The Maine Public Utilities Commission began on Monday to dig into FairPoint Communication’s request for a subsidy that, if approved, would increase the telephone bill of everyone in Maine who uses a cellphone or landline.

FairPoint, the largest landline provider in Maine, filed a request with the PUC last October that claimed it was losing money trying to meet a state mandate to provide what’s known as “provider of last resort” telephone service – basic landline telephone service with no bells and whistles – to anyone in its service territory, no matter how far they live from the nearest telephone pole.

To make up the shortfall, it is asking for a disbursement of $66.9 million from the Maine Universal Service Fund, which is collected through a small fee on everyone’s telephone bill.

The Universal Service Fund, a subsidy for rural telephone access, currently collects roughly $8.3 million a year in fees from Maine residents. If FairPoint’s request is approved, the average residential phone customer would see the fee jump from 38 cents every month to $3.40.

For a cellphone user paying $75 a month for service, an additional $5 per month would be assessed for the Universal Service Fund, according to estimates from the Maine Office of the Public Advocate.

FairPoint also is asking for permission to increase by $2 the rate it charges to its 29,000 customers who pay for basic telephone service. For residential customers, that would increase the monthly charge to $16.69 from $14.69, and to $34.28 from $32.28 for “provider of last resort” business customers.

PUC commissioners are expected to hear arguments from FairPoint that the company is following directions set forth in a 2013 report on “provider of last resort” service that the PUC delivered to the Legislature; opponents of the request claim it’s an attempt by the publicly traded company to increase its revenue to please investors.

This week, the PUC is conducting technical conferences – hearings where PUC staff ask questions of the parties involved and their witnesses. They were scheduled to begin with witnesses for the Office of the Public Advocate – an intervenor in FairPoint’s rate request case.

The rate request is expected to bring into sharp focus the changing landscape of the telecommunications industry since FairPoint bought Verizon’s landline business in Maine, New Hampshire and Vermont five years ago. Since then, the North Carolina-based company has filed for and emerged from bankrupcty, and invested more than $700 million in its network in those three states.

Meanwhile, in 2012, the Legislature almost completely deregulated the telecommunications industry – the only portion still regulated is “provider of last resort” service – which opened up FairPoint’s territory to competition from other providers without a mandate to provide service to anyone who wants it. As a result, FairPoint has lost some of its lucrative urban customers.

In an attempt to stall FairPoint’s rate request and give the Legislature time to determine if the state’s “provider of last resort” service system needs to be revamped, Rep. Barry Hobbins, D-Saco, introduced a bill last session that would have capped the amount collected for the Universal Service Fund at $7.5 million and instructed the PUC to seek guidance from the Legislature if it determined more was required. Hobbins, co-chair of the Legislature’s energy and utilities committee, said he introduced the bill for the PUC.

The Legislature passed the bill, LD 1479, but Gov. Paul LePage vetoed it on April 23. The Legislature is expected to consider an overturn of the veto on Thursday.

Whit Richardson can be contacted at 791-6463 or at:

wrichardson@pressherald.com

Twitter: @whit_richardson

 

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