FairPoint Scrambles For Relief

July 8th, 2009 by · Leave a Comment

It is no secret that over the past year, FairPoint Communications (news, filings) has had a few integration problems.  Okay, more than a few.  Since buying Verizon (NYSE:VZ, news, filings)'s assets in northern New England, they have had all sorts of problems up there.  In the process, they have run up penalties with local phone companies of $2.8M due to subpar service and those pesky service level agreements and such.  The company has now asked the Maine Public Utilities commission to waive $850K of those penalties.

The reason?  That would be "unprecedented and unforeseen issues" and "situations beyond FairPoint's control."  Unforeseen?  Perhaps.  Unprecedented?  Hardly.  Beyond FairPoints control?  Err, the whole point of the penalties is that FairPoint didn't excercise control over what it said it had control over.  In other words, they had a contract to provide something, didn't provide it, and now want to get paid in full anyway.  But not agreeing to this will mean they won't have the resources to fix the problems in the future.  No wonder the smaller phone companies are a tad angry, eh? 

It's never a good sign when a company with $1.2B in revenue asks for relief of $850K.  FairPoint is clearly running out of time and options.  I do hope they pull through, but I also hope that Frontier Communications (NYSE:FTR, news, filings) learns from their mistakes when they take over Verizon's other rural assets.

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Categories: ILECs, PTTs

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