FairPoint's struggles continue

By JEFF INGLIS  |  September 1, 2010

This is particularly ironic in Maine, because FAIRPOINT HAS SPENT MONEY TO LOBBY AGAINST A HIGH-CAPACITY BROADBAND NETWORK to be built with state, federal, and private funds. The company has argued that such an effort would unfairly compete with the slower-speed and later-arriving service FairPoint promises it will one day get around to providing. But federal funds aren't the real issue: having failed to receive any of the $38 million in economic stimulus money it applied for a year ago, the company has nevertheless applied again, this time seeking $20 million in federal funds to build out its network.

In the past five months, two TOP EXECUTIVES HAVE LEFT, AND ARE BEING REPLACED WITH EXECUTIVES WITH PRIOR CORPORATE BANKRUPTCIES ON THEIR RESUMES. Alfred Giammarino, who became FairPoint's chief financial officer in September 2008, resigned March 31 for what were called "personal reasons." He was replaced July 18 with Ajay Sabherwal, who was CFO for Choice One Communications leading up to, during, and after that company's 2004 bankruptcy restructuring. And David Hauser, appointed CEO in June 2009, was asked to resign by the company's major creditors and did so in mid-August. He has been replaced with Paul Sunu, who was CFO of Hawaiian Telecom when that company, another former Verizon landline property, entered bankruptcy protection in 2008.

And then, if all that wasn't enough, FAIRPOINT HAS ARGUED THAT IT SHOULD FACELESS SCRUTINY FROM STATE AND FEDERAL REGULATORS after it emerges from bankruptcy. Specifically, the company told Vermont regulators that their oversight puts the company at a competitive disadvantage when offering Internet and television services that are not regulated by the state, in combined packages with landline service, which is regulated.

In making this argument, FAIRPOINT HAS FORGOTTEN THAT IT PROMISED THE PUBLIC MORE AND FASTER INTERNET ACCESS as a key element in its argument that its takeover of Verizon would benefit the public. Now that it has sought — and received — permission from state regulators to delay and renege on those promises, the public benefit is reduced. No wonder FairPoint wants less regulation.

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