‘Cautiously Optimistic:’ IBEW Leaders See Reasons to Like Proposed FairPoint Sale

FairPoint’s purchase of Verizon’s landline business in northern New England eight years ago was beset by problems from the beginning. 

 

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That’s why IBEW leaders think FairPoint’s proposed sale to Consolidated Communications – which has been in the telephone business for more than a century – is potentially good news.

“We want a company to come in here and run the business and provide good telephone and broadband service,” said Augusta, Maine, Local 2327 Business Manager Peter J. McLaughlin, who is chairman of a three-state council that includes Manchester, N.H., Local 2320 and Montpelier, Vt., Local 2326.

“Maine, New Hampshire and Vermont are very rural states,” McLaughlin added. “Our connection to outside states is broadband in a lot of places. Our businesses up here really need that.”

Consolidated announced on Dec. 5 it had purchased FairPoint for $1.5 billon pending regulatory approval, which is expected by mid-2017. The majority of IBEW members employed by FairPoint are based in northern New England. Others are in New York, Ohio, Virginia, Missouri, Washington and Oregon.

“I think a new perspective and a fresh set of eyes are a good opportunity,” Broadcasting and Telecommunications Department Director Martha Pultar said. “We’re cautiously optimistic this will end up being a good thing.”

North Carolina-based FairPoint completed its $2.3 billion purchase of Verizon’s landlines in 2008. It filed for Chapter 11 bankruptcy less than two years later and didn’t emerge from it until 2011. It later sued Verizon for $2 billion, alleging it lured it into the purchase that led to the bankruptcy.  (The case was settled for $95 million in 2014.)

The impact on workers was felt in late 2014, when a four-month strike involving 1,700 northern New England employees who were IBEW and Communications Workers of America members began. That ended in February 2015 and about 220 employees were laid off in the summer of that year.

Things haven’t been much better recently. The Maine Public Utilities Commission is considering a $500,000 fine against FairPoint for failure to meet commitments to landline customers. The company laid off about 110 employees in Maine, Vermont and New Hampshire just before Christmas, despite a plea from Vermont senator and former presidential candidate Bernie Sanders. FairPoint had about 4,000 employees at the time of the purchase from Verizon. Now, it stands at 2,500.

Pultar noted the IBEW was opposed to the FairPoint purchase of the Verizon landlines from the start.

“We were fighting the sale because we knew they didn’t have the ability to run the business,” she said. “We thought it would be about three years [until the bankruptcy]. Instead, it was 18 months.”

Consolidated is based in Mattoon, Ill., and opened for business in 1894 as the Mattoon Telephone Company. It currently has operations in 11 states. It will more than double in size ffrom 1,800 to 4,400 employees after the sale’s approval, company officials said.. The size of its fiber optic network will increase from 14,000 to 35,000 miles.

IBEW leaders are encouraged the network will be managed by people with firsthand knowledge of telecommunications, which wasn’t the case with FairPoint’s private equity owners.

“They have a lot of homegrown senior management who are telephone people,” McLaughlin said. “The head of human resources seemed to have a working knowledge of the telephone business when I spoke with him. I was glad to hear that.”

That wasn’t necessarily the case with FairPoint, especially after hedge fund Maglan Capital gained equity during the 2009 bankruptcy proceedings as part of its loan-to-own deal with the company. Maglan called for four FairPoint directors to resign earlier this year and for the company to sell itself.

“Once the [2009] deal was made, the hedge funds took over,” McLaughlin said.

Northern New England has an educated consumer base in search of a reliable telecommunications company with a commitment to superior customer service, McLaughlin said.

“There is so much room for growth in these three states,” he said. “Someone that comes in here and does a good job has a real opportunity.”

McLaughlin noted that IBEW members usually are the ones who deal with public complaints about FairPoint’s poor service – whether it’s a technician visiting a home or a customer service employee answering a call. They want a company with a commitment to quality, he said.

“We live here,” he said. “Our friends and neighbors and family live here, too. They know we’re the telephone guys. When it gets messed up, they knock on our doors and ask why we can’t get service.”