NHLA and FairPoint Communication, Inc. Enter Into Memorandum of Understanding

 

NHLA and FairPoint Communication, Inc. Enter Into Memorandum of Understanding

In January 2007 Verizon & FairPoint Communications (FairPoint) filed a joint Petition with the NH Public Utilities Commission (as well as with the Maine, Vermont and Federal Communications Commissions) requesting that the Commission approve the proposed sale by Verizon of its northern New England landline telephone business to FairPoint. If approved, FairPoint would become the local telephone company for most of New Hampshire households. The NH Commission (and the other Commissions) had to determine whether the proposed sale was in the public interest. Approximately 20 parties, including a client represented by NHLA, sought and received permission from the NH Commission to participate in the case. NHLA�s client was the only low income residential customer to participate in the case. Also participating in the case were the Commission Staff and the Office of the Consumer Advocate (OCA) which represents residential ratepayers. The other parties included wholesale customers of Verizon, competitors of Verizon, Labor Unions representing Verizon�s employees, and various municipalities and electric utilities that share joint pole arrangements with Verizon. Both Verizon & FairPoint produced a voluminous amount of documents for the parties to review and analyze in response to the parties� requests for financial and other information pertaining to the proposed transaction. Hearings were scheduled before the NH Commission for mid-October 2007 for Verizon, FairPoint, and all the parties to present expert testimony related to the sale. Prior to the hearings all parties filed written testimony setting forth their respective positions regarding the proposed sale. The testimony described the parties� concerns about the proposed sale. The concerns of NHLA�s client included the following: 1) The need to preserve rate stability and not increase rates for several years. 2) The need to maintain low cost service options, such as low use measured service. 3) The need to preserve �stand-alone� basic local exchange service without having to purchase �enhanced� services such as call-waiting, call-forwarding and similar options. 4) The need to expand the federal �Lifeline� rate discount program for low income customers (the discount is approximately $8.25 per month; however, only a small number of Verizon customers participate in or are even aware of the monthly bill discount program). Similarly, there is a need to expand the federal �Link-Up� program (the �Link-Up� program pays for a portion of the cost of hooking up new phone service for low income households who do not have phone service.) 5) The need to have �soft dial tone� in New Hampshire (�soft disconnect� or �soft dial tone� allows a household to have dial tone to dial 911 emergency service and to access the phone company�s business office after the customer�s phone service has been shut off for non-payment of the bill). 6) The need for more �public interest pay phones� in New Hampshire (a �public interest payphone� is a payphone that, under federal law, is not allowed to be removed once a State Commission determines that a particular payphone or payphone site is necessary for public health, safety or welfare purposes; once the Commission approves a petition to designate a payphone as a �public interest payphone� the phone carrier must be reimbursed by the State for the cost of maintaining the payphone in service). 7) The need to notify NHLA, the OCA, and the Commission Staff before a payphone is removed that might be eligible for designation by the NH Commission as a �public interest payphone.� Prior to the October 2007 hearings NHLA entered into settlement negotiations with FairPoint on behalf of our low income client. In return for our client�s support for the proposed sale FairPoint agreed to the following on behalf of its (future) low income customers if the sale were to be approved by the Commission: 1) Work with NHLA to increase participation by eligible customers in the Lifeline and Link-Up programs. Initially, for a period of 3 years, FairPoint will work with the NH Community Action Programs (CAPs), the New Hampshire Department of Health and Human Services, and the NH Municipal Association to do outreach concerning the Lifeline and Link-Up programs. FairPoint will develop an outreach plan and will also pay the CAPs and social service agencies to help implement the outreach plan. FairPoint will submit periodic reports to the Commission Staff, OCA and NHLA regarding Lifeline and Link-Up participation levels. FairPoint will meet periodically with NHLA, OCA and the Commission Staff to discuss the outreach efforts. FairPoint will also provide the Commission Staff, OCA and NHLA with the opportunity to review and provide input on the outreach materials to be developed by FairPoint. 2) Institute a �soft disconnect� process whereby customers disconnected for non-payment of their telephone bill will continue to have access to dial tone for the purpose of calling 911 for emergencies and the FairPoint business office for a period of at least 90 days. (The soft disconnect policy would not be available to customers who take service with another carrier.) 3) Continue to provide a separate, stand-alone basic telephone service offering for a minimum of 3 years. 4) Provide at least 30 days advance notice in writing to NHLA, OCA and the Commission Staff of its intent to remove any payphone that might be eligible for consideration as a �public interest payphone.� 5) Install, fund and maintain for at least 3 years five �public interest payphones� at locations to be determined in consultation with NHLA, the Commission Staff, and OCA. Following the hearings FairPoint entered into a settlement agreement with the Commission Staff. Under the terms of the settlement agreement the Commission Staff agreed to support the proposed sale. In return, FairPoint made a number of additional financial commitments, including an agreement not to seek to raise retail rates for at least 5 years. FairPoint also agreed to provide a separate stand-alone service offering indefinitely. In December 2007 the Commission held further hearings to determine whether the FairPoint settlement agreement with the Commission Staff was in the �public interest.� On February 25, 2008 the Commission issued an Order approving the Staff settlement agreement and the proposed sale of Verizon�s landlines to FairPoint. The Commission found that the Staff settlement agreement added �significant public benefits to the transaction.� For example, the settlement provided assurance of rate stability for retail customers over the next 5 years. The Commission also said that �FairPoint�s additional retail service commitments will provide benefits to ratepayers.� Order, pages 70, 71. The Commission then referred specifically to the Memorandum of Understanding that FairPoint entered into with NHLA�s client as providing �An additional service related set of benefits.� Order, page 71. Thus, FairPoint�s commitments to its low income customers was a factor in the Commission�s determination that the sale was in the �public interest.� NHLA looks forward to working with FairPoint, the Commission Staff and the Office of Consumer Advocate over the next 3 years to implement the terms of FairPoint�s Memorandum of Understanding with NHLA�s low income client, Irene Schmitt.

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