Sale skeptics say letters to PUC oppose Verizon's lines sale

MANCHESTER – Nearly nine out of 10 letters filed with the New Hampshire Public Utilities Commission through mid-November oppose the three-state sale of Verizon's wireline business to FairPoint Communications, according to an analysis released by Jobs With Justice.

Meanwhile this week, Verizon and FairPoint responded to a hearing examiner's report to the Maine Public Utilities Commission, which recommended rejecting the deal, calling the report one-sided and biased and charging that it ignored expert witnesses presented by Verizon.

Of 252 letters and e-mails taking a position on the proposed $2.7 billion sale of Verizon's landline telephone business in New Hampshire, Maine and Vermont, 225 comments, or 89 percent, were against the sale, while only 27 were for it, according to the analysis by the Boston chapter of Jobs with Justice, a coalition of unions and other community organizations.

The analysis also found that 62 of 64 comments submitted by elected officials, or 97 percent, opposed the sale, while only two were in favor.

Another 10 comments expressed concerns, but did not take a position either for or against the proposed sale.

Glenn Brackett, business manager for International Brotherhood of Electrical Workers Local 2320, which represents more than 1,000 workers at Verizon in New Hampshire, said the letters point out, "As people became aware of what this deal was about, they became overwhelmingly against it

"It's a sweet deal for two companies and nobody else."

Unions representing more than 3,000 Verizon workers in Maine, New Hampshire and Vermont began a letter writing campaign to state legislators and the Public Utilities Commission to block the sale in January shortly after the proposed deal was announced.

However, "the focus of IBEW and CWA's efforts have been on getting the public to contact PUCs and their legislators and elected officials with concerns about the sale, not union members," Rand Wilson, spokesman for the AFL-CIO, said.

'Arbitrary' report

The companies this week had strong words criticizing the Maine Hearing Examiner's report.

In a written filing with the Maine PUC, Verizon said the Maine Hearing Examiner's report was "arbitrary and capricious."

"The report contains no analysis, findings of fact or conclusions of law about the likely risk of any of the feared outcomes. Moreover, the report fails to give any weight to FairPoint's testimony about its expected performance when measured against its peer or guidelines," Verizon's attorneys wrote.

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"We brought in two witnesses who are extraordinarily experienced in the industry," FairPoint Chairman Gene Johnson said in a telephone interview yesterday. "One was analyst of the year in telecom and is a very well-known witness, and the second is kind of the leading analyst today for the independent, non-RBOC industry." (RBOCs are the regional Bell operating such as Verizon that formed after the break up of AT&T in 1984.)

Those witnesses testified the transaction is 30 to 40 percent cheaper than previous transactions done by RBOCs in selling lines, if not the cheapest transaction done in the last 15 years or so, he said.

"The writers of the report seem to imply that there was something wrong with the deal, because Verizon was using a tax structure that reduced its taxes, and it kind of panned the fact that we're paying less because of that," Johnson said. He the tax-free nature of the transaction to Verizon shareholders, who would own 60 percent of FairPoint after the merger, made the deal possible and would benefit ratepayers.

"They ought to be pleased that Verizon structured this kind of transaction," he said. "We could not have bought the company at a price that made sense for Verizon if it were not for this kind of structure."

Rulings expected

In New Hampshire, Consumer Advocate Meredith A. Hatfield also has recommended rejecting the deal as it is currently structured.

The Maine PUC will deliberate on Dec. 13. New Hampshire and Vermont commissions have not set dates for deliberations, but all three PUCs are expected to rule on the case by the end of the year.

The deal would bring 1.5 million telephone lines under the FairPoint umbrella in the three states, five times the number of customers the North Carolina-based company currently serves in the 18 states where it operates.

The major issue during recently concluded regulatory public hearings was conversion of those landlines into high-speed Internet access lines. Verizon halted most of its rural conversion in favor of rolling out high-speed DSL service in more urban areas around the country, as it crafted the deal with FairPoint to shed the landline business in northern New England.

The expense of upgrading Internet service for rural customers was another point of contention during the hearings. FairPoint plans to borrow $1.7 billion of the $2.7 billion purchase price.

Regarding the union analysis of letters to the New Hampshire commission, FairPoint Chairman Johnson said, it "speaks to that there is a tremendous political campaign by the unions.

"In the public hearings, we had hundreds of people that stood up and spoke on our behalf ... literally hundreds of people that spoke on FairPoint's behalf at those hearings," he said.

Mark MacKenzie, president of the New Hampshire AFL-CIO, said in a statement, "As the commissioners deliberate, we really hope they will take into consideration the wisdom of the people of New Hampshire.

"A clear majority of citizens are very concerned that this sale is not in the public's interest."