Complex phone transition to FairPoint poised to wrap up

On Jan. 30, the cord will officially be cut on Verizon’s landline business in New Hampshire, Maine and Vermont.

Two years after the telephone giant announced plans to sell its landline and DSL business here to a little-known Charlotte, N.C., company for $2.7 billion, FairPoint is finally ready to sever the last tie with Verizon.

This twice-delayed “cutover” from Verizon to FairPoint computer systems is by far the most complex piece of a multifaceted transition. It’s expected to take more than two weeks, wrapping up Feb. 9.

For customers, it means the return of online billing and a required switch from the old “” e-mail addresses to one ending in “” There will be some delays in completing service requests for the next few weeks, but the telephone and Internet connections should work as normal, FairPoint says.

>>FairPoint Watch<< For FairPoint, this is a big moment, the culmination of more than two years of fighting against the improbable. Heated union opposition and wary regulators in all three states once threatened to kill this David and Goliath deal. Critics feared FairPoint was too small to take on a telephone operation that's six times larger than the rural exchanges it previously controlled. They worried the company was taking on more debt that it could pay back. In response, FairPoint waged an aggressive marketing campaign, infused with reminders that FairPoint wanted to be here and Verizon clearly wanted out. Early last year, regulators in all three states eventually said "yes" to the deal, but not without imposing strict conditions on the company - from how much money it should invest in all three states to a timetable for DSL expansion. Now FairPoint says it's anxious to begin "business as usual." It has overcome some big obstacles in the last couple years, but faces another one it couldn't have anticipated: a recession. 10 days just to transfer data

By now, customers are probably used to the FairPoint name. The signs were changed and trucks painted nearly a year ago. But all the behind-the-scenes systems have been rented from Verizon at a cost of $16 million a month.

FairPoint expects save about $10 million a month just by switching over to its own computer systems.

The physical transfer of all that data has long been considered risky because of its enormity. FairPoint will have to take all of the information Verizon stored on about 2 million access lines in three states – including names, addresses, billing history and payment information – and transfer it a completely different computer system that has to flow through 127 central offices.

That transfer of data alone will take 10 days, said Jeffrey W. Allen, FairPoint’s executive vice president for external relations.

“This is more complex than any transaction I can think of in the industry,” Allen said. “It’s every system.”

Because of the sheer complexity, this week’s cutover has been delayed twice from its original September date to allow more time to prepare and train employees. Allen said the September date was “optimistic.”

Aside from the huge cost savings, FairPoint is eager to split from Verizon to shed the restrictions that came with using the company’s computer systems. By contract, FairPoint hasn’t been allowed to change prices or introduce products or promotions in the last 10 months.

“That was part of the deal,” Allen said. “It was no surprise, but it was restrictive.”

FairPoint has plans this year to introduce bundling packages and other promotions to entice new customers. It hopes to lure back some of the customers who have abandoned landlines at an even faster rate than anticipated in the last year.

The company is also about to launch a pilot program in Portsmouth to test its TV service – a much anticipated competitor to cable. By the fall of this year, FairPoint plans to introduce the service in New Hampshire communities that have fiber-optic lines – which includes parts of Nashua.

Verizon was in the process of rolling out FiOS, its super-fast fiber-optic telephone, cable and Internet service, in the highest-density New Hampshire cities and towns before announcing plans to leave the state.

FairPoint has no plans to expand the service – instead focusing on expanding DSL into even the most rural areas of northern New England – but has re-branded the service as FAST and kept it intact where it already exists.

Adjusting to the recession

At a time when companies across the country are scaling back on investments and making budget cuts, FairPoint has little choice but to continue pouring money into its new northern New England business.

Conditions of the deal in all three states require millions of dollars of infrastructure investments in the coming years.

FairPoint also pledged to create hundreds of new jobs in New England, and has delivered on that promise. About 275 new hires were promised for New Hampshire, and FairPoint has surpassed that number.

The broadband expansion and TV rollout will undoubtedly cost millions.

And then there’s the $2.4 billion in debt FairPoint took on after the purchase price was finalized.

But, how is it that a company in a declining industry can pour millions and millions into a business at all – particularly in the midst of a recession – and survive?

Allen said the company has made some adjustments to respond to the declining economy.

The company had planned to bring in-house the credit and collections work that Verizon outsourced. But after looking at the numbers and realizing it would cost more, that idea was nixed, Allen said.

Although the company is pouring money into hiring for some segments of the company – including sales – it has had to cut back on staff in other areas, he said.

“We continue to look for more ways to be efficient without impacting the customer,” Allen said.

To be safe, the company drew extra money from its line of credit several months ago at the height of the financial crisis to make sure it would have funding available when it’s needed.

The company is also banking on bringing in a significant amount of new revenue when the TV service is rolled out and the broadband expansion is complete.