verizon in northern New England.

FairPoint's cut-over to its independent systems began Jan. 30, 10 months after it acquired the landline business from Verizon in the three northern New England states. It leased computers and equipment from Verizon during the transition period leading up to cut-over. After the cut-over, FairPoint experienced delays in answering consumers' phone calls and processing orders for wholesale customers. There were also billing problems and other concerns.

An e-mail to the Vermont Public Service Board alleged that tests observed by Liberty Consulting Group on behalf of the three northern New England states were fakes -- not real-time, live demonstrations.

The attorney general offices of all three northern New England states are investigating the allegations.

Considering the troubles FairPoint customers have suffered since the cut-over from Verizon I have little problem believing the allegation. Customers haven't been receiving bills, have been unable to add, change, or terminate their phone service. Service calls takes weeks, if not months to complete. These problems have caused FairPoint to lose 13% of their customers over this past year.

The anonymous e-mail states FairPoint wasn't really ready for the cut-over.

In his original e-mail, sent Aug. 14 to regulators, the writer, who called himself "David Unavailable," wrote:

"As January neared and it appeared to everyone on site in Atlanta that there would be another delay, suddenly Peter Nixon (FairPoint's president) and Gene Johnson (its then-CEO) made the announcement that the cut to the new systems would take place at the end of January and the relationship with Verizon would end. Most people were stunned as it did not appear feasible."

In his later note to the AP, the writer said FairPoint had a strong incentive to complete the cutover: It was paying monthly fees to Verizon for continuing to use its system after the sale between the two companies closed. This was confirmed by a report filed by Liberty with state regulators.

If these allegations are true, then the people of northern New England were taken for $2.3 billion (the sale price of Verizon's landline assets) and will end up paying the price for the duplicitous actions of FairPoint's executives.

1 comment:

Anonymous said...

The majority share holder of Fairpoint is verizon, and they are probably going to do the same in mass in the near future. The are already talking about restructuring.