Verizon deal is a step backward

The future of the New Hampshire economy and the health and viability of our businesses depend upon having an advanced telecommunications infrastructure similar to that which has been installed in much of the country, and in every advanced nation in the world. It has not been accomplished in many areas of our state (most notably the North Country) and will not be accomplished if the Public Utilities Commission approves the Verizon/FairPoint acquisition.

Verizon has failed to provide our state with the technology it has deployed in other states. Instead, the company proposes to sell all of its residential and small business landlines to a far smaller company, FairPoint Communications. For its part, FairPoint has made numerous promises as part of the deal – to expand broadband within the state, retain current high quality jobs, expand its workforce and so on. There are issues, however.

As any business owner knows, rapid expansion of any business is financially risky. That is a concern with FairPoint. FairPoint proposes to acquire a company five times its size in number of landlines, revenues and employees. In the process, FairPoint will take on $1.7 billion of new debt on top of an already heavy debt load. FairPoint will be highly leveraged and highly dependent on the availability of credit at a time of poor liquidity in the credit markets.

In addition, FairPoint will acquire Verizon assets that have been neglected for months, and in some cases, years. A distressed infrastructure combined with the financial burden this transaction would impose could result in little more than a declining telephone system depriving the people of New Hampshire of the technological advances being enjoyed by our business competitors in other states for decades to come.

According to Susan M. Baldwin, the consultant retained as an expert witness by the PUC’s Office of Consumer Advocate, the proposed transaction poses serious financial risks to New Hampshire residents. In fact, her testimony indicates that there is no set of conditions that would result in this proposed transaction being in the public interest.

She also was highly critical of Verizon’s service quality. We are concerned on behalf of our communities and businesses that the quality of existing landlines will be found not suitable for the deployment of DSL (FairPoint’s answer to broadband – an already outdated technology), even ignoring the financial risks involved in the transaction. If FairPoint is unable to make 71 percent of the lines DSL-quality by 2010, New Hampshire businesses will be even further behind other areas of the country, which Verizon will be servicing with fiber optic.

We should not be willing to roll the dice and hope for the best when the future of economic development and job creation in New Hampshire are at stake.

New Hampshire needs a comprehensive telecommunications plan to address all of the technological and geographical challenges we face. Part of the solution may be a public-private partnership to supplement and augment the existing infrastructure in the state. We need to work in partnership with all of the carriers, municipalities and non-profit organizations in the state to promote competition and avoid redundancy. We need a strategy that will permit businesses in Colebrook, Bath and Stewartstown to compete and grow.

We recognize that we have to make a commitment to getting this job done for our economic health and our future. Walking away from the Verizon/FairPoint transaction is the best way to protect the viability and growth of New Hampshire’s businesses.

The PUC should not approve the sale, should insist that Verizon fulfill previous promises made to the state in return for which the company received concessions, and should insist that any proposed sale be to a company that has the financial capability of ensuring that the residents of New Hampshire get the modern telecommunications infrastructure they need and deserve.

Sen. Deborah Reynolds, a Democrat, represents District 3, Sen. Jacalyn Cilley, a Democrat, represents District 4, and Sen. Robert Letourneau, a Republican, represents District 19 in the New Hampshire Senate.