Without an agreement by Fairpoint’s bondholders to delay repayment of at least 95% of FairPoint’s debt, the troubled phone company could find itself in bankruptcy by the end of the year.

That is the company’s own assessment in its most recent filings with the Securities and Exchange Commission.  FairPoint’s crushing debt was taken on in order to purchase the assets of Verizon Communications in three New England states — Maine, New Hampshire, and Vermont.  Verizon has been dumping customers in less proftable areas to concentrate on more populated areas.

Since the sale, it has been one nightmare after another for consumers in those three states, dealing with a phone company called “abysmal,” and a “third-world telephone company” by its customers, and “completely unacceptable” by several state regulators.  From Vermont, where inept employees bungled even the simplest tasks of maintaining basic telephone and Internet service, to New Hampshire where incompetence forced a few businesses to seriously contemplate moving to Massachusetts just to get a telephone line installed, to Maine, where life-threatening 911 failures caused havoc, FairPoint has not proven worthy of running telephone service for any customer in New England.

“There’s no satisfaction in saying I told you so,” said Rand Wilson, a spokesman for the International Brotherhood of Electrical Workers Local 2222 in Boston. “FairPoint said their experience would be different.”

The IBEW was one of the first critics of the sale, and focused their attention directly on point – the debt the company would take on to make the deal.  They ran advertising in all of the impacted states and also pressured lawmakers to review the deal more carefully.

Audio Clip: International Brotherhood of Electrical Workers Radio Spots (3 minutes)
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The IBEW has experience with bad telephone companies.  In Hawaii, their members blasted a deal where a private equity firm borrowed heavily to purchase Hawaii’s largest phone company from Verizon in 2005.  It was also a disaster for consumers, with lousy customer service, declining revenue, and eventual bankruptcy.  IBEW warned state officials pondering a Verizon-FairPoint deal about their experiences.  State officials didn’t listen.

Now those same officials are hiring consultants to prepare their states for the real possibility of FairPoint going bust by the end of the year.  Should that happen, phone service will almost certainly continue for millions of New England FairPoint customers.  But as far as a restructured FairPoint keeping all of the promises it made to get approval of the deal, residents may find those deals are disconnected or no longer in service.

Joost Signs Off

Joost, the online video service that preceded Hulu but has since been overshadowed by it, has announced it is shifting priorities away from serving online video to consumers, to serve cable operators and other media companies with their own ready-made online video platforms instead.

Joost’s failure comes as a result of the difficult advertising marketplace.  Like Hulu, and many other ad-supported websites, the ongoing recession has made it difficult to attract advertisers to support the costs of licensing and distributing television shows and movies.  As a result, the company today announced it would be refocusing itself on selling its services to other media providers.  Joost tried to market itself to cable companies earlier this year, reportedly talking with Time Warner about buying out the service.  But no deals were forthcoming, and the financial picture at Joost appeared bleak.

Joost still will maintain its website with some of the content it continues to hold licensing agreements to stream to viewers.  But once those agreements expire, the future of the site itself becomes an open question.

In simplified terms, Joost plans to sell a ready-to-run video platform to any media company that wants to deliver online video to customers, subscribers, or the public.  The media company simply has to customize its website’s look, and Joost’s streaming technology will run underneath it.  Joost already uses copy protection and authentication technology to “pre-authorize” viewers to permit them to access content based on their Internet address and location (licensing agreements often are for individual countries only, not worldwide), so their platform is already capable of restricting access to authorized viewers only.

Joost was the brainchild of Niklas Zennström and Janus Friis, the duo that also founded the music swapping service Kazaa and the popular Skype calling service.  All three services originally relied on a peer-to-peer distribution platform, which meant while you swapped music on Kazaa, make phone calls on Skype, or watch videos on Joost, the software quietly shared some of your bandwidth with other users to help transport music, phone calls, or video.  Joost required users to download a software application to access the service, something that proved unpopular with the Internet masses.  Hulu soon appeared and allowed people to watch video right from their browsers and quickly overran Joost in popularity.

By the time Joost came up with their own browser-based service, dumping the peer-to-peer distribution model, it was too late.  Most major networks and content producers had already signed their allegiance to Hulu, and Joost’s content selection stayed largely stagnant.  At one point, Joost tried to bring in user-created content and short form video, but most viewers weren’t interested.

