We knew it would be bad. Heck, beyond all the ink in all the other newspapers, we at the Portland Phoenix printed 4500 words over the course of six months explaining what was wrong with the Verizon-FairPoint merger, in which a North Carolina-based little-phone-company-that-could spent $2.3 billion of mostly borrowed money to take over the northern New England operations of one of the world’s largest telecommunications companies (see “A Bad Idea Triumphs,” by Jeff Inglis, February 29).
But it is with a distinct feeling of dismay (though perhaps just a touch of schadenfreude) that we report that the change-over has been more disastrous than even we thought: FairPoint is performing terribly now, and all signs point to the situation getting far worse, and probably never getting better.
Let’s move past the MISSING ONLINE BILLING SYSTEM that has customers in Maine, New Hampshire, and Vermont upset at having to buy stamps to mail in their payments for phone service. That’s still not resolved, but it’s relatively minor — and the company says it’ll be fixed by late fall. Liberty Consulting Group, the Pennsylvania-based company monitoring FairPoint’s transition for regulators in all three states, says it shouldn’t be a big problem. (You’ll see shortly that neither FairPoint nor Liberty is establishing a very good track record for this sort of promise, but there are much bigger fish to fry than complaints about adding 42 cents to everyone’s phone bill.)
We can less easily dismiss the fact that more workers have left the company than FairPoint predicted, leaving the new outfit SHORT OF EXPERIENCED WORKERS at a time when customers need reassurance — which usually comes in the form of speedy, competent service. That goes for both in-person physical repair work and over-the-phone support.
FairPoint had said that, upon closing the deal, it would hire an additional 675 employees in northern New England. But as of March 31, according to a report from Liberty, the company had 10 percent fewer employees than Verizon had had 10 months earlier, meaning it needs to hire replacements for roughly 270 people before economic-development number-crunchers can even begin to count any “new” workers. FairPoint corporate communications manager Jill Healey Wurm says the company needs to hire a total of roughly 900 people, but wouldn’t give a reason for the increased number. The company had hired 260 people as of the end of April, the most recent numbers Liberty or FairPoint have disclosed.
Liberty, though, says not all 900 positions need to be filled, and has claimed that only “key” positions do — while simultaneously recognizing that defining the word “key” is ... well, key, and refusing to define it.
But honestly, those issues too are small potatoes compared to three other problems lurking just under the radar, hidden in plain sight, in Liberty’s reports — all of which are available on the Web sites of the Maine and New Hampshire Public Utilities Commissions (the NHPUC one is much easier to find and use, atwww.puc.state.nh.us/Telecom/FairPoint.htm).
Moving at a snail’s pace
The first major problem is the speed of FairPoint’s takeover from Verizon, which is ALREADY FOUR MONTHS BEHIND SCHEDULE, a delay that means customers will not see the lower phone rates promised by FairPoint until December at the earliest, rather than August, as regulators had hoped. (In December, FairPoint customers in Maine will get a credit retroactive to August, totaling around $20 per phone line.) The original transition plan gave FairPoint four months after the date the deal actually closed to prepare to take over all phone-system operations from Verizon (an event called the “cutover”).
But months before closing, FairPoint was saying it would need more time to get ready, in January estimating it would need five months post-closing. Liberty’s January 14 report, its second monthly summary of FairPoint’s preparedness, called that deadline “very aggressive” and expressed “doubts that FairPoint can meet” it. In its February 11 report, Liberty was even more worried, calling the five-month schedule “extremely aggressive.”
By Liberty’s March 7 report, the closing was slated for March 31, and FairPoint was saying it needed six months post-close, delaying the cutover to “late September” at the earliest. While Liberty called the delay “helpful,” the consulting firm wrote that it was “too soon to assess the likelihood that FairPoint will be able (to) meet a September cutover date.”
Its April 10 report also saw Liberty saying it was “too early to judge” FairPoint’s ability to take over in September, but by May 9, Liberty was calling it “unlikely” that FairPoint would be ready in time.
And a month later, on June 6, Liberty’s report just plain said it: FairPoint’s four-months-plus-two-extra target of a September cutover was “unrealistic” because testing was nowhere near complete, neither of new software created by FairPoint to handle the former Verizon systems, nor of connections with other telephone companies. Liberty then recommended the cutover be delayed another two months, and happen sometime in November, saying it did “not anticipate any substantial roadblocks to FairPoint’s meeting that date.”
