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Extended Coverage: FairPoint Goes Bankrupt: “Services Will Continue As Usual, Which Means Crappy,” Customer Says

Phillip Dampier October 26, 2009 Audio, FairPoint, Video 4 Comments

FairPointBarely 18 months after taking control of telephone and broadband service from Verizon Communications, FairPoint Communications collapsed under the weight of enormous debt and an economic downturn, announcing they would declare Chapter 11 bankruptcy this morning.

As Stop the Cap! reported Friday afternoon, sources told us the company had quietly notified key employees of the impending filing, which was expected as early as this weekend.  On Monday morning, the announcement of the filing was made to the media and to an unsurprised customer base of several million dissatisfied customers in Maine, New Hampshire, and Vermont who lived through a never-ending nightmare of bad service and broken promises from a company many believe “bit off more than they can chew.”

Today’s announcement may bring additional scrutiny to the next telecommunications deal Verizon has planned for customers in 13 states.  Frontier Communications, much like FairPoint, wants to take on the operations of a departing Verizon, who wants to disengage from smaller communities to focus on providing fiber optic telecommunications service in larger cities.  Today’s bankruptcy announcement marks three out of three failures for companies assuming control of Verizon’s discarded operations.  Hawaii Telcom declared bankruptcy last December, three years after being sold to The Carlyle Group, a politically well-connected private equity investment firm.  Idearc Media, a Verizon spinoff of the phone company’s print and online yellow pages business declared bankruptcy on March 31st, and FairPoint Communications, which took over Verizon’s northern New England phone operations made its bankruptcy known this morning.

Outside_Plant_Tech_Working_on_a_PoleFairPoint executives admit the downturn in the economy and much larger than anticipated conversion problems contributed to the declaration.  FairPoint has accumulated more than $2.7 billion in debt, mostly from the Verizon transaction, and faced difficulty making payments on that debt as credit markets froze and customers fled the terrible service problems that developed when the company tried to integrate 600 Verizon computer systems and software to 60 FairPoint systems on January 30th.

“Those two things contributed to FairPoint having too much debt, at the end of the day,” said David Hauser, chairman and CEO of FairPoint.

Creditors now effectively control FairPoint Communications, and they’ve agreed to forgive $1.7 billion dollars in debt and reduce the company’s interest payments to keep service operational.  Company officials are also looking for savings from cost-cutting measures.  Union officials are extremely concerned that could mean significant job losses for a company already stressed to provide service.  Although company officials characterized today’s announcement as a “non event” for FairPoint customers, many are not so sure.

“There have been a lot of promises made by FairPoint,” one customer told a Maine television station.  “Services that were promised are not being delivered,” said another.

Skepticism was rampant that today’s bankruptcy announcement would be the start of a new beginning for a restructured FairPoint.

“On the news they said that the services would go on as usual, which means crappy,” said one Maine customer in Portland.

Perhaps to underline that sentiment, FairPoint spokeswoman Jill Wurm reported FairPoint broadband’s e-mail service is out of order this evening.  Wurm said anyone with a fairpoint.net e-mail address has been without service since 6pm.  The company was unable to project an estimated time when service will be restored. It was also not known how many customers were affected.

Union leaders said they take no pleasure in the fact their predictions were all-too-accurate about the ultimate outcome of the FairPoint-Verizon deal.

Bucket_Truck-Pole_Repair“What good does it do us? We can say it, but we’re left here to deal with it,” Pete McLaughlin of the International Brotherhood of Electrical Workers, which represents FairPoint employees, told the Associated Press.

State regulators across all three New England states plan to keep a watchful eye on reorganization proceedings.  Special consultants and attorneys have been hired to give the states input and guidance as the restructuring commences.  For some consumers, that doesn’t provide much comfort because many of these same regulatory agencies approved the deal in the first place.