It’s the second failure among online video services this month.  Microsoft announced in mid-June it was “scaling back” Soapbox, its attempt to rival YouTube with user-generated video content.  Soapbox had actually been around since 2006, but was often used to post copyrighted video content hassled off of YouTube.  By 2007, Microsoft stopped accepting new users until it got copyright violations under control, but by the time it returned, nobody outside of Microsoft’s Redmond, Washington campus cared.  The service now primarily exists to host Microsoft-generated video content.

Verizon is concerned about potential risks for data hacking and security breaches associated with mergers and acquisitions in undertakes.  The Verizon Business Risk Team reported that 13% of the breaches studied in 2008 involved companies undergoing transition as part of a merger or acquisition.

Verizon signaled caution to prospective Frontier Communications territories about to be spun away from Verizon:

“Mergers and acquisitions bring together not only the people and products of once separate organizations, but their technology environments as well. Integration rarely happens overnight or without a hitch.”

TheDeal.com writes Verizon has the experience to understand the risks, as both a buyer and seller.

Verizon’s selling of its operations in New England to FairPoint Communications was particularly noted, because of ongoing billing, customer care, and other transition problems, some of which are still unresolved to this day.

Charter Communications is going to have some major competition in the Massachusetts city of Groton over the next year as city officials signed a 15-year franchise agreement with Verizon Communications to bring the fiber-to-the-home service to area residents.

Verizon promised to introduce FiOS service to area residents immediately, with a build out to nearby communities taking place over a four year period.  The deal brings competitive choice to Groton, which until now has relied exclusively on Charter Cable for cable television service.

Verizon agreed to spend $112,500 to outfit four locations with broadcast equipment and provide three public access channels.  Equipment will be installed at the Town Hall for local government coverage, the local public library, the middle school Performing Arts Center and a nearby senior center.  The franchise fee will be 4.2% of local earnings and a 50 cent fee per subscriber per year, all paid to Groton’s local government.

The loudest complaint came from one resident who wanted to know why service might not be immediately available on his street.  He told local officials Charter had the “worst service” on his street and wanted the Verizon alternative immediately.

While residential customers face the threat of Internet Overcharging schemes designed to ration their use of the Internet with excessive pricing combined with usage limits, business customers are finding the opposite:  providers rolling out several new innovative services designed to control costs and increase broadband flexibility.

Verizon Business‘ Ethernet Virtual Private Line Service customers, who enjoy enormously fast speeds over a fiber-based network, will now have the ability to customize their bandwidth on-demand, through an online control panel.

Verizon EVPL Dynamic Bandwidth enables customers to raise or lower their broadband speeds as needed, and pay for their broadband service based on the speed they select.  The service is designed to maximize savings for businesses that have a periodic need for higher bandwidth, but don’t feel justified paying for a higher tier of service that will go unused at other times.  A customer accesses an online control panel, reviews pricing for different levels of speed, and then selects the option that best meets their needs.

Customers can raise or lower both the upload and download speeds once every 24 hours.  The requested capacity is provided within 60 minutes, and the control panel lets customers schedule bandwidth needs in advance.

The Dynamic Bandwidth service supports speeds between 1Mbps all the way up to 1000Mbps, depending on available facilities in your area.

“There is an insatiable hunger for bandwidth as technologies such as video transmission become more widely adopted by enterprises,” said Blair Crump, worldwide president of sales with Verizon Business.  “Our self-service dynamic bandwidth capability allows our EVPL and Private IP customers to make the most of their networks, at their convenience.”

David Hold, senior analyst, network services with Current Analysis, said: “Verizon Business is delivering a unique value proposition to the Ethernet services market with their new dynamic bandwidth capability.  With the proliferation of sophisticated, bandwidth-intensive applications, most organizations are demanding greater network capacity, and this new capability will help customers improve their return on investment in EVPL by only paying for greater speed when needed.”

Speed-based tiered pricing is familiar to consumers, and does not raise the same level of concern that consumption-based billing schemes do.  It is based on the premise that those heavy users of broadband will naturally gravitate towards higher speed, more expensive tiers of service to enjoy faster speeds.  The provider’s premium pricing also guarantees premium profits.

While residential customers bear the brunt of Internet Overcharging experiments based on data consumption, most business-class customers curiously escape such limits and fees.  Indeed, if the rationale for such pricing is based on demands placed on the network infrastructure, business customers, who face pricing commensurate with their anticipated higher usage, should be the natural first candidates for experimentation, not the ones exempted from it.

Verizon Business’ new speed based tiering demonstrates that there is money to be made providing customers with their choice of speed, without alienating them with unwarranted usage limits and the penalties and fees that follow those who exceed them.