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FairPoint to use $2.8 million penalty to fund more NH broadband

New Hampshire Union Leader

February 04. 2013 6:20PM

CONCORD - The Public Utilities Commission on Jan. 29 approved a proposal by FairPoint Communications to use $2.8 million in service quality penalties incurred in 2009 and 2010 to expand high-speed Internet to under-served parts of the state.

As part of the agreement, the company will invest an additional $500,000, bringing the value of the project to $3.3 million.

That's enough to bring broadband Internet to 2,500 homes, business or schools throughout the state that now only have access to much slower and less-reliable Internet connections, according to a company spokesperson.

FairPoint incurred the penalties for problems that arose when telephone and Internet service in the state was transferred from Verizon. The penalties were based on such measures as how long it took for a customer to get an answer at a call center; how long it took to get dial tone installed; how long it took to get a problem fixed; and how many network problems were reported per 100 access lines.

"The majority of the penalties were incurred in 2009, and were associated with FairPoint's process of migrating to new systems," said Sabina Haskell, director of regional public relations for FairPoint. "In the past few years, FairPoint has significantly improved its system efficiencies."

The PUC initially approved the concept of using the penalty money to expand broadband service, rather than a rebate to customers, in June. It ordered FairPoint to develop an implementation plan and set up an escrow account for the funds separate from the company operating accounts. That plan was approved last week, setting the stage for work to begin with a completion deadline of Dec. 31 of this year.

Commission Chairman Amy L. Ignatius and Commissioner Robert R. Scott joined in approving the concept of funding broadband investment with service quality penalties in an order issued June 26. In a dissenting opinion, Commissioner Michael Harrington wrote, "I continue to believe that money left in the hands of thousands of ratepayers to spend as they see fit will produce more benefits for New Hampshire than the Public Utilities Commission deciding how best to spend it."

PUC Telecommunications Division Director Kathryn M. Bailey said at the time, "Staff believes that broadband is a really important telecommunications service that all customers should have access to, but it was really a commission public interest determination on whether it was appropriate to use this money for that."

The locations that will get the enhanced connections are still confidential, Haskell said, but noted that "the new locations are far-reaching and touch all 10 New Hampshire counties. The goal behind the plan is to deliver in under-served areas."

In order to obtain PUC approval for the plan, the company had to agree to expand throughout the state, not just in the North Country, and had to specify a minimum number of broadband connections that will be made above the 95 percent of the state already required.

If the company abandons the effort, for whatever reason, the balance in escrow will have to be credited to customers.

"The work involved is typical of any broadband expansion we do," Haskell said. "It involves a planning and engineering review, followed by design, equipment ordering, construction and site location provisioning - all before we open sales to customers. Several different teams will support the effort."

The work has to be completed by the end of the year to meet the terms of the PUC approval, "but we hope to finish prior to that," she said.

The penalty-funded expansion is in addition to FairPoint's ongoing plan to increase broadband access to 95 percent in its New Hampshire service areas by the end of 2013. The company reported to the PUC at the end of last year that it was at 93 percent.

Fairpoint worked with the PUC staff and the state Department of Resources and Economic Development to determine the specific regions to benefit from the expansion.

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