Summary
While all the fingerpointing does not make it easy to assign blame accurately for Fairpoint's troubles, it does seem to be another example of financial considerations trumping engineering, operational, and dare one say it, public and customer service priorities.
Analysis
The outcome so far of Fairpoint's (an unfortunate name given the antonyms of both its syllables) takeover of the Northern New England fixed access assets of Verizon, has confirmed the fears and the prescience of those who warned of the consequences of this acquisition in light of their perceptions of the company's financial and operational capabilities or limitations. Whether one ascribes some or even significant blame for this state of affairs to state regulators or to other parties (of which there are several potential scapegoats, since some critics always tend to blame unions, others consultants), there is little doubt that FairPoint's management bears substantial responsibility for the problems its customers have encountered (which does not seem to have prevented bonuses being awarded to its President and former CEO who presided over the acquisition). To recover and improve its performance FairPoint has been appointing a number of new executives with experience in operations and customer service, as well as a new CEO. Under the best of circumstances it is difficult being a fixed-only access operator given the increased number of voice customers who are happy with mobile-only service. Success in offering broadband services is the most obvious way to mitigate the resulting decline in revenues by making it worthwhile for customers to keep their fixed copper lines for DSL service.
Of course FairPoint's dubious performance record is not stopping it from applying for broadband stimulus funding. Reportedly for example FairPoint is developing a $20 million proposal that builds on its existing Internet infrastructure in Maine, saying that this proposal will bring broadband access to 90 percent of Maine by 2013. Some might argue that this proposal is the telecommunications equivalent of the children who kill their parents and then ask for support because they are disadvantaged orphans. It will be interesting to see if any FairPoint proposals receive support from state or local officials, especially if other entities present competing alternative proposals to improve broadband coverage in rural Northern New England..
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