Stop the Cap! has extensive coverage of today’s developments from across all three states’ local newscasts.  We’ve also been notified representatives of utility boards now considering a similar spinoff with Frontier have also arrived here to gain our perspective on the sales deal now before them.  For that reason, we will continue covering FairPoint’s final months before today’s announcement to complete the record on FairPoint and its impact on customers, state regulators, and public safety officials.

Our coverage begins with today’s announcement, starting in Maine, where it was a lead story across the state.

WGME-TV in Portland leads their 6pm newscast this evening with the news of FairPoint’s bankruptcy and what it means for customers, some of whom remain skeptical. (5 minutes)

More video to view below ….

Residents in Vermont were hardly surprised to learn of this morning’s announcement.  Even as FairPoint stock trading was suspended, WPTZ-TV in Plattsburgh found company officials spinning today’s announcement as “good news.”  But on almost every point, FairPoint seems headed for a stormy winter ahead. (2 minutes)

Just over a week before today’s announcement, the International Brotherhood of Electrical Workers held a meeting in Concord, New Hampshire to discuss company requests for significant concessions from FairPoint’s employees.  WMUR-TV reports employees are upset they are being asked to pay for FairPoint’s mistakes. (10/18/2009 – 2 minutes)


FairPoint CEO David Hauser dismissed questions about whether, in hindsight, it was a good idea for North Carolina-based FairPoint to purchase northern New England telephone operations from Verizon.  WMUR-TV in Manchester, New Hampshire reports Hauser considers the question irrelevant.  But customers are starting to shop around looking for alternatives, joining more than 13% of customers who have already left. (2 minutes)


How FairPoint will realize savings from cost-cutting concerns many who work for FairPoint Communications.  The media is asking hard questions of company officials about how FairPoint can consider cutting employees when many already consider the company “way over its head” even at current staff levels.  FairPoint’s stock continues to take a beating.  On February 26, 2008 the stock was valued at $10.35.  As of last Friday’s close, the stock was worth just $0.37 a share, as WMUR-TV reports. (2 minutes)


FairPoint officials are trying to tell customers across Maine it will cut costs, live under bankruptcy reorganization for the time being, and yet still expand services throughout Maine.  WMTW-TV in Portland explores how Maine’s Public Utilities Commission will be able to hold FairPoint to those promises. (2 minutes)


NECN News, which serves cable subscribers across New England, talks with FairPoint’s biggest union about the bankruptcy, and interviews a bankruptcy attorney about what changes might be coming next. (2 minutes)

WCSH-TV in Portland, Maine talks with union officials who warned about the consequences of approving the FairPoint-Verizon deal in the first place, letting viewers know FairPoint is not overstaffed anywhere, and any cost cutting resulting in layoffs will be to the detriment of customers. (2 minutes)


Vermont Public Radio discusses the implications of today’s FairPoint bankruptcy. (3 minutes)
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Currently there are 4 comments on this Article:

  1. waiting and watching says:

    ??? So Fairpoint is being blamed for everything, and Verizon is not held accountable for anything? That is like saying Obama screwed up the economy and started the 2 wars right now, and Bush had nothing to do with it. Obama is at blame only for his part, and just because he is in charge now, doesn’t make him the one solely accountable, and Bush must accept his responsibility, and I think Verizon in this case should as well. Not because I am from NC, I don’t even know of Fairpoint before reading here; but because Verizon was already screwing up, so they should have to pay their fair share of fixing the problems that they created. I don’t recall anymore as long ago as it was, but if Fairpoint hadn’t moved in would those customers have anything right now, or would Verizon have just closed shop and left everyone stranded? Again, not trying to side with Farpoint, just seems they aren’t the only one to blame, and I hate people that use others as scapegoats. 🙁

  2. john m hughes111 says:

    What happens to stock holders now that they are in to bankruptcy ?

  3. waiting and watching says:

    Well unless they control major interests in the company, probably they just lose their investment. They won’t gain anymore dividend, but their share of payout come form profits. I don’t play the stocks, but don’t think they are liable for losses to the company beyond their investments. I don’t think anyone would go to take someones house for owning a few shares in Fairpoint now that it is bankrupt.

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