Labor intervenors in the regulatory oversight of the proposed sale of Verizon's landlines to FairPoint Communications submitted testimony to the Vermont Public Service Board concluding that modifications to the transaction as proposed by settlements in Maine and Vermont do not meet reasonable standards for financial fitness.

According to expert witness Randy Barber, "this transaction could create profound – even perverse – incentives for FairPoint to cut expenses and capital spending...just when it should be continuing to invest heavily in rebuilding the communications network."

Barber is president of the Center for Economic Organizing and has been an expert witness for the telecom workers' unions in all three state regulatory proceedings. He testified at the PSB hearing in Montpelier on January 30.

Last December, the Maine Hearing Examiner found that Verizon would need to provide $600 to $700 million to make FairPoint financially viable. Verizon has only agreed to provide FairPoint with $297.5 million, less than one-half the amount needed. Meanwhile, FairPoint has already been forced to make firm financial commitments that essentially use up Verizon's contribution and it has agreed to "continent" obligations that far exceed it.

The Maine PUC required Verizon to provide $12 million additional for broadband investment in that state. The New Hampshire stipulation (which has not yet been approved by the N.H. PUC) requires Verizon to provide an additional $50 million for investment in that state. The Department of Public Service proposal does not include any amount from Verizon dedicated for Vermont.

"The proposed stipulation in Vermont yet again lets Verizon off the hook for the hundreds of millions of additional dollars it should be putting into this transaction," Barber wrote in a pre-filed brief submitted to the PSB on January 24. "Instead, it forces FairPoint to dig itself even further in the hole and foot the bill for every single provision that the DPS extracted from it. In the process, it amplifies the perverse incentives to cut service and spending that FairPoint already accepted in the Maine proceedings.

"Verizon should not be permitted to abandon Vermont without making adequate provision for the future prospects of its customers, communities and employers. Absent a very significant increased financial commitment from Verizon, I conclude that FairPoint will not be financially fit to own and operate Verizon's Vermont network. The Board, therefore, should reject the proposed stipulation and affirm its earlier decision rejecting the transaction."

VT statehouse hearing set for Thurs, Jan. 31

Barber will testify for the IBEW and the CWA at a Senate Economic Development Committee hearing at 8:30 AM in Room 10 at the statehouse on Thursday, January 31. The committee is chaired by Senator Vince Illuzzi.

The hearing was called after Speaker of the House Gaye Symington, Senate President Pro Tempore Peter Shumlin, Senate Committee on Economic Development, Housing & General Affairs Chair Vincent Illuzzi, and House Committee on Commerce Chair Warren Kitzmiller wrote to the PSB on January 16 with concerns about the impact of the proposed revised Verizon FairPoint proposal.

The elected officials wrote that the stipulation must, "ensure that FairPoint has the financial capacity to provide affordable broadband by the year 2010 to all residences and businesses in all regions of the state that Verizon serves. (30 V.S.A. Chapter 91, Sec. 8060(b)(1))."

The hearing invoking their statutory obligations established in Act 79, "the strong recommendation...that any company seeking to acquire the assets and network of Verizon New England, Inc. have the capabilities and intentions to furnish broadband services that are sufficient to meet the rapidly evolving needs of Vermont residents, businesses and institutions."

Barber will also provide an update to the Vermont House Commerce Committee at 11:30 AM in Room 35.

Copies of the Mr. Barber's testimony are available from the PSB or by request from Rand Wilson at the above number or by email to rand (at) mindspring.com. More information about the campaign to Stop the Sale is on www.stop-the-sale.org and www.no-deal.org.