FairPoint delays Verizon takeover again

FairPoint Communications has announced a second two-month delay in its official break from Verizon, pushing the takeover date to late January.

The delay comes on the heels of a consultant’s report describing “significant gaps” in FairPoint’s readiness for what is known as the official “cutover.” FairPoint had originally planned to take over from Verizon this month but had already pushed it back to November before a Sept. 15 announcement of a further delay.

“The activity is monumental in terms of what we needed to do,” FairPoint spokesperson Jill Wurm said. “We just want to make sure everything is ready for a smooth transition.”

To FairPoint customers, the delay won’t be noticeable except for another postponement in transition from e-mail addresses ending in “verizon.net” to those ending in “myfairpoint.net.” That switch should coincide with the January transition.

The terms of the $2.4 billion sale in March allowed FairPoint to use Verizon’s equipment and operating systems until it gets its own running.

Liberty Consulting Group, the company hired to monitor the transition, said in a Sept. 15 report that FairPoint wasn’t ready for the transition. The report said FairPoint still needs to complete system testing, fill key staff positions, conduct training and resolve issues with competing phone companies connecting into the system.

“All the piece parts of this very complicated development have yet to completely come together,” the report said. “Much progress has happened recently, which means that there has been uncomfortably little time for those involved to take stock of where they are and what might be missing.”

In a statement, FairPoint downplayed the financial impacts of the delay, despite $16.5 million a month payments to Verizon for its help in the transition process.

The payment drops to $16 million in December, FairPoint said, and a company called Capgemini, which is helping FairPoint with the transition, will pay January’s $15.5 million payment in exchange for stock.

The Capgemini arrangement was established as part of regulators’ approval of the sale, designed to handle concerns that financial problems could overwhelm FairPoint as it took over operations that caused it to grow five-fold overnight.

‘Done right the first time’

An official with one of the unions representing FairPoint employees said that he has no problem with the delay.

“We want it done right the first time. So if that takes a little longer, that’s fine with us,” said Glenn Brackett, business manager for the International Brotherhood of Electrical Workers in New Hampshire.

Both unions representing Verizon employees initially opposed the sale to Charlotte, N.C.-based FairPoint, then a relative unknown in New England.

The purchase of Verizon’s assets in New Hampshire, Maine and Vermont catapulted FairPoint to the eighth-largest telecom company in the nation.

Brackett said he lost 25 percent of his membership to retirement before the sale was completed.

Wurm said FairPoint is reducing Verizon’s some 600 operating systems to 60 through the advent of new technology. Tasks include things like creating a new billing and service entry systems, she said.

To read the entire consultant’s report about FairPoint’s unreadiness to cut free from Verizon, go to the Public Utilities Commission Web site at puc.state.nh.us/Telecom/ FairPoint.htm.