PORTLAND — Losing up to 10 percent of its landline customers a year, FairPoint Communications is staking its financial future on providing a robust broadband network for businesses and institutions, and fiber optic connections to wireless providers, the company’s Maine president told business leaders today.

“The future of telecommunications relies on a robust, core backbone network,” Mike Reed told a breakfast meeting of the Portland Regional Chamber.

Reed’s comments came five months after FairPoint emerged from bankruptcy protection, suffering from a crushing $2 billion debt load assumed during its 2008 purchase of Verizon’s landline service in northern New England.

FairPoint’s financial woes were made worse by widespread customer service problems as it attempted to switch over Verizon’s old network to a complex, new computer system. These problems damaged the company’s reputation, and accelerated the industry trend of customers abandoning landline service for mobile phones.

But FairPoint has made progress over the past year.

Through bankruptcy reorganization, it cut its debt by 64 percent, although it recorded a net loss last year of more than $281 million. Its stock, which had been delisted prior to the bankruptcy, is trading again on the NASDAQ exchange, recently at around $16 a share.

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FairPoint also has been working to repair its reputation by improving service quality, such as responding more quickly to installation and repair requests. That has allowed it to reverse $12.7 million of penalties in New Hampshire and Vermont, according to the company’s financial filings. In Maine, FairPoint is in the middle of its service quality review period with the Public Utilities Commission, and it’s too early to say whether the company is meeting the standards.

The company also slowed the loss of landline customers last year to the lowest rate since April of 2008, and increased high-speed Internet subscribers for the first time since mid-2009. It also made good on a commitment to regulators, as part of the Verizon sale, to expand broadband lines in the region. It now offers service to 83 percent of customers in Maine, 85 percent in New Hampshire and 80 percent in Vermont.

FairPoint remains the largest phone carrier in northern New England, but also has made great progress, Reed said, in finding new business through the construction of its VantagePoint Internet Protocol-based network.

Two examples:

  • It won a five-year, $25 million contract to provide broadband service to 1,000 schools and libraries in Maine, with enough bandwidth to give laptop-toting students high-speed access to the Internet.
  • It’s building new fiber-optic links to 1,600 cellphone towers in northern New England. These connections will help wireless carriers meet the exploding need for bandwith to handle smart phones, tablets and other devices, and support the evolving 4G service levels.

“This is a tremendous opportunity for FairPoint and an investment that will continue to bring in revenue for years to come,” Reed said.

Reed reminded participants that the “wireless” connections people now take for granted are really only from the phone to the tower. After that, they rely on the wired infrastructure known as “backhaul” to complete the call or download data.

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FairPoint, which as an incumbent telephone carrier is regulated by the PUC, also is striving for more freedom to compete with adversaries including Time Warner Cable and Comcast.

It stands to gain a major victory, if a bill endorsed Tuesday by Maine’s Energy, Utilities and Technology Committee is passed by the full Legislature. The bill aims to create an even, regulatory playing field for all telecom providers. Toward that goal, the PUC is being directed to submit a plan to the Legislature by January, describing what actions will be needed to make that happen.

But following Reed’s presentation, one consumer advocate struck a note of caution.

Despite its growth in new services, FairPoint remains the only telephone provider for thousands of Mainers, especially in rural areas, according to Wayne Jortner, a lawyer at the Office of Public Advocate.

“There’s still a need to protect customers who have no choice but FairPoint,” Jortner said. “To many customers, they still are a monopoly.” 


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